Leading shares have paused for breath amid continuing geopolitical concerns, after Monday’s boost from the proposed £24bn takeover of ARM by Japan’s Softbank.
As UK inflation came in higher than expected, giving a lift to the pound, the FTSE 100 has slipped 24.18 points to 6671.24.
But Coca-Cola Hellenic Bottling is heading the risers, up 36p to £15.57 as analysts at JP Morgan raised their recommendation from neutral to overweight and their price target from £15 to £18.
The bank said Coca-Cola was well placed in a low inflation world, with the soft drinks market likely to be resilient to economic volatility. It expected Coca-Cola to have strengthened its balance sheet within a year, leaving it free to return cash to shareholders or take part in merger and acquisition activity.
Sky has also been boosted by a broker upgrade, 16.5p better at 896.5p as RBC lifted its target from £10 to £11 and moving from underperform to outperform. The bank said:
Our view reflects (1) the lower share price; (2) de-risking of rights renewal in Germany; (3) upside from mobile rollout. The rise in price target is partly driven by our forecasts for higher outer year earnings in pound terms from Germany and Italy.
Miners are among the biggest fallers after a disappointing update from Rio Tinto, down 97.5p at £23.65. Anglo American has fallen 29.2p to 802.8p while BHP Billiton is 31.2p lower at 945.6p. Mike van Dulken, head of research at Accendo Markets said:
The FTSE’s mining contingent is on the back foot this morning, holding the UK blue-chip index back after Rio’s second quarter production report delivered iron-ore shipments below analyst expectations, albeit still higher than both the first quarter of 2016 and the second quarter of 2015. Management has been fortunate to be able to reiterate 2016 production guidance thanks to limited weather impact, operational efficiencies and ramp-ups/roll-outs, however, its pledges of compelling and consistent returns are falling on deaf ears.
This is because investors are focusing on a strong US dollar hindering a the commodity space recovery as the US Fed looks to hike rates and peers look to do quite the opposite. Low/negative interest rates and the prospect of more monetary and fiscal stimulus from major central banks (Oz and NZ on top of BoE, ECB, BoJ) suggests flagging faith in a growth revival to counter a slowing China and a potential race to the bottom generating another round of currency wars that simply serves to send the dollar even higher. To the detriment of key raw material prices.
