MARKET REPORT: Rio Tinto slashes its divi as miners suffer sell-off

Miners bore the brunt of a stock market sell-off as Rio Tinto slashed its dividend and commodity prices drifted lower.

With renewed worries about rising interest rates on investors’ minds, the FTSE 100 fell 0.59 per cent, or 47.12 points, to 7930.63 while the FTSE 250 slid 0.86 per cent, or 170.56 points, to 19680.29.

Rio more than halved its dividend payment to shareholders.

Investors will get $4.92 per share for 2022 – down 53 per cent from 2021’s record payout of $10.40 a share.

The miner reported a 13 per cent slide in annual revenues to £46billion and a 40 per cent slump in profits to £15billion as it was hit by weaker iron ore and copper prices, and a slowdown in demand from China.

Russ Mould, investment director at AJ Bell, said: ‘Having enjoyed a boom in 2021, a pullback in commodity prices in 2022 has led to a big drop in both earnings and the dividend.

‘What happens next is more important, a reopening of the Chinese economy should in theory lead to a rise in commodity demand, helping to offset any potential weakness in other parts of the world.’

Like Rio, Antofagasta this week cut its dividend by nearly 60 per cent after a steep drop in profits.

Shares in Rio fell 3.6 per cent, or 221p, to 5983p, while Antofagasta was down 2.8 per cent, or 48p, to 1674p. Glencore slid 1.8 per cent, or 9.2p, to 494.1p and Anglo American dropped 2.2 per cent, or 68.5p, to 3085.5p.

In Europe, the main benchmark in Germany was up 0.01 per cent but France’s Cac fell 0.13 per cent. US markets were more positive a day after Wall Street recorded its worst performance of the year amid fears of more rate hikes.

Stock Watch – Angling Direct

Angling Direct was upbeat as it geared up for the start of the UK’s fishing season.

The fishing tackle retailer expects to meet market forecasts of at least £2.2million of profit for the year to January 31.

This is despite the group making a loss on the European distribution centre it launched in March last year. Group sales rose 2.2 per cent to £74.1million in the year to January 31.

It was driven by robust store sales which rose nearly 7 per cent to £41.3million in the period. Shares rose 3.4 per cent, or 1p, to 30.5p.

The Dow Jones Industrial Average rose 0.28 per cent while the S&P 500 was up 0.05 per cent. But the Nasdaq was down 0.3 per cent.

Victoria Scholar, head of investment at Interactive Investor, said: ‘It looks like inflation and interest rates will be a major determinant of price action in the months ahead as central banks continue to try to keep a lid on price levels.’

Oil drifted lower towards $82 a barrel amid demand concerns. It sent BP down 2 per cent, or 10.9p, to 539.4p while Shell slid 1.5 per cent, or 36p, to 2449.5p.

Among mid-cap stocks, Serco pushed back its date to publish results for 2022 after auditing delays at KPMG. The outsourcing giant will post an update on February 28 rather than today. Shares fell 1 per cent, or 1.6p, to 151.8p.

Gooch & Housego warned its higher wage bill and supply chain costs would hit annual profits.

The maker of parts for satellites, medical devices and the manufacturing sector said it would pass on price rises but overdue orders would mean delays in recovering such costs. Shares fell 5.4 per cent, or 30p, to 523p. 

Meanwhile, Just Group rose 2.7 per cent, or 2.3p, to 86.9p after Jefferies raised the retirement insurer’s target price to 120p from 115p.

At its annual general meeting, language services group RWS Holdings said it was on track to meet forecasts of £779.2million in revenue and £133.3million of profit. Shares fell 2.6 per cent, or 9.4p, to 357.8p.

Property services firm Kinovo won a £12million contract over five years with existing client Hyde.

The deal will see Kinovo check electricity and safety at the housing and care provider’s domestic and communal properties. Shares rose 7 per cent, or 2.5p, to 38p.

Elsewhere, Seeing Machines posted record interim results after an 11 per cent rise in vehicles fitted with its safety monitoring technology.

The Australian-based group aims to prevent driving-related deaths by installing cameras in vehicles that can detect if a motorist is tired. 

It expects revenue to rise by 54 per cent to £20.23million for the six months to the end of December. Shares rose 0.8 per cent, or 0.1p, to 7.5p.