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FTSE falls but surging miners shrug off dollar rally
Miners shrug off rally in dollar after US jobs data to race higher, as investors bet worst is over for beaten-up sector.
Update: The FTSE 100 has fallen into the red but miners shrugged off a jump in the dollar following mixed US jobs data, as investors continue to bet the worst is over for the beaten-up sector.
The UK blue-chip index closed 51 points, or 0.9%, lower at 5,848, despite a strong rally from miners that had threatened to come unstuck on a stronger dollar, but gathered strength towards the end of trading.
House builders fell firmly into losses amid renewed fears over interest rate rises following the US jobs data. Berkeley (BKGH) was down 5% at £33.90, Persimmon (PSN) fell 3.6% to £19.65 and Taylor Wimpey (TW) dropped 3.3% to 182.8p.
US jobs spark dollar jump
(14:26) The FTSE 100 has pared the day's gains after mixed US jobs data strengthened the dollar and set back a strong rally in mining shares.
The UK blue-chip index was up 22 points, or 0.4%, at 5,899, down from a high of 5,944 in the morning's trading, as mixed messages from US non-farm payroll figures sparked volatile trading in the dollar.
A headline figure of 151,000 new jobs created in January, well below the 189,000 expected and the 292,000 in December, initially strengthened the dollar sell-off that has been building this week.
But there was better news in the average earnings figure, which rose by 0.5% month-on-month in January, and is up 2.5% over that last year. Trading in the dollar quickly switched, sending the euro and the pound 0.7% lower against the US currency.
'It is difficult to see exactly what the Fed will make of this,' said Rob Carnell, economist at ING. 'But with global financial conditions tightening, this release says "more data needed" before any firm conclusions about any shift in Fed policy.'
The rally in the dollar hurt miners on the FTSE 100, which had benefited from the slide in the greenback and the boost that gave to metals, which are priced in the currency.
Anglo American (AAL) remained at the top of the index, up 7.7% on the day at 353.5p but down from an earlier high of 377.7p.
Other miners fell into the red. Rio Tinto (RIO) was the biggest faller on the index, down 3% at £18.01, BHP Billiton (BLT) fell 2.3% to 696.9p, while Glencore (GLEN), one of the biggest FTSE 100 risers in the morning's trading, was flat at 100p.
Mining rally strengthens
(11:10) A surge in mining stocks has continued apace to lead the FTSE 100 higher, as investors bet the beaten-up sector has reached its bottom.
'Mining shares have picked up where they left off, topping the FTSE 100 by a wide margin for a second day,' said Jasper Lawler, market analyst at CMC Markets.
They helped the FTSE 100 rise 34 points, or 0.6%, to 5,932. Emerging markets-focused stocks also rose, with Standard Chartered (STAN) bank up 4.4% at 456.5p and fund group Aberdeen Asset Management (ADN) rising 2.7% to 246.9p.
On the FTSE Small Cap index, the surge in commodities stocks powered embattled miner Lonmin (LMI) 14.2% higher to 64.9p.
Investors were looking ahead to jobs data from the US to be released this afternoon, against the backdrop of an apparent weakening of the world's largest economy.
News of weaker-than-expected non-manufacturing activity has sparked a sell-off in the dollar over the last week, as investors bet against imminent further interest rate rises.
'Such is the sharpness of the US dollar sell-off seen in the last couple of days, a poor jobs number, of anywhere near or below 150,000, could well tip the greenback over the edge and send it even lower, particularly if we also get weak wage growth numbers as well,' said Lawler.
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Look up the shares
- Anglo American PLC (AAL.L)
- Glencore PLC (GLEN.L)
- Standard Chartered PLC (STAN.L)
- Aberdeen Asset Management PLC (ADN.L)
- Royal Dutch Shell PLC (RDSb.L)
- BG Group PLC (BG.L)
- BP PLC (BP.L)
- Tullow Oil PLC (TLW.L)
- Vedanta Resources PLC (VED.L)
- Amec Foster Wheeler PLC (AMFW.L)
- Lonmin PLC (LMI.L)
- Rio Tinto PLC (RIO.L)
- BHP Billiton PLC (BLT.L)
- Antofagasta PLC (ANTO.L)
- Berkeley Group Holdings PLC (BKGH.L)
- Persimmon PLC (PSN.L)
- Taylor Wimpey PLC (TW.L)
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by Gavin Lumsden on Oct 21, 2016 at 17:18