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FTSE falters but Coca-Cola Hellenic and Sky boosted by brokers

Discussion in 'Market News' started by Lily, Jul 19, 2016.

  1. Lily

    Lily Forum Member

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    Investors cautious with mining shares hit by disappointing Rio Tinto update

    Leading shares have paused for breath amid continuing geopolitical concerns, after Monday’s boost from the proposed £24bn takeover of ARM by Japan’s Softbank.

    As UK inflation came in higher than expected, giving a lift to the pound, the FTSE 100 has slipped 24.18 points to 6671.24.

    The FTSE’s mining contingent is on the back foot this morning, holding the UK blue-chip index back after Rio’s second quarter production report delivered iron-ore shipments below analyst expectations, albeit still higher than both the first quarter of 2016 and the second quarter of 2015. Management has been fortunate to be able to reiterate 2016 production guidance thanks to limited weather impact, operational efficiencies and ramp-ups/roll-outs, however, its pledges of compelling and consistent returns are falling on deaf ears.

    This is because investors are focusing on a strong US dollar hindering a the commodity space recovery as the US Fed looks to hike rates and peers look to do quite the opposite. Low/negative interest rates and the prospect of more monetary and fiscal stimulus from major central banks (Oz and NZ on top of BoE, ECB, BoJ) suggests flagging faith in a growth revival to counter a slowing China and a potential race to the bottom generating another round of currency wars that simply serves to send the dollar even higher. To the detriment of key raw material prices.

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