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Miners lift UK's FTSE 100 to new 20-month highs, Burberry slides

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By Reuters
Banks, miners lift UK blue-chip stocks; retail drags
Banks, miners lift UK blue-chip stocks; retail drags   -   Copyright  Thomson Reuters 2021

By Bansari Mayur Kamdar

-UK’s blue-chip index hit fresh 20-month highs on Thursday as miners bounced on relief that property developer China Evergrande averted a default, although a slew of disappointing updates from retailers cast gloom on the sector.

Luxury brand Burberry fell 5.0% after it said sales flatlined in the second quarter due to bad weather and COVID-19 travel restrictions in China, taking the shine off the fashion brand’s better-than-expected profit. [nL8N2S23SN]

Discount retailer B&M dropped 5.5% after posting lower first-half core earnings. [nL8N2S22H6]

The FTSE 100 index still ended 0.6% higher, helped by China-exposed mining stocks, after China Evergrande averted a destabilising default at the last minute for the third time in the past month. Precious metal miners added 3.8%.

“Rising commodity prices have helped the FTSE 100 to a new post-pandemic peak, shrugging off a turn lower for Burberry,” said Chris Beauchamp, chief market analyst at IG.

Data showed Britain’s economy grew by 0.6% in September, beating estimates and gaining some steam at the end of the third quarter, but estimates for previous months were revised lower.

“The uptick is because with sluggish growth amid higher inflation, there are expectations that BoE won’t raise rates in really quick succession,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

In comparison to its European and U.S. peers, the FTSE 100 has underperformed in post-pandemic recovery this year, hurt by global supply chain problems, surging energy prices, post-Brexit shortages of labour and inflationary worries.

Oil major BP fell 0.8% after it and Norway’s Aker jointly sold a 5% stake in Norwegian oil firm Aker BP, cutting their combined holding in the company to 65%.

Johnson Matthey tumbled 18.6% after announcing plans to exit its battery materials business and the departure of its chief executive. [nL4N2S22CY]

Online car marketplace Auto Trader Group Plc was the top gainer on the FTSE 100, surging 14.3%, after it reported its highest ever half-year revenue and profit.