By Muvija M
(Reuters) – Mining heavyweights dragged London’s main index lower on Wednesday, as iron ore prices fell after miner Vale prepared to resume operations at its Vargem Grande complex, while luxury carmaker Aston Martin plunged after cutting annual targets.
The FTSE 100 () inched 0.4% lower by 0800 GMT, lagging most of the global markets where signs of progress in the U.S.-China trade talks lifted sentiments. The FTSE 250 midcap () was seen up 0.2%.
Vale SA (SA:) said it has been authorized to partially resume dry processing operations at the complex in Brazil, months after the country’s mining regulatory agency had ordered the company to halt operations there to guarantee the stability of its dams.
Rio Tinto (L:) was the biggest drag with a 3.3% drop, while Anglo American (L:) and BHP (L:) were also lower, as Liberum analysts downgraded the iron ore majors and flagged warning signs after rising iron ore port inventories.
Exporters also weighed on the index as sterling recovered after falling in the last session after Brexit hard-liner Boris Johnson won the leadership of Britain’s Conservative Party to become the country’s next prime minister.
Corporate earnings on Wall Street and in Europe have been largely positive this week.
However, data from Refinitiv highlighted the risk of an earnings recession, as earnings at constituents of the pan-European STOXX 600 index () are now expected to decline this quarter, putting it at risk of back-to-back quarterly declines.
On what turned out to be a busy earnings day for the UK markets, Aston Martin (L:) dropped 22% after it slashed several of its forecasts, blaming macro-economic uncertainty and weakness in the UK and European markets.
The target cut from Aston Martin followed a disappointing quarterly update from its German peer Daimler (DE:).
Pub operator Marston’s (L:) slumped 8.6% after reporting like-for-like sales numbers that Peel Hunt analysts called “slightly worse than we expected”.
Helping contain losses on the FTSE 100 was broadcaster ITV (L:), which jumped 7.2% after it said a strong contribution to online revenue from reality show “Love Island” helped limit the decline in first-half ad revenue.
Event manager Informa (L:) rose 5.4% to its highest this year, after reporting strong half-year results.
Chemicals maker Croda (L:), however, fell 5% as its profit missed expectations with the U.S.-China trade war and new Chinese sales legislation having hurt demand at its personal care unit.
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