Miners lead FTSE 100 advance on copper surge
UK equities pushed higher on Friday, supported by a powerful rally in commodity stocks. The FTSE 100 gained ground as copper and spot gold prices hit fresh records, lifting major mining companies to new highs.
Antofagasta led the mining sector advance, reaching levels not seen in years. Fellow copper producers Glencore and Anglo American also benefited from the metal’s relentless climb, which shows little sign of stalling.
The gains came despite headwinds from energy stocks, which faced fresh analyst downgrades. The divergence between sectors highlights the varied fortunes across the index, with commodity exposure proving crucial for overall market direction.
This marks another session where the FTSE 100’s heavy weighting towards materials has worked in investors’ favour. The question now is whether copper’s rally has further to run, or if profit-taking will finally emerge.
Copper prices target $13,000 as supply concerns mount
Copper’s surge towards record territory has caught the attention of major investment banks. Citi analysts now forecast prices to average $13,000.00 a tonne next year, a bullish call that reflects growing supply concerns.
The industrial metal has benefited from multiple tailwinds. Demand expectations for electrification and infrastructure projects remain robust, while supply disruptions have tightened the market more than anticipated.
Gold has joined the commodity rally, reaching fresh all-time highs. This has provided additional support to diversified miners with exposure to precious metals, amplifying gains across the mining sector.
For traders, the key question is whether these price levels are sustainable. History suggests commodity rallies can reverse sharply when sentiment shifts, making risk management crucial for those chasing momentum.
Energy majors drag despite Shell’s relative strength
BP and Shell faced renewed pressure after analyst downgrades, weighing on the FTSE 100’s performance. The energy sector continues to struggle with weak sentiment around oil demand and refining margins.
However, analysts highlighted Shell’s relative resilience compared to its peers. The company’s integrated model and focus on shareholder returns have helped it weather sector headwinds more effectively than some competitors.
The divergence within the energy sector mirrors broader market themes. Companies with strong balance sheets and clear strategies are holding up better, while those facing structural challenges continue to underperform.
Energy stocks remain one of the FTSE 100’s weakest areas this year. The sector needs either a sustained oil price rally or a significant shift in sentiment to reverse its fortunes.
Ocado surges on Kroger payment despite closures
Ocado jumped sharply after securing a $350 million one-off payment from Kroger, providing a welcome boost to the online grocer’s shares. The payment relates to the companies’ partnership agreement and offers near-term financial support.
However, the positive news came alongside confirmation of multiple fulfilment-centre closures. This highlights the ongoing challenges Ocado faces in balancing growth ambitions with operational efficiency and profitability.
The share price reaction suggests investors are focusing on the immediate cash injection rather than longer-term structural concerns. Whether this proves wise depends on Ocado’s ability to demonstrate sustainable profit growth.
Elsewhere in retail, Greggs climbed following a bullish broker upgrade. The bakery chain’s shares remain sharply lower for the year, but analysts see value emerging at current levels after recent weakness.
Big Yellow pulls back after Blackstone talks end
Big Yellow Storage ended takeover discussions with Blackstone, sending shares lower. The collapse of talks removes the bid premium that had supported the stock, disappointing those hoping for a deal.
The property sector continues to face challenges from higher interest rates and uncertain economic conditions. Self-storage has proven more resilient than some other property subsectors, but valuations remain under pressure.
Halifax reported a slowdown in UK house-price growth, with regional divergence becoming more pronounced. London prices slipped, while some northern regions showed more resilience, reflecting varied local economic conditions.
The housing market data adds to evidence of a cooling property sector. For property stocks, the outlook remains challenging until interest rate expectations shift decisively lower or economic growth accelerates.
Sterling strengthens as dollar weakness persists
Sterling is on track for a second consecutive strong weekly gain against the US dollar. The pound has benefited from dollar weakness rather than domestic UK strength, but the result is the same for traders.
Gilt yields have remained relatively steady, suggesting bond markets are comfortable with current pricing. There has been no repeat of the volatility seen earlier in the year, which is positive for broader market stability.
The currency moves reflect expectations around central bank policy. Markets are pricing in a Federal Reserve (Fed) rate cut next week, which continues to weigh on the dollar across major pairs.
For UK-focused investors, the stronger pound has both positive and negative implications. It benefits those with overseas earnings but weighs on the translated value of international revenues for FTSE 100 companies.
Global markets await US inflation data
European markets pushed higher for a fourth consecutive session, led by miners and industrials. The advance came ahead of key US inflation data, which could influence expectations for next week’s Federal Reserve meeting.
Asian markets also climbed overnight, maintaining the positive global tone. Equities remain supported by expectations of looser monetary policy, even as some question whether rate-cut expectations have become too aggressive.
The market’s current positioning reflects confidence that inflation is under control and central banks will ease policy further. However, this leaves little room for disappointment if data surprises to the upside.
Looking ahead, traders will focus on US inflation figures and any hints about the Fed’s intentions. A hawkish surprise could quickly reverse recent gains, highlighting the importance of remaining nimble in current conditions.
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