Miners Put a Weight on FTSE 100
Shares in Evraz and Eurasian Natural Resources both fall by more than 3%
The benchmark FTSE 100 index lost 28 points, or 0.5%, to close at 5,824. TheFTSE 250 index also dipped by 0.5% to close at 11,563.
The biggest decliner of the day was Evraz (EVR), which saw its shares fall by just over 4%. Shares in the miner have plunged by over 30% since the start of 2012, while the overall FTSE 100 index has eked out a 4.5% gain. Shares in the miners Eurasian Natural Resources (ENRC), Xstrata (XTA) and Kazakhyms (KAZ) also followed suit and fell by more than 3% each.
To see the day's winners & losers on the FTSE, take a look at Morningstar's Heat Map.
The drop in Xstrata shares comes a day ahead of Glencore’s (GLEN) first-half 2012 earnings results. Glencore is in the process of trying to takeover Xstrata, thoughthe deal has faced some challenges over the last few months.
Morningstar analyst Daniel Rohr outlines what he expects to see in the results:
“Weaker commodity prices will take a big bite out of Glencore’s profits in the mining business, as they have for everyone who digs metals and minerals out the ground. I’d expect investor focus will centre on two issues. First, how is the marketing side of the shop faring amid very turbulent markets? Second, whither Glencore-Xstrata? Tomorrow’s earnings will provide investors an answer on the first question, but management is likely to play it “close to the vest” on the second.”
Looking ahead to market expectations and movements for the rest of the week, there seems to be a hint of caution in the air.
“There does appear to be some nervousness creeping back into markets ahead of this week’s meeting between eurozone leaders,” says David Jones, chief market strategist at IG Index. “If there is one thing we have learned over the last couple of years it is the potential for shocks and surprises these sorts of meetings can generate, as agreement seems hard to come by. With the FTSE 100 having rallied by 10% in the last few months, it wouldn't be unexpected if some felt discretion was the better part of valour and took a bit of risk off the table ahead of the next chapter of the eurozone crisis.”
