MARKET REPORT: FTSE weighed down by miserable mining stocks

Mining stocks weighed on the FTSE 100 as fears of a global economic slowdown sent commodity prices tumbling.

Mexican precious metals miner Fresnillo slumped 8.9 per cent, or 68.8p, to 704.4p, Endeavour Mining fell 7 per cent, or 136p, to 1801p, Glencore dropped 4.4 per cent, or 21p, to 455p, Anglo American lost 4.6 per cent, or 155p, to 3242.5p, Antofagasta slipped 4.5 per cent, or 62.5p, to 1340p, BHP eased 2.9 per cent, or 76p, to 2535p and Rio Tinto shed 2.9 per cent, or 154p, to 5203p.

The sector was not helped by analysts at Deutsche Bank, who cut their target price for Anglo, BHP and Glencore while downgrading Rio to ‘hold’ from ‘buy’.

Investors were concerned that spluttering growth in China, as its economy was disrupted by Covid-19 lockdowns, as well as rising inflation and interest rate hikes across the world, will slam the brakes on global demand for raw materials.

The bleak mood sent the FTSE 100 tumbling 1.6 per cent, or 114.32 points, to 7233.34 and the FTSE 250 sank 0.9 per cent, or 166.27 points, to 19480.88. 

Market sentiment was knocked by bleak GDP data which showed the economy shrank by 0.1 per cent in March as the cost of living crisis began to bite.

The figure was worse than predicted and stoked fears of a looming recession as consumers cut back on spending amid soaring energy bills and tax rises.

Meanwhile, Scottish Mortgage Investment Trust, which counts firms such as Tesla and Amazon among its biggest holdings, tumbled 3.8 per cent, or 30p, to 750.8p.

The fund, a popular choice among investors, has lost nearly 45 per cent of its value so far this year amid growing fears momentum of the high-growth tech sector will be unable to withstand the cocktail of inflation, rising interest rates and geopolitical worries weighing on the global economy.

The decline also meant Scottish Mortgage lost its status as the UK’s largest investment trust, being overtaken by private equity investor 3i Group (down 1.2 per cent, or 15.5p, to 1272.5p).

Stock Watch – Circassia

Circassia shares surged after the firm upgraded its full-year forecasts.

The company, which makes devices to help with the diagnosis and treatment of asthma, said it performed well in the first four months of the year, with revenues in its clinical business up 17pc compared to the same period in 2021.

As a result, Circassia said yesterday that full-year earnings would be ‘materially ahead’ of expectations.

The shares jumped 9.6 per cent, or 3.2p, to 36.4p.

‘Once seen as a superstar vehicle for the world’s next big things in the world of business, Scottish Mortgage has lost its shine big time,’ said AJ Bell investment director Russ Mould.

Other listed funds with exposure to the tech sector and the wider US market also came under pressure. Baillie Gifford US Growth Trust was down 0.7 per cent, or 1.2p, to 162.2p and Allianz Technology Trust slumped 3.1 per cent, or 7p, to 218p. 

Another mid-cap fund, Chrysalis Investments, which has holdings in UK tech firms including ecommerce group THG (up 3.7 per cent, or 3.95p, to 111.85p) and money transfer firm Wise (up 4 per cent, or 12.9p, to 332.7p), also fell 9 per cent, or 12p, to 122p amid mounting investor worries about the sector’s growth potential.

RHI Magnesita, a supplier of equipment for steel foundries, jumped 5.5 per cent, or 124p, to 2366p after it flagged profits in the first quarter of 2022 had been ‘materially higher’ year-on-year.

The firm highlighted ‘robust’ demand for its products in the period and noted that increased costs due to inflation were being passed onto customers.

FTSE 250 landlord Grainger gained 3.1 per cent, or 8.8p, to 289.8p following a strong set of half-year results.

The group reported a 23 per cent rise in rental income in the six months to the end of March, while pre-tax profits more than doubled to £99million.

Drinks bottler Coca-Cola HBC was one of the strongest blue-chip risers yesterday, up 5.6 per cent, or 89p, to 1687p, after it delivered revenue growth of 26 per cent in the first quarter of the year. 

The company was also considering ‘all options’ for its Russian business after suspending activity in the country following the invasion of Ukraine.