Top flight shares stayed in the red on Monday as a negative reaction to news from miners left traders looking for a boost from the US.
The FTSE 100 Index fell 35.39 points to 6,380 as bullish sentiment deserted the market after last week’s 286-point surge.
Glencore lost hold of early gains to stand 1.05p off at 128.05p after the beleaguered miner announced it was selling copper mines in both Australia and Chile, its latest debt-reducing move following last week’s zinc production cuts.
Investment bank Goldman Sachs did nothing to lift the gloom hanging over markets by saying it expected the commodity price rally to fade, with oversupply and deflation sparking more declines.
"The decision by Glencore (and others) to shut mines is a reaction to reality, not a reason to get bullish, in our view," the broker said in a note.
Chris Beauchamp at spread-betting firm IG said: "It seems investors are now much more cautious about continuing to boost allocations to equities than they were just two weeks ago; one sign of this is Glencore, which is down 2% this morning despite announcing a sale of some of its copper assets.
Attention switched to the US where, despite bond markets being closed for Columbus Day, economists expected Fed officials to give more hints about interest rates in speeches later Monday.
Forex firm FXTM said dollar vulnerability was still the main theme resonating in the global currency markets.
The dealer's research analyst Lukman Otunuga said: "The continuous diminishing expectations of a US rate hike in 2015, combined with the lack of clarity offered by the September meeting minutes, has exposed the USD to more losses."
BP (LON:BP.) ceded gains to stand 1.15p down at 390.45p but Royal Dutch Shell (LON:RDSB) ticked up 3.5p to 1836.5p and BG Group (LON:BG.) inflated 0.5p to 1093.5p despite slight rises in the price of Brent and US light crude to US$52.9 and US$49.9 respectively.
Other miners were mixed, with Rio Tinto (LON:RIO) losing 8p to 2,591.5p after it resisted pressure to cut copper production.
BHP Billiton (LON:BLT) gained 8.5p to 1203p but Anglo American (AAL) was 0.4p off at 726.1p.
Elsewhere, African budget carrier Fastjet (LON:FJT) gave up gains and fell back to its opening price of 87p on news that it had secured an air service licence in Kenya.
Savannah Resources (LON:SAV) reversed 0.1p to 2.1p on an extension of its long-stop date for completion of its Jangamo mineral sands joint venture with Rio Tinto until 31 March 2016.
Tethys Petroleum (LON:TPL) leaked 0.62p to 4.75p after telling investors it had actively considered proposals from all parties since the Nostrum exclusivity period ended after October 6.
It came as the company responded to a statement from Olisol Investment Group, which suggested Tethys had not engaged with Olisol or considered Olisol's proposal.
LONDON OPEN
The London trading week began on a negative note as dealers took a breather after last week's gains.
The FTSE 100 Index fell 24.87 points to 6,391.29 as markets digested last week’s 286-point surge.
Falls came despite buoyancy in Asian markets on the back of reports that Beijing is set to pump money into the Chinese economy.
Some gains in oil and mining failed to counter losses in banking and pharmaceuticals. AstraZeneca (LON:AZN) led the latter sector lower following last week’s news that trials for two of its key pipeline cancer treatments had been halted. Shares in the UK drug group fell 36p to 4,173.5p.
BP (LON:BP.) spurted 1.2p to 392.8p but Royal Dutch Shell (LON:RDSB) and BG Group (LON:BG.) were both off colour despite slight rises in the price of Brent and US light crude to US$53 and US$50 respectively.
Glencore also dropped 0.35p to 128.75p after the beleaguered miner announced it was selling copper mines in both Australia and Chile, its latest debt-reducing move following last week’s zinc production cuts.
Other miners were mixed, with Rio Tinto (LON:RIO) losing 1.5p to 2,598p after it vowed not to cut copper production. But BHP Billiton (LON:BLT) gained 2p to 1196.5p and Anglo American (AAL) toughened 0.4p to 726.9p.
Elsewhere, African budget carrier Fastjet (LON:FJT) ascended 4p to 91p on news that it had secured an air service licence in Kenya.
MARKET PREVIEW
The FTSE 100 is set mark time on open as investors take stock after last week’s strong surge in the blue-chip index that mirrored a new-found sense of confidence on world equity markets.
In Asia overnight China led the way amid reports Beijing is ready to invoke stimulus measures to lighten the blow of the economic slowdown.
The Shanghai Composite rose 3.7%, while in Hong Kong the Hang Seng was up 1.2%. Japan was closed for Health and Sports Day.
The spread betting firm IG is predicting Britain’s top stocks index will open its account on Monday down 17 points at 6,399.6 – a none-too-surprising pause for breath after last week’s 286 point surge last week.
Perhaps we will see a reaction – albeit a delayed one – the rather gloomy economic analysis from the International Monetary Fund in Lima, Peru.
Possibly. But as Michael Hewson, chief analyst at CMC Markets, pointed out: “While weekend events in Lima at the IMF annual meetings focused on the risks to the global economy, last week’s rebound in equity markets would appear to suggest that investors are for now, fairly sanguine about these risks, though emerging markets remain a cause for concern.”
We are looking at a busier week for corporate news both here and the States.
And, of course, we have the putative super-merger in the brewing sector with SAB Miller and AB InBev continuing their courtship. The bid would create a US$110bn Goliath of the sector.