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Miners Put a Weight on FTSE 100

Shares in Evraz and Eurasian Natural Resources both fall by more than 3%

Alanna Petroff 20 August, 2012 | 7:10PM

Large miners  weighed down the overall FTSE 100 index on Monday as metal prices declined.

The benchmark FTSE 100 index lost 28 points, or 0.5%, to close at 5,824. The FTSE 250 index also dipped by 0.5% to close at 11,563.

The biggest decliner of the day was Evraz (EVR), which saw its shares fall by just over 4%. Shares in the miner have plunged by over 30% since the start of 2012, while the overall FTSE 100 index has eked out a 4.5% gain. Shares in the miners Eurasian Natural Resources (ENRC), Xstrata (XTA) and Kazakhyms (KAZ) also followed suit and fell by more than 3% each.

To see the day's winners & losers on the FTSE, take a look at Morningstar's Heat Map.

The drop in Xstrata shares comes a day ahead of Glencore’s (GLEN) first-half 2012 earnings results. Glencore is in the process of trying to takeover Xstrata, though the deal has faced some challenges over the last few months.

Morningstar analyst Daniel Rohr outlines what he expects to see in the results:

“Weaker commodity prices will take a big bite out of Glencore’s profits in the mining business, as they have for everyone who digs metals and minerals out the ground. I’d expect investor focus will centre on two issues. First, how is the marketing side of the shop faring amid very turbulent markets? Second, whither Glencore-Xstrata? Tomorrow’s earnings will provide investors an answer on the first question, but management is likely to play it “close to the vest” on the second.”

Looking ahead to market expectations and movements for the rest of the week, there seems to be a hint of caution in the air.

“There does appear to be some nervousness creeping back into markets ahead of this week’s meeting between eurozone leaders,” says David Jones, chief market strategist at IG Index. “If there is one thing we have learned over the last couple of years it is the potential for shocks and surprises these sorts of meetings can generate, as agreement seems hard to come by. With the FTSE 100 having rallied by 10% in the last few months, it wouldn't be unexpected if some felt discretion was the better part of valour and took a bit of risk off the table ahead of the next chapter of the eurozone crisis.”

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article
Security NamePriceChange (%)Morningstar
EVRAZ PLC407.30 GBX-0.42-
Glencore Xstrata PLC380.65 GBX0.70
Kazakhmys PLC924.00 GBX-0.45-
About Author Alanna Petroff

Alanna Petroff  is a financial journalist with Morningstar UK.