FTSE 100 shares sank on Friday as gold miners were out of love in the midst of the rising dollar which hit yellow metal prices.
The FTSE 100 blue-chip index was down 0.3% to 6775.
Metals miner Fresnillo (LON:FRES) was the biggest faller, closing down 6.9% at 1289p and Randgold Resources (LON:RRS), was the third-biggest faller, dropping 4.9% to 5790p, as the gold price fell to $1,206.5 an ounce. Anglo American (LON:AAL) was down 3.3% to 1089.5p, Antofagasta Holdings (LON:ANTO) down 3.1% to 666p and Rio Tinto (LON:RIO) was down 2.9% to 2934p.
Although outside the bottom 10, Glencore (LON:GLEN) also slid, by 2.2% to 261.9p and BHP Billiton (LON:BLT) down 1.2% to 1263.5p.
Commodities are generally priced in dollars, so a rise in the dollar's value makes them more expensive for holders of other currencies. The dollar has risen on expectations that US rates will rise next month.
On Thursday, the chair of the Federal Reserve, Janet Yellen, indicated that the US central bank could raise interest rates "relatively soon".
If that was ambivalent, Kansas Fed chief Esther George on Friday made it more explicit that a rate hike in December was on the cards.
On the mid-cap FTSE 250, which conversely gained 0.3% to 17,659, shares in Electrocomponents surged 22% to 451.4p and led the ticker higher, after the electronic component distributor reported a 76% jump in half-year profits to £55.1mln, and raised its target for cost savings.
The FTSE AIM 100 Index ended down 0.04% at 3881 and the FTSE AIM All-Share Index up 0.03% at 811.
Gainers in London were almost matched by losers at 32% versus 30%.
Midsession
FTSE 100 down 3 at 6,791
London rallies after shaky start
Tesco steady after capital markets day
FTSE100 rallied as the session wore on even though US indicators suggested a mixed start on Wall Street.
London’s index was down 3 points at 6,791, having been off by almost as much as 50 at one point.
The US dominated the mood nonetheless, with Janet Yellen’s comments that she intended to see out her term as US Federal Reserve chair and also not be swayed on interest rates setting the tone.
Tesco PLC (LON:TSCO) featured strongly in London as brokers came back generally impressed from its capital markets day yesterday.
HSBC said it was one of the most detailed presentations it had seen and spelt bad news for rivals such as Sainsbury’s (LON:SBRY).
It reiterated its buy view and a 260p share price.
Tesco’s boss Dave Lewis was also in the news as he made his first public comment over the Marmite spat with Unilever (LON:ULVR).
He said suppliers should not raise prices just to adjust for currency movements.
"The only thing we would ask of companies that are in that position is they don't ask UK customers to pay inflated prices in order that their reporting currency is maintained," he said.
"They don't do that for countries outside of the UK."
Unilever put up the price of Marmite even though it is made in Britain.
Tesco shares were flat at 212.5p, while Sainsbury’s rose a touch to 237.8p.
Royal Mail (LON:RMG) rallied 2% to 476.6p, with Whitbread another handy riser at 3,596p.
The dollar hit a new 13 year high and that took its toll on gold and precious metal miners Randgold Resources (LON:RRS) and Fresnillo PLC (LON:FRES), which fell 5% to 5,795p and 1,310p respectively.
FTSE 100 led lower by mining stocks - 10.40am
Tesco PLC (LON:TSCO) slipped back despite a glowing write-up from HSBC following the supermarket’s capital markets day yesterday.
“Perhaps the stand out feature was the corporate body language. Management were confident and believe in the company once again.“
HSBC repeated its buy recommendation and 260p target price, but the shares eased slightly to 212.7p even so.
FTSE 100 led lower by miners - 9.00am
The miners led the FTSE 100 lower as investors took a less bullish view on the sector after some initial euphoria following the election of Donald Trump to the Whitehouse.
The feeling in the wake of the US vote was that Trump would invest heavily in infrastructure projects requiring basic materials produced by the major diggers.
Now the focus is on world trade and in particular, relations with powerhouse China.
On Thursday, BHP Billiton (LON:BLT) chairman Jac Nasser warned the imposition of tariffs on the People’s Republic mooted by Trump when he was out on the stump would have a “traumatic” impact on the world economy.
Precious metals giants Polymetal and Fresnillo (LON:FRES) were at the top of the loser’s board as the index of blue-chip shares fell 40 points to 6,754.75.
Not far behind were BHP, Anglo American (LON:AAL)and Glencore (LON:GLEN).
FTSE 100 seen opening flat - 6.30am
FTSE 100 is seen almost flat as the trading week ends as shares in Japan surged and investors around the globe eye a US interest rate hike next month.
The UK index of leading shares closed out 44 points higher, or 0.67% yesterday at 6,749 but spreadbetters at IG Index are calling it to start around two points higher.
A clutch of positive American economic data yesterday helped to boost sentiment in Asia and the US overnight.
In the jobs market, closely monitored, as a signal for growth, the numbers applying for the first time for unemployment benefits fell to the lower level for over 40 years, while consumer prices surged in October.
Janet Yellen, Fed chair also made noises that a rate hike could happen “relatively soon", which pushed the US dollar higher, weakening the Yen, pushing up the Nikkei 225.
She also said that any fiscal stimulus programme from Trump’s new government would have to be taken into account when setting future policy due to the inflationary risks involved. It
On Wall Street on Thursday, markets firmed. The benchmark Dow closed 0.19% ahead at 18,903, while the S&P500 added 0.47% to 2,187 and the tech heavy Nasdaq gained 0.74% to 5,333.
Meanwhile, after recent gains, the oil price fell amid less hopes of an output cut resulting from the next OPEC meeting on November 30.
US benchmark crude- West Texas intermediate- is down 1 .03% to US$44.95 a barrel at the time of writing.
Brent crude down 0.09% to US$46.76
Spot gold down 0.2% to US$1,226 per ounce
CITY HEADLINES
- Dave Lewis, the boss of Tesco, has publicly criticised the attempt by large consumer goods giants to hike the prices of everyday goods in the wake of the row over the price of Marmite. Telegraph.
- RBS ignored warnings from senior advisers about estimated losses that would be reported in the prospectus for its record £12 billion rights issue in order to portray the bank in a falsely healthy light, it has been alleged, the Times reports.
- Germany’s finance minister has set out a tough line on EU divorce talks with Britain on issues from tax breaks to exit costs, dashing Downing Street hopes Berlin would soften Europe’s stance on a UK departure from the bloc.FT
- Janet Yellen has vowed to complete her full term as chairman of the US Federal Reserve and defend the institution's independence. Telegraph.
- Asda remains firmly rooted at the bottom of the league table of big UK supermarkets after reporting a near 6 per cent slump in like-for-like sales in the three months to the end of September. Times
- JP Morgan is to pay US$264m (£212mln) to US authorities to settle charges the Wall Street bank breached anti-bribery laws by employing Chinese "princelings", the children of influential figures, to secure business. Telegraph