FTSE heads for 2016 high but Randgold and Fresnillo fall

Discussion in 'Market News' started by Lily, Mar 18, 2016.

  1. Lily

    Lily Forum Member

    Aug 29, 2015
    Likes Received:
    Gold miners hit as investors move away from defensive sectors

    As leading shares head towards their high for the year and investors tend towards riskier assets once more, precious metals have lost some of their lustre.

    Gold and silver have slipped as their attraction as a safe port in a storm fades, leaving precious metal mining groups lower. So Fresnillo has fallen 23p to 984p while Randgold Resources is down 140p at £65.15, the two biggest declines in the FTSE 100.

    Solid risk appetite into the end of what has been a busy week for central bank updates, and a US dollar off its dovish Fed-inspired 5-month lows, is seeing gold and silver come off their recovery highs (stronger US dollar makes them more expensive for non-dollar buyers).

    A new chief executive does not alter the structural challenges Debenhams faces. Sales, margin and cost focused strategies have all be tried and failed to deliver growth. While Debenhams has self-help opportunities (space optimisation; operating efficiencies and mark down), we expect these to be offset by material wage inflation and margin reinvestment back into differentiating the offer. With little profit growth expected over the medium term, we cut to sell (from reduce). Our target price, based on a 35% sector 2017 PE discount, falls to 67p {from 70p].

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