Marcus Evans Group | Worldwide Headquarters | American Offices | Latin America | European Offices | African / Asian Offices

Miners, banks and commodities feel brunt of sell-off

Miners and commodities felt the full brunt of the sell-off on Thursday, bettered only by banking stocks as the FTSE 100 plunged by 4.5%.

The index was 239 points lower by the close at 5,092, having endured a series of shocks during the day, all tending to a view that global growth was under threat, with all the knock-on effects that would have on the Eurozone debt crisis.

Swiss miner Xstrata was the biggest faller among the blue-chip miners, falling 10.2% to finish at 972p. Commodities trader Glencore was 10% lower at 355p, while Kazakhmys fell 8.2% to reach 958p. Oil and gas Engineer Wood Group joined them, falling 8.7% to 527p, as did temporary power supplier Aggreko, down 8% to £17.36.

One miner weathering the storm well was Randgold Resources. The gold miner fell just 0.4% to £64.15, a respectable performance in a market when every single FTSE 100 stock was down. Randgold benefitted from investors buying the precious metal it specialises in. Gold hit its umpteenth new high of the year, reaching ,826.91 an ounce.

Oil fell markedly, with Brent Crude futures down almost 3% at 7.29 a barrel. Sector heavyweights BP and Royal Dutch Shell fell 3.1% and 3.2% respectively off the back of that fall.

There was very little to be positive about in a market where everything was being sold. Only six stocks among the UK’s top 350 companies gained ground.

One of them was Savills, whose interim numbers showed first-half profits before tax up 39% to £20m. The property group said that the high-end London residential property market was still doing very well. It is also developing in the Asia-Pacific region, and investors bought the story even as the market was collapsing around them. The shares finished up 0.5% at 314p.

Thursday had begun with some brokers suggesting that there were reasons to be cheerful, though their calls seemed more plaintive as the day wore on. Citigroup put out a note suggesting that, as far as the level of the FTSE 100 went, there was “much in the price already for the risk of global recession” and maintained its target for the end of the year – 6,200.

Even Morgan Stanley, whose suggestion that the global economy was getting “dangerously close to recession” had appeared to be the cue for the early sell-offs, said that a recession was “not our base case.” Corporates looked healthy, the broker said, while headline inflation figures would come down in due course.

Morgan Stanley’s warning was followed at lunchtime by a series of weaker-than-expected pieces of US data that gave the markets the jitters – inflation and jobless claims coming in higher than estimated. The “Philly Fed” business activity index then came in at -30.7, from 3.2 the month before, prompting a dramatic dip at 3pm.

The FTSE 100 recovered some ground later on, having been more than 5% down at one stage.

Other international markets were down even more precipitously. The German Dax fell 5.8%, while the French CAC was 5.5% down at the close.

Some shares suffered in particular: Thomas Cook was the biggest faller among the mid-caps, down 16% to 44.2p. Office space supplier Regus was not far behind – falling 15.8% to 67.2p.

Gulf Keystone Petroleum, an oil explorer beloved of small investors, released an upbeat update on an Iraqi oil discovery, but even that was not enough to avoid the rout. The shares were almost 13% down at 126p.

Cineworld was another stock to beat the heavy sell-offs, after releasing half-year numbers boosted by the latest Harry Potter film. The shares fell just 1% to 183p.

Meanwhile, Seymour Pierce downgraded Home Retail Group to “Sell” from “Hold”, suggesting a strategic shake-up is needed at the owner of Argos: “The balance sheet is becoming more stretched, which we believe means management will have to consider the possible closure of Argos stores,” the broker said. Home Retail shares closed down 6.4% at 125p. © Guardian News & Media Limited 2011 | Use of this content is subject to our Terms & Conditions | More Feeds