The stock market took a breather from its recent surge as the FTSE 100 Index closed down 1% on the week to end at 5,815. Market sentiment was gloomy as sovereign debt reared its head as an issue once more. Bond spreads suggested that some form of default by Ireland and Portugal was likely, although concerns were placated by a supportive statement on Friday from leading EU countries and the indication from the European Commission that it had not received an aid request from Ireland. There was also general disappointment with the outcome of the G20 summit where leaders failed to reach agreement on current account surpluses and deficits, succeeding only in deferring the issue into 2011. As a result, it was a more neutral week for the UK equity market high/low ratio, with 69 companies clearing new highs versus 42 new lows.
Winners had hard hats...
Mining stocks were volatile amid speculation China may raise its interest rates, curbing demand for commodities, but in spite of this the sector was one of the fews to continue to new highs. Bank of America Merrill Lynch upgraded 6 big cap mining stocks this week to buys including Kazakhmys (LON:KAZ) , Antofagasta (LON:ANTO), Xstrata Plc (LON:XTA) and Ferrexpo Plc (LON:FXPO) . Ferrexpo the iron ore producer reported record production levels in Q3 with very strong cash flow generation and rocketed 10% higher on the week.
Precious Metals including Gold, Silver and Palladium bounced back from a recent correction to post even higher highs, with some calling silver’s burst to $28 post-parabolic. Some of the small caps in the sector have been extremely active of late, and silver Specialist Herencia Resources (LON:HER) was no exception as it strengthened on reporting that its NPV at its Paguanta Project in Chile is projected at $90.4m.
The old saying that 'in a gold rush, buy companies selling picks and shovels' held true this week as Latchways (LON:LTC) reported a 28% rise in first half profits. The company sells safety harnesses and products for engineering…
