By Patrick Munnelly, Market Strategist, Tickmill
The FTSE 100 in the UK began the trading day on Thursday with a positive start. This upward momentum was fueled by U.S. inflation data that strengthened the expectation that the Federal Reserve would maintain its current interest rates during the upcoming week.
Additionally, the European Central Bank’s (ECB) rate decision, which the market interpreted as a dovish hike, further contributed to the surge in the FTSE 100, resulting in a remarkable gain of 1.95% by the close.
FTSE 100 biggest movers
Anglo American LON:AAL +7.7% and Rio Tinto LON:RIO +4.7 have seen their stock prices rise due to positive developments in the mining industry.
London’s industrial metal mining index has surged by 4.3%, driven by a rally in iron ore prices.
Brokerage firm J.P. Morgan raised its price targets for both Anglo American AAL and the London-listed shares of Rio Tinto in response to these developments.
Iron ore futures traded in Singapore recently reached $121.13 per metric ton, marking the highest level since April 11 and representing a notable increase of 17.4% from the recent low observed on August 3. J.P. Morgan’s price target for Anglo American (AAL) was raised to 2900p from 2650p. Consequently, (AAL) has become the top gainer on London’s FTSE100 index.
J.P. Morgan’s analysis suggests that the iron ore market is relatively more balanced in the medium term, thanks to supportive fundamentals in China, which is the world’s largest consumer of this crucial steel raw material.
The brokerage firm has also raised its iron ore price forecasts for 2023-2025 to $117/t, $110/t, and $105/t, representing increases of 6%, 13%, and 17%, respectively.
Rio Tinto saw its shares rise after J.P. Morgan raised its price target on the stock to 6,000p from 5,400p. J.P. Morgan’s assessment highlights the resilience of China’s steel demand, which has been supported by a growing infrastructure market that has offset weakness in the property sector.
Additionally, excess steel production has found its way into the export market.
It’s important to note that, as of the last close, Anglo American has seen a year-to-date decline of 31.46%.
On the negative side of the ledger Entain LON:ENT sits at the bottom of today’s table, falling 0.9% by the close,
HSBC has reduced its target price for Entain following what it describes as an “anaemic” first half performance by the gambling company.
Despite this adjustment, HSBC maintains its ‘buy’ rating for Entain’s stock with the target price lowered from 1,830p to 1,540p.
However, this revised target still indicates a substantial potential upside from the company’s current share price.
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