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Thursday 23 January 2020

Miners’ shares strike gold after China stimulus unveiled

Anglo American, Glencore and BHP Billiton were the top risers on the FTSE 100.

Miners were in demand after China revealed measures to boost domestic demand (PA)
Miners were in demand after China revealed measures to boost domestic demand (PA)

By Helen Cahill, Press Association City Reporter

Global stocks have surged after the Chinese government unveiled a stimulus package, with mining shares in focus on the London Stock Exchange.

China announced a package of policies including tax cuts and the sale of special bonds to boost domestic demand.

Metal prices powered ahead after the news broke due to the expectation of a spike in demand from China, which in turn meant mining stocks were in demand.

By the market close, Anglo American, Glencore and BHP Billiton were all up by more than 5%, making them the three top risers on the FTSE 100.

Fiona Cincotta, senior market analyst at City Index, said: “The unveiling of a stimulus package to lift domestic demand in China, the world’s biggest consumer of metals, is going some way to counter trade war jitters.

“A package of tax cuts, research spending, special bonds, infrastructure spending and a pledge to use tax policy to stimulate growth shows that the authorities in China are concerned over the impact that the developing trade war will have on growth and are taking measures to counteract a weakening economy.”

The FTSE 100 charged ahead, closing the day 0.7% or 53.26 points higher at 7,709.05. The Cac 40 in France surged 1.26%, while the Dax in Germany was up 1.1%.

In currencies, the pound strengthened against both the euro and the dollar.

Against the dollar, sterling was up 0.37% to 1.314. The pound was up 0.25% against the euro at 1.123.

Beijing’s stimulus announcement also lifted oil prices, with Brent crude rising 1.14% to 73.697 US dollars a barrel.

“Oil is a good barometer of how strong or weak the global economy is, and since China is the second-largest economy in the world, any increase in economic activity is likely to ripple out around the globe,” said David Madden, market analyst at CMC Markets UK.

Meanwhile, Hammerson unveiled plans to offload £1.1 billion in assets and hand millions back to shareholders in a move meant to appease investors after profits plunged.

The property giant posted a whopping 80% drop in pre-tax profits to £55.8 million over the six months to June 30, compared with £289.7 million a year earlier. Shares closed the session 3p higher at 529p.

Shares in Fever Tree sparkled after the drinks company posted impressive sales growth and said it would be “comfortably” ahead of its financial targets for the year.

The firm’s revenues for the six months ended June 30 soared 45%, from £71.9 million to £104.2 million, boosting its shares by 195p to 3,650p during trading.

Shares in Superdry fell 9.5% or 129p to 1,236p after the retailer’s co-founder Julian Dunkerton scooped around £71 million from selling off another chunk of shares in the business.

Mr Dunkerton – who left the board in March, 33 years after he founded the group – sold a 6.7% stake, slashing his holding in the firm to 18.5% after offloading 5.5 million shares at £12.85 each.

The biggest risers on the FTSE 100 were BHP Billiton up 92.2p to 1,702.4p, Anglo American up 90.4p to 1,695p, Glencore up 17.4p and Evraz up 26p to 549p.

The biggest fallers on the FTSE 100 were National Grid down 19.4p to 818p, United Utilities down 14.4p to 706.6p, SSE down 26p to 1,336p and Centrica down 2.6p to 150.45p.

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