BRITAIN’S blue-chip share index set a record high yesterday as mining stocks rallied with firmer metals prices, outpacing weakness in shares such as Weir Group.
The UK mining index gained 2.2 per cent as copper hit a two-month high, driven by a weaker dollar on expectations the US Federal Reserve will stay accommodative for the near term. Global miner BHP Billiton rose 2.6 per cent. Glencore was up 2.4 per cent.
Asia-focused Standard Chartered was the top FTSE 100 performer and its 6.5 per cent rise yesterday took gains to more than 20 per cent since mid-March on the back of a weaker dollar and positive broker comments, with Citi and JP Morgan becoming the latest to upgrade the bank.
“In a sense both the move higher in Standard Chartered and the commodity complex were triggered by the loss of strength in the US dollar,” Jasper Lawler, analyst at CMC Markets, said.
“Emerging markets stand to fare a lot better with a weaker dollar, helping StanChart who specialise in the region, whereas commodity prices tend to rise as the dollar falls, which helps mining and oil companies.”
However, engineering company Weir Group fell 2.2 per cent to 1,801p after RBC downgraded it to “sector perform” from “top pick”, and cut its price target to 1,850p from 2,150p.
The benchmark FTSE index ended 0.2 per cent higher at 7,037.67 points, a new life-time peak.
The index rose for a sixth straight session yesterday and has gained nearly seven per cent this year.
The market has been spurred by official comments that have led investors to push back the timing of their expectations for US and UK rate rises.
However investors traded cautiously, seeing several equity indexes in Europe near their multi-year peaks as vulnerable to profit-taking.
“We are nervous of buying into a rally that is less about improved corporate earnings forecasts, and more about delving into the tea leaves of statements from the US Fed,” deVere Group international investment strategist, Tom Elliott, said.
Highlighting earnings risks, Deutsche cut cruise-operator Carnival to “hold” from “buy” ahead of results due on 27 March, saying currency volatility could affect earnings. Its shares fell 1.6 per cent.
“With only five per cent upside to our £34 price target we move our recommendation to hold,” Deutsche Bank analysts said in a note.