Tuesday, 25 October: Mixed Asian trade preceded a green open for UK and European indices before the FTSE 250 and French & German indices slumped lower. The FTSE 100 was given a leg up from the miners and a drop in sterling, as the rest of indices in London were buoyed or condemned lower by select company reports. Brent crude continued its slide lower to c. $50.70/bbl, from a c. $53.70/bbl high last week, the highest level since this time last year.
Anglo American(+5.22%) led miners higher after issuing a solid set of production results for the third quarter of the year as its non-core division did outperform the three core divisions. In response to the prolonged global downturn in commodities, it will strip out a large slice of its portfolio to focus on only diamonds, platinum and copper. Production of nickel, coal and iron ore (non-core) delivered an improved performance in the quarter, whilst production of core materials diamonds and copper were both lower than in the previous quarter, with copper struggling the most as it reported a year-on-year fall. The resource company is focusing on long term fundamentals of its realigned business, rather than looking to exploit short term commodity price spikes.
Sterling plunged almost 1% lower against the dollar shortly after midday, with the catalyst not immediately clear. Though, this price action did follow comments from Chancellor Phillip Hammond in which he expressed support for the Bank of England’s quantitative easing program. Market sources cited “a shortage of natural buyers on dips amid uncertainty” may have helped prompt the slump. The selloff came ahead of BOE Governor Mark Carney’s remarks to the House of Lords, and after PM Theresa May’s earlier comments pertaining to “bad side effects” of the BOE bond purchasing scheme.
At the close, European indices were mixed with the FTSE 100 +0.45%, the DAX 30 -0.04% and the CAC 40 -0.26%.