The FTSE 100 dipped on Tuesday as AstraZeneca weighed on the index after announcing disappointing developments for a lung cancer drug.
Due to the heavy weighting of AstraZeneca, the largest London-listed stock by market cap, its 4% drop offset the positivity in JD Sports, a jump in precious metals miners, and a mild rebound in the housebuilders. Weakness in diversified miners also dragged on the FTSE 100.
“The FTSE 100 went into reverse on Tuesday, despite some modest gains in the US overnight,” said AJ Bell investment director Russ Mould.
“The move hints at some lingering nervousness in the market after an up and down period for global stocks since the start of August.
The softer session in Europe follows an encouraging instalment from US equities overnight, where the S&P 500 broke a four-day losing streak.
“Last week was tough, with both the S&P 500 and Nasdaq down 4.25% and 5.89%, respectively, but given the lack of any real catalysts, investors are clearly seeing this weakness as an opportunity to buy the dip,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.
“US inflation data out on Wednesday is going to be the main focal point of the week, and probably the only thing that could shift the market view on how bold the Fed will be at next week’s rate meeting, where a 0.25% cut is the current best guess.”
Precious metals miners rally
After JD Sports, precious metals miners Fesnillo and Endeavour Mining were the top risers as investors jumped in on hopes that Centamin’s takeover could signal broader interest in London’s few major precious metals miners.
“A takeover of Centamin represents the end of an era for mid and large-cap gold miners on the UK stock market,” Russ Mould said.
“Centamin is one of the last pure-play gold producers remaining on the London Stock Exchange. While there are plenty of tiny exploration companies hoping to strike it rich, few have enjoyed Centamin’s level of success and built a large-scale operating mine.
“Over the years, gold producers of any notable scale have been snapped up by rivals or merged with others, leaving investors with limited options on the London Stock Exchange and effectively making them look at overseas stock markets for a broader range of gold miners.
“Names like Randgold Resources, once a FTSE 100 constituent, are now long gone from London and, if AngloGold Ashanti is successful in buying Centamin, it would leave Endeavour Mining as the only big primary gold producer left on the UK stock market, along with silver producer Fresnillo which also digs up gold.”