LONDON MARKET OPEN: Antofagasta Falls After Slashing Dividend

(Alliance News) - Stock prices in London opened lower on Thursday following a sobering economic assessment ny the US Federal Reserve, while Antofagasta sank after slashing its dividend.

The US central bank reiterated, in the minutes of its most recent Federal Open Market Committee meeting, that the path of the US economy will depend significantly on the course of the coronavirus which continues to rage across the country.

In the minutes, released Wednesday, the Fed said its members observed that "uncertainty surrounding the economic outlook remained very elevated".

The central bank said: "Several risks to the outlook were noted, including the possibility that additional waves of virus outbreaks could result in extended economic disruptions and a protracted period of reduced economic activity.

"In addition, members agreed that the ongoing public health crisis would weigh heavily on economic activity, employment, and inflation in the near-term and was posing considerable risks to the economic outlook over the medium term."

In London, the blue-chip FTSE 100 index was down 68.55 points, or 1.1%, at 6,043.43. The mid-cap FTSE 250 index was down 40.99 points or 0.8% at 17,442.40, and the AIM All-Share index was down 0.2% at 958.94.

The Cboe UK 100 index was down 1.2% at 601.69. The Cboe 250 was down 0.7% at 14,977.68, and the Cboe Small Companies was flat at 9,649.53.

In mainland Europe, the CAC 40 index in Paris was down 1.4%, while the DAX 30 in Frankfurt was 1.2% lower.

In the FTSE 100, InterContinental Hotels Group was the best performer, up 2.6% after French newspaper Le Figaro reported on its website that peer Accor was examining a merger with the Crowne Plaza and Holiday Inn chain owner.

A potential merger would topple US chain Marriott International from its position as the world's largest hotel operator.

Accor shares were up 1.9% in Paris.

CRH was up 1.0% after the Irish building materials firm maintained its dividend, despite reporting a drop in interim profit.

CRH reported a USD518 million pretax profit for the six months ended June 30, down 28% from USD717 million a year before.

A dividend of 22.0 US cents per share was declared for the interim period, maintained from a year before.

Going forward, third-quarter Ebitda is expected to align with the previous year, while visibility into the fourth quarter and 2021 is "limited". CRH said it will focus on improving its profitability, margins and cash.

At the other end of the large-cap index, Evraz was the worst performer, down 5.3% after the stock went ex-dividend, meaning new buyers no longer qualify for the latest payout.

M&G was down 5.2% after Deutsche Bank downgraded the investment manager to Hold from Buy.

Antofagasta was 4.9% lower. The Chilean copper miner slashed its interim dividend by 42%, as first-half earnings took a hit from a drop in copper prices as a result of the coronavirus crisis.

Antofagasta also warned that 2020 copper output will be at the lower end of its original 725,000 to 755,000 tonnes range, and only if no Covid-19 related shutdowns occur during the rest of the year.

For the half-year ended June 30, revenue fell 15% to USD2.14 billion from USD2.53 billion last year as a result of lower realised copper prices and sales volumes, partially offset by the increase in the realised gold price.

First-half pretax profit fell by 49% to USD387.5 million from USD763 million.

In Asia on Thursday, the Japanese Nikkei 225 index ended 1.0% lower. In China, the Shanghai Composite closed down 1.3%, while the Hang Seng index in Hong Kong is down 2.0%.

The pound was quoted at USD1.3088 early Thursday, down from USD1.3190 at the London equities close Wednesday.

On Tuesday, the European Union reiterated that a post-Brexit trade agreement between the UK and the EU must be achieved "in October at the latest", as talks continue.

A spokesman for the EU Commission said the EU wants an "ambitious and fair partnership with the UK", but a deal must be achieved by the end of October for it to be ratified in time.

The euro was priced at USD1.1838, down from USD1.1896. Against the yen, the dollar was trading at JPY106.07, up from JPY105.73.

In commodities, Brent oil was quoted at USD45.01 Thursday morning, lower than USD45.26 a barrel Wednesday evening. Gold was trading at USD1,944.35 an ounce, down from USD1,958.00.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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