By Patrick Munnelly, Market Strategist, Tickmill
On Friday, the UK’s FTSE 100 saw an increase as energy stocks rose on higher crude oil prices. The blue-chip index rose 0.5% on the day, reaching its highest level since October 19th.
Anglo American performance update disappoints
On the negative side of the ledger Anglo American LON:AAL is experiencing a decline in its stock as the mining company predicts a $1.8 billion reduction in capital expenditure by 2026. The company’s shares have dropped by over 18%, making it the biggest faller on the FTSE 100 index. Anglo American plans to implement spending cuts across all its units in order to achieve the capex reduction. Additionally, the company anticipates a decrease in production of approximately 4% in 2024 and a further decrease of around 3% in 2025. It also expects to identify an additional $500 million in annual cost efficiencies across its global businesses by 2024. The company has already made progress in reducing its business support costs by $0.5 billion by mid-2024. As part of its strategy, Anglo American will reduce production at its South African unit, Kumba Iron Ore, and focus on higher-margin production for its platinum group metals operations.
Year-to-date, the company’s shares have declined by 31.3%.
RBC downgrades Imperial Brands
Imperial Brands LON:IMB, the maker of Winston cigarettes, saw its shares slip by 2%, placing the stock among the top percentage fallers on Friday. RBC downgraded the stock to “sector perform” from “outperform” and reduced the target price to 1,800p from 2,200p. RBC believes that an expected share buyback announcement would negatively impact the stock. The company’s business model, which relies on strong pricing power to offset declining volumes, could be affected if there is a deterioration in pricing power or a decline in volumes. RBC also noted that changes in tobacco regulations would harm the share price performance. The shares are down 12.2% year-to-date, including session moves.
Antofagasta the pick of diversified miners according to Citi
On the positive side of the ledger, according to Citi analysts the top investment prospects for next year in the metals and mining industry are diversified miners such as Antofagasta within the European market, rather than base or precious metals. This was announced on Thursday and led investors to allocate capital to the companies shares leaving it top of the blue chip index heading into the close with shares up 4.2%, Citi believe that while they generally recommend copper exposure through diversified miners, they also find Antofagasta appealing because it is considered a pure-play in the copper industry and has the potential for a volume recovery.
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