Going into the last few minutes of trading, it looks to be a slightly positive finish for the London market.
It has been something of a choppy day today with the main company news focused on the mining sector. The announcement from BHP Billiton that it was dropping its bid for fellow miner Rio Tinto is maybe not too surprising in the current environment, considering the punishment that mining share prices and commodities have taken in recent months. It sent the share price of Rio sharply lower – briefly back down to levels not seen since late 1994.
With the exception of BHP, other miners also remained under pressure for most of the day and although these companies are trading at a significant discount to where they were in the summer, investors still seem to be shying away from the sector as a whole. With commodity prices struggling to hold onto any rallies for anything but a few days, and a global slowdown continuing to impact on demand, it is difficult to come up with convincing story that the worst is behind these stocks, despite the recent massive slides.
Back to the broader market, today saw the FTSE 100 briefly back above the 4200 mark but momentum has started to wane. We should be used to this by now – there have been many impressive rallies all the way through this year but they have ultimately come to nothing when it comes to turning the year long slide around. Despite Tuesday’s record-breaking gains in London, it is starting to look as though traders are banking profits from this and buckling up for the next move lower. The UK index is still trading almost 20% lower than where it was at the beginning of October and there are plenty of hurdles on the upside still to be cleared before we can even start to think the bear market is running out of steam. It would not be surprising to see the FTSE take another trip below the 4,000 mark before the week is out.
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