London markets continued to flirt with year-highs this week but analysts complained that macro conditions were failing to inspire much momentum, either to the upside or the downside. After opening the week at 6062 points, the FTSE 100 was trading down a touch at 6055 by lunch on Friday.
In a note to investors, Angus Campbell, head of sales at trading firm London Capital Group, said the markets were drifting “almost motionlessly around their highs” with investors apparently reluctant to push the index into new territory. He noted that German inflation data had come in at double consensus expectations, with the main culprit being higher commodity prices.
While the soaring price of food, metals and oil continues to cause headaches in some quarters, it certainly gave investors cause for celebration. On Friday, Anglo American (LON:AAL) became the latest in a series of mining giants to unveil bumper annual results. Pre-tax profits nearly tripled to $10.9bn (£6.7bn) on revenues up 34% to $32.9bn. It also announced a tie-up with Lafarge that will see the two sides merge some of their UK operations, including Anglo’s Tarmac subsidiary. Earlier in the week, rival miner BHP Billiton (LON:BLT) reported record half year figures, with sales up 39% to $34.1bn and attributable profits up 72% to $10.5bn. The Anglo American share price dipped by 2% during Friday to 3,223.5p, with the BHP Billiton share price falling by a similar margin to 2,399p
While the price of gold has had a relatively muted start to the year – current trading is at around $1,385 per ounce – research by the World Gold Council this week predicted ongoing strong demand for the yellow metal. The WGC, which is funded by mining groups, said gold demand last year reached a ten year high of 3,812.2 tonnes - worth approximately US$150bn. Strong consumer buying in the likes of India and China combined with demand from emerging country banks would underpin further growth, it said. Among the small cap gold groups this week, AIM listed Goldplat (LON:GDP) got the go-ahead from the Kenyan Government to start operations at its Kilimapesa Gold project. Elsewhere, Australian gold miner Norseman Gold (LON:NGL) raised £10m and slashed its near term production forecasts but insisted…
