LONDON MARKETS: FTSE 100 Falls, Weighed By Losses For Bank, Mining Stocks
26 October 2016 - 7:46PM
Dow Jones News
By Carla Mozee, MarketWatch
Antofagasta drops 7%
U.K. stocks declined Wednesday, with the benchmark FTSE 100's
losses anchored by Lloyds Banking Group PLC and Antofagasta PLC
after updates from the lender and the miner.
The FTSE 100 fell 0.6% to 6,976.41. That declines follows
Tuesday's rise of 0.5%.
(http://www.marketwatch.com/story/ftse-100-gains-as-miners-and-st-jamess-place-jump-2016-10-25)
Antofagasta PLC (ANTO.LN) sank to the bottom of index as shares
tumbled 7.1%. The miner posted an increase in third-quarter copper
output but also expects this year's copper output to be close to
the lower end
(http://www.marketwatch.com/story/antofagasta-copper-output-up-reaffirms-guidance-2016-10-26)
of its forecast of 710,000-740,000 tons.
Shares of other miners were driven lower, with Anglo American
PLC (AAL.LN) and BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) each
down 1.8%. Rio Tinto PLC (RIO) (RIO) (RIO) was off 0.9%.
Copper producers "have not had a strong third quarter thus far
with guidance downgraded by 166kt for 2016. Antofagasta will have
to have a very strong quarter to hit the bottom end of 2016
guidance of 710kt and has downgraded its 2017 guidance early to
685-720kt (versus consensus at c.750kt)," said mining analysts at
Liberum in a note.
"We still expect weakness in the copper price into the year end
driven by dollar strength and weak apparent Chinese demand," they
said, adding that risks to their bearish call include a continued
rise in Chinese property prices.
Banks: Lloyds shares (LLOY.LN) (LLOY.LN) dropped 3.1% as the
company's third-quarter profit tumbled 68% to GBP219 million
(http://www.marketwatch.com/story/lloyds-profit-tumbles-on-provisions-2016-10-26)
($266.39 million) as it set put aside more cash to compensate
customers who were sold an unnecessary insurance product. Lloyds
did reaffirm its 2016 financial guidance.
Lloyds shares "as viewed as a proxy for the U.K. economy ...
have been under pressure in anticipation of a hard Brexit, with all
its negative connotations and with interest rates remaining at
historic lows, the sector in general faces ongoing challenges,"
said Richard Hunter, head of research at Wilson King Investment
Management, in a note.
A so-called hard Brexit refers to the possibility that the U.K.
would lose access to the European Union's single market and that
U.K. banks would have to give up passporting rules
(http://www.marketwatch.com/story/banks-planning-to-abandon-uk-in-wake-of-brexit-trade-body-warns-2016-10-24)
that allow them to seamlessly sell their services and products
across the EU.
But positives for Lloyds include a "current dividend yield of
over 4% [that] is attractive to investors given the wider savings
backdrop," said Hunter.
Meanwhile, shares of Barclays PLC (BCS) (BCS) fell 0.7%, HSBC
PLC (HSBA.LN) (HSBA.LN) lost 0.6% and Standard Chartered PLC
(STAN.LN) gave up 0.9%.
Royal Bank of Scotland PLC (RBS.LN) (RBS.LN) turned higher by
0.1%. Banking group CYBG PLC (CYBG.LN) said it's made a preliminary
proposal related to RBS's Williams and Glyn operations. Off the
main index, CYBG shares were down 1%.
The pound was buying $1.2212 compared with $1.2182 late
Tuesday.
(END) Dow Jones Newswires
October 26, 2016 04:31 ET (08:31 GMT)
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