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FTSE rises but miners mixed, with Anglo American sparkling but Fresnillo falling

Discussion in 'Market News' started by Lily, Mar 1, 2016.

  1. Lily

    Lily Forum Member

    Aug 29, 2015
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    Investors shrug off poor Chinese data, while Anglo boosted by strong diamond sales

    Leading shares have started the month on a positive note despite some mixed company news and poor manufacturing data from China.

    Mining shares are having a mixed time, however. Anglo American has added 20.15p to 500.4p after positive news on diamond sales from its De Beers’ subsidiary. Rough diamond sales for the second sales cycle rose to $610m from $545m in the first cycle. De Beers chief executive Philippe Mellier said:

    Retailer restocking after the end of year holiday season is supporting demand for polished diamonds and in turn, we are seeing improved demand...for rough diamonds. However, we remain mindful of the need for a cautious approach as the recovery continues.

    Ashtead generates the bulk of its profit in US non-residential construction markets where conditions remain favourable - for now. However, the market is clearly worried about a potential US slowdown. Ashtead’s plans to cut back capital expenditure and reduce leverage are sensible in this context, but do little to allay investors’ concerns of tougher times ahead.

    The margin performance in the UK is materially better than we had expected and this appears to be long-term fundamental as opposed to a short-term boost. There is a lot of noise around the delivery market and whilst there are risks, we believe these have been overplayed in the short term. Given the margin surprise and recent share price weakness, we move to add from hold.

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