Fashion retailers are supporting the leading index after well received results from Next but mining shares are putting pressure on the markets.
So with continuing uncertainty over the UK general election, the situation in Greece and ahead of the latest US GDP figures and Federal Reserve interest rate decision, the FTSE 100 has edged up 7.08 points to 7037.61, having already traded in a 46 point range.
Antofagasta is leading the losers, down 23.5p at 778.5p after the miner cut its annual production forecast and reported lower than expected copper output in the first quarter, down 13.6% from a year ago.
Mining shares have been recovering in recent days as metal prices - especially iron ore - have moved higher, but now they are heading lower again. BHP Billiton is down 32.5p at £15.57 while Rio Tinto has lost 55p to 2924.5p. Tony Cross, market analyst at Trustnet Direct, said:
The big losers are focused on the mining sector – iron ore prices are slipping back and this is calling into question the idea that the recent rally was anything more than a short term correction – as we’ve said before, nothing is changing in terns of the underlying market, production remains intense and demand is lacklustre.
But Next has added 235p to £74 as the clothing retailer reported first quarter sales had risen by a better than expected 3.2% in the first quarter and said it would pay another special dividend. The positive news helped lift Marks & Spencer 10p to 565p.
Weir, the pumping group which supplies the oil industry, has come under pressure as the plunging crude price prompted cutbacks in investment in the sector. But it has climbed 50p to £17.88 despite announcing a 23% fall in orders from its oil and gas business in the first quarter and plans to cut 125 jobs, mostly in north America. Orders for its mining division were up 5%. Canaccord Genuity said:
We need to think about the pricing comments and the shape of the potential recovery in oil and gas. However, the Minerals performance is reassuring and demonstrates the quality in the aftermarket profile.
The company is generating substantial cash and remains a market leader in markets that have long term structural growth. We accept that it will be bumpy but we still see the risk reward skewed considerably to the latter on a year plus view, hence the continued buy recommendation and 2200p price target.
It was a mixed day for results in all, with British American Tobacco down 49.5p at £36.20 as first quarter revenues fell 5.8% as more people cut back on smoking and a stronger pound hit its business.
Barclays is down 2.1p at 259.3p as it set aside another £800m for potential settlements for alleged foreign exchange manipulation.
Among the mid-caps, retailers were also in focus, with Argos and Homebase owner Home Retail Group rising 3.9p to 171.2p and home shopping specialist N Brown adding 15.1p to 336.9p after their latest updates.
But Thorntons has melted 1.5% to 81.75p after a disappointing performance in the third quarter, particularly on Mother’s Day. Retail sales were up just 0.1% while commercial and international sales dropped 6.7%, and the company said it was cautious about the outlook.
Elsewhere Coca-Coca Hellenic Bottling is 37p better at £14.25 after Citigroup raised its price target from £11.50 to £14.50. The bank said:
We expect 3.6% organic volume growth in the first quarter, boosted by technical factors (4 extra trading days, early Easter and easy comparisons) and 5.1% org sales growth. Foreign exchange guidance likely to be updated. Current guidance is €200m hit to 2015 earnings before interest and tax. The 20% Ruble appreciation since February results could be worth about €80m on earnings before interest and tax, which we don’t expect to fall to the bottom line in full. We raise earnings per share around 9%, mostly on foreign exchange and move our target price to 1,450p. We stay neutral.
