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LONDON MARKET PRE-OPEN: Fresnillo silver production misses forecast

Wed, 26th Jan 2022 07:56

(Alliance News) - Stock prices in London are seen opening higher on Wednesday, shaking off another slump for US technology stocks, as investors look ahead to interest rate decisions from the US Federal Reserve and Bank of Canada.

In early company news, Mexican precious metals miner Fresnillo said production for 2022 is likely to take a hit. Contract-for-difference provider CMC Markets expressed confidence in its prospects. The UK Competition & Markets Authority cast its eye over the merger between bus and train operators Stagecoach and National Express.

IG futures indicate the FTSE 100 index is to open 74.84 points higher at 7,446.30. The blue-chip index closed up 74.31 points, or 1.0%, at 7,371.46 on Tuesday.

Fresnillo said it saw a "creditable" performance during the year, with silver production marginally short of guidance, but gold production exceeding expectations.

For 2021, Fresnillo delivered attributable silver production of 53.1 million ounces, which was below guidance of 53.5 million to 59.5 million ounces. The company said output was below guidance due to lower grade and less ore at the Saucito and Fresnillo mines.

Fresnillo reported 2021 gold production of 751,200 ounces, down 2.4% on 2020 but ahead of guidance of 675,000 to 725,000 ounces of gold. It attributed lower gold production to lower ore grades at Cienega and at San Julian Veins.

Looking ahead, Fresnillo forecasts 50.5 million to 56.5 million ounces attributable silver - including Silverstream - in 2022. Fresnillo also guided for 600,000 to 650,000 ounces attributable gold production in 2022. Both are down on 2021.

Fresnillo said the 2022 guidance issued is in light of the ongoing and new operational challenges caused by the virus pandemic and its resulting effects on workforce availability, as well as the implementation of the new labour laws that limit use of contractors.

"As we reported in our third-quarter update, we had anticipated a certain level of impact on production as a result of these factors in both fourth quarter and first quarter, though we are now likely to see a greater impact in the earlier part of the year than previously expected," Fresnillo said.

Investment manager M&G said it was partnering with digital investment firm Moneyfarm to provide direct investment services to UK consumers.

M&G Wealth, its UK wealth management arm, will use Moneyfarm technology to create a new direct digital service tailored to meet a range of customer risk appetites and profiles through a collection of multi-asset model portfolios, backed by a selection of actively-managed and passive funds.

Moneyfarm will deliver the operating models, including dedicated "squads" to support the technology platform and customer relationship management, together with custody and trading services, M&G explained.

M&G will invest for a minority stake in MFM Holding, and the two companies will explore opportunities to partner in other European wealth markets as well.

CMC Markets said it delivered a sustained performance across both leveraged and non-leveraged operations in the third quarter.

For the three months to December 31, CMC said client money and assets under administration in leveraged and non-leveraged businesses were close to record highs. Monthly active client numbers across both leveraged and non-leveraged businesses remained at similar levels to those in the first half.

CMC Markets said it was confident in achieving full-year net operating income of GBP250 million to GBP280 million.

The UK Competition & Markets Authority has served an initial enforcement order in relation to the planned merger between National Express and Stagecoach.

Noting the announcement, Stagecoach said the CMA indicated that the purpose of the order is to maintain the businesses in their current shape whilst it commences its review of the merger.

As such, the order will delay completion of the proposed sale of the marketing, retail and customer service activities of Stagecoach's inter-city coach businesses to ComfortDelGro Corp beyond February 28.

Stagecoach said that both its board and that of National Express continue to believe the Stagecoach inter-city coach business sale represents a "comprehensive solution" to any competition concerns that might arise from their overlapping coach operations. Stagecoach added that it will engage with the CMA to allow the Stagecoach inter-city coach sale to complete as soon as possible.

Wednesday's economic calendar is headlined by an interest rate decision from the US Federal Reserve at 1900 GMT and press conference with Chair Jerome Powell at 1930 GMT. Ahead of that, the Bank of Canada's announces policy at 1500 GMT.

In the US on Tuesday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.2%, S&P 500 down 1.2% and Nasdaq Composite down 2.3%.

In Asia on Wednesday, the Japanese Nikkei 225 index closed down 0.4%. In China, the Shanghai Composite ended up 0.7%, while the Hang Seng index in Hong Kong was down 0.1%. Financial markets in Sydney were closed on Wednesday for Australia Day.

The US and its allies are preparing for a possible reduction in Russian gas supplies to Europe in case of an escalation in the Ukraine conflict.

"We are working with countries and companies around the world to ensure the security of supply and to mitigate price shocks affecting both the American people and the global economy," a senior US government official said in Washington on Tuesday.

"We are just in discussions with major natural gas producers around the globe, to understand their capacity and willingness to temporarily surge natural gas output, and to allocate these volumes to European buyers."

The government official pointed out that gas has been stored in storage facilities in Europe for several weeks. Efforts were aimed at providing a replacement within days or weeks, not months, in the event of a reduction or loss of Russian supplies.

The pound was quoted at USD1.3502 early Wednesday, up from USD1.3491 at the London equities close Tuesday.

The euro was priced at USD1.1298, higher against USD1.1279. Against the yen, the dollar was trading at JPY113.93, unmoved from JPY113.92.

Brent oil was quoted at USD88.31 a barrel on Wednesday morning, up from USD87.57 late Tuesday. Gold stood at USD1,849.07 an ounce, slightly higher against USD1,846.58.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

Copyright 2022 Alliance News Limited. All Rights Reserved.

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