By Samuel Indyk
Investing.com – The FTSE 100 closed 1.3% lower on Wednesday with miners dragging down the index. The FTSE 350 Mining sub index was the worst performing, falling by over 4%. The catalyst for the decline appeared to be a production update from Fresnillo PLC (LON:FRES) who reported a full-year decline in production and anticipate a further decrease in the coming year.
FRESNILLO
Fresnillo primarily mines precious metals and said that FY silver production was down 2.9%. FY attributable gold production was down 12.1% driven primarily by a lower volume of ore processed at Herradura as a result of Covid-19 working restrictions. Looking forward, the FTSE 100 miner also forecast a decline in gold production in FY21 mainly due to a minor land slip at Noche Buena which has limited access to deeper areas of the pit, thus changing mining sequencing. At the close, Fresnillo shares were down 13.0% at £9.27.
Other mining companies fell in sympathy with Fresnillo with Glencore PLC (LON:GLEN) down 5.6%, Anglo American PLC (LON:AAL) down 6.2% and Rio Tinto PLC (LON:RIO) down 2.9%.
MELROSE INDUSTRIES
Melrose Industries PLC (LON:MRON) shares fell 1.5% after Sky News reported the industrials company was reviving plans to sell its Nortek air conditioning unit in a transaction that could be valued at more than $3.5B. They had originally planned to sell the unit at the beginning of 2020 but had to shelve the plans after the outbreak of Covid-19.
PEARSON
Pearson PLC (LON:PSON) was the best performer in the FTSE 100 with shares closing higher by 14.0%. The company is a heavily shorted stock in the FTSE 100 and the rally echoed what has been in happening across the pond with companies such as GameStop (NYSE:GME) and BlackBerry Ltd (NYSE:BB). Pearson has issued multiple profit warnings recently amid the shift to online learning, but shares hit their highest level since July 2019 as the squeeze continued.
Two of the bigger funds that were shorting GameStop have now closed their positions, both experiencing losses. Citron Research’s Andrew Left confirmed he had closed his position in a YouTube video, while CNBC reported that Melvin Capital had closed their position on Tuesday.
STERLING
The pound traded mixed against the USD and the EUR. GBP/USD fell after earlier touching its highest level since early 2018 at 1.3760. However, GBP rose against the EUR as the differing speeds of vaccinations between the UK and the single currency bloc could see economies diverge in the coming months. At 16:30, EUR/GBP was trading 19 pips lower at 0.8830.
LOOKING AHEAD
There’s a busy schedule for the rest of the day with the Federal Reserve set to announce their interest rate decision at 19:00GMT, followed by a press conference from Fed Chair Powell 30 minutes later. No changes to monetary policy are expected. Elsewhere, earnings from tech giants Apple Inc (NASDAQ:AAPL), Facebook Inc (NASDAQ:FB) and Tesla Inc (NASDAQ:TSLA) are due after the market close in the US, following strong earnings from Microsoft (NASDAQ:MSFT) yesterday.