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FTSE 100 Live: Stocks climb, BAT falters after chunky write-down

Published Dec 06, 2023 10:26 Updated Dec 06, 2023 10:40
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© Reuters. FTSE 100 Live: Stocks climb, BAT falters after chunky write-down
 
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Proactive Investors -

  • FTSE 100 up 21 points at 7,511
  • BAT (LON:BATS) takes £25 billion write-down, sees low-end revenue
  • TUI (LON:TUIT) profit jumps, mulls London delisting

Upbeat Rio Tinto lifts miners

Mining stocks are in demand after positive comments from Rio Tinto which is hosting an Investor Seminar in Sydney today.

Rio Tinto (LON:RIO) Chief Executive Jakob Stausholm said: "We strongly believe we are well positioned in an opportunity rich world.”

“There has never been greater demand for what we do, from mining to processing, and the work we are doing today is creating a stronger Rio Tinto for years to come.”

Rio said total copper equivalent commodity demand growth of around 4% CAGR is expected between 2022 and 2035 and its share of capital investment is expected to be around $10 billion per year from 2024 to 2026, including up to $3 billion per year of growth investment to meet this demand.

AJ Bell’s Russ Mould noted Stausholm also briefed investors that Chinese steel mills were ‘producing flat out’.

“This is good news for iron ore producers like Rio, with the patchy recovery in China a big reason why the mining sector has had a difficult time in 2023,” he said.

“Rio also announced big spending plans. Along with signs of burgeoning M&A elsewhere in the sector, any excitement felt by investors at the growth potential may be tempered by concerns the industry is losing some of the discipline it has demonstrated in recent years,” he suggested.

UK construction sector remains under the cosh

The UK construction sector contracted for the third consecutive month during November, led by another sharp fall in residential building, a survey showed on Wednesday.

The headline S&P Global/CIPS UK Construction PMI registered 45.5 in November, down fractionally from 45.6 in October and the second-lowest reading since May 2020.

The report showed that house building (index at 39.2) remained by far the weakest-performing segment, followed by civil engineering (43.5) reflecting cutbacks to residential development projects and a general slowdown in activity due to unfavourable market conditions.

Commercial building showed some resilience (index at 48.1), but this category has now decreased for three months in a row.

Elevated borrowing costs and subdued demand for new housing projects held back construction activity although the survey pointed to the steepest reduction in purchasing costs across the construction sector for more than 14 years.

This was linked to lower raw material prices, alongside greater competition among suppliers in response to falling demand for construction inputs.

Ocado firms on JPMorgan upgrade

Ocado Group PLC (LON:OCDO) which enjoys a volatile life in the FTSE 100 is up more than 3% today following an upgrade by JPMorgan (NYSE:JPM) to ‘neutral’ from ‘sell’.

The investment bank sees a brighter outlook for the European internet sector in 2024 based on improvements in profitability and cash flow, an expected fall in bond yields and increased M&A activity.

“Having favoured the high margin, low debt (often net cash) names in the online classifieds sector in the past two years, we now turn our sector preference towards names with strong earnings momentum, higher leverage & scope for M&A,” the bank said.

As a result, the bank ha upgraded Ocado and increased its price target to 600p from 400p.

It kept Trainline at 'overweight' and THG (LON:THG) and Auto Trader at ‘underweight’.

TUI delisting would be a major blow to London

TUI is enjoying a better day with shares up 6.5% after its results plus news that it is considering delisting its shares in London.

Victoria Scholar at interative investor said news that Europe’s largest travel operator is considering delisting from the London Stock Exchange to focus on its Frankfurt listing instead would be a major blow to London.

She pointed out the London Stock Exchange has been grappling with an exodus of companies as well as the weak performance for London-listed stocks.

Read more on Proactive Investors UK

Disclaimer

FTSE 100 Live: Stocks climb, BAT falters after chunky write-down
 

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