Leading shares are slipping back ahead of US jobs figures later which could give more clues as to when the Federal Reserve will raise interest rates.
But mining shares are providing some support, as commodity prices show some signs of stability. Weakness in the dollar on uncertainty about whether the Fed will sanction dearer borrowing in September, as had been widely thought, helped lift metal prices, as did a recovery in Chinese shares after reports that authorities were intervening to underpin the market.
Results this week from Rio Tinto, up 32.5p at £26.08, also helped sentiment. Mike van Dulken, head of research at Accendo Markets, said:
Results from major Rio Tinto delivering better cash generation and capital expenditure cuts has also helped appease those worried about dividends sustainability in the sector and helping diversified peers.
So Anglo American has added 17.7p to 793.1p and Glencore is up 4.05p at 203.35p.
But overall the FTSE 100 is currently down 12.04 points at 6735.05 ahead of the US figures. Disappointing French and German industrial production figures have given investors pause for thought, while the UK trade deficit has come in slightly better than expected. There is also some uncertainty after Super Thursday suggested the Bank of England may not raise rates until next year, although governor Mark Carney’s press conference was notably more hawkish than the documents released.
Media shares have followed the US sector lower after disappointing Disney figures continued to cause concern, with ITV down 11.6p at 260.3p and Sky 10p lower at £10.90. Last week Liberty Global raised its stake in ITV to 9.9% but said it would not make a full offer for the broadcaster.
Elsewhere William Hill has lost 24.6p to 386.3p after a 12% fall in first half operating profits, while UK Mail is down 40p at 490p as it warned full year profits would be materially below market expectations due to disruption from a move to Coventry. Investec said:
UK Mail has released a trading statement reporting that the impact on performance of the move to the new hub in Coventry has proved more significant than anticipated. The rate of parcel volume growth has slowed with a negative parcel revenue mix and a greater proportion of parcels volume than expected is incompatible with the new sortation equipment resulting in higher costs and lower asset utilisation. Consequently, we cut our forecasts, reduce our target price to 485p and downgrade to add.
We believe the impact is relatively temporary and expect an improvement in performance for 2017.
Soft drinks group Britvic is up 2p at 690.5p despite worries about increased competition following news that rival Coca-Cola Enterprises (CCE) planned to merge with private Coke bottlers in Spain and Germany. Societe Generale raised its rating from hold to buy, and Shore Capital also issued a buy recommendation. Shore analyst Phil Carroll said:
Clearly, this is relevant to Britvic which in fairness we believe has been outperforming CCE in the UK in recent years so from CCE’s perspective improvement in performance is needed. Britvic’s outperformance of its main competitor continued to be evident in its recent third quarter trading statement where management stated the Pepsi portfolio continues to gain market share on a volume and value basis. As to whether [the new merged group] can outperform Britvic in the future, only time will tell but based on the recent past, Britvic has shown how effective it is when it comes to its marketing, revenue management and innovation capabilities. Therefore, we are not overly concerned by the news at this stage and would certainly encourage investors to take advantage of any potential weakness in Britvic’s share price of the back of this deal announcement.
