Sector movers: Mining and energy stocks lead predictable market decline

Mining, metals and energy stocks fell yet again in London on Thursday, as China reset its guiding rate for the yuan lower for a third consecutive session, even though the latest downward revision, of 1% against the dollar, was smaller relative to cuts introduced earlier.

The People’s Bank of China (PBoC) initiated cuts of 1.9% and 1.6% to the daily reference midpoint for the currency on Tuesday and Wednesday respectively. At the close of Asian trading, a dollar was fetching CNY6.3982 up 0.19%, with commodities exporters to China feeling the heat, and oil and gas stocks being dragged lower by another oil price slump.

The FTSE 100 closed marginally in negative territory down 0.04% or 2.86 points at 6,568.33, while FTSE 250 ended higher by 0.90% or 157.38 points at 17,595.47 with the latter helped in no small part by Cineworld (up 7.38%).

The cinema operator posted a revenue rise of 22.5%, off the back of strong film showings such as "Fifty Shades of Grey", "Fast and Furious 7", and "Jurassic World." While Cineworld helped the FTSE 250 avoid a drop into the red, both indices conveyed a similar story of sizeable drops in mining and oil and gas shares.

At 1635 BST, trading on London Metal Exchange was fairly mixed with three-month futures contracts of lead (up 0.8%) and zinc (up 0.3%) trading marginally in positive territory. However, primary aluminium (down 0.8%), copper (down 0.1%) and tin (down 0.3%) were marginally lower. Nickel, which shed 1.2% or $125 to $10,587.50 per tonne, was the biggest faller.

While both oil benchmarks were trading lower, the WTI was hit particularly hard, shedding 3% at one point and falling to a six-year low, after Switzerland became the first country to lift sanctions on Iran since the nuclear deal. At 1643 BST, the WTI front-month futures contract was down 2.29% or 99 cents at $42.32 a barrel, while Brent was trading lower by 1.41% or 70 cents at $48.96.

As Greece neared its bailout, and the prospect of a US interest rate rise remained on the horizon, precious metals saw a correction. COMEX gold for December delivery was down 0.74% or $8.30 to $1,115.30 an ounce, while spot gold was down 0.75% or $8.48 to $1,115.19 an ounce, having risen for the past three sessions in a row.

Concurrently, COMEX silver was down 0.26% or four cents at $15.44 an ounce, while spot platinum retreated back below the $1,000 level, shedding $6.20 or 0.62% at $994.13 an ounce.

Predictably, the biggest blue chip fallers of the session were Rio Tinto (down 3.74%), Randgold Resources (down 3.17%) and Royal Dutch Shell (‘a’ shares down 2.98% / ‘b’ shares down 3.02%).

Meanwhile, the biggest FTSE 250 fallers were Premier Oil (down 5.66%) and Lonmin (down 2.90%), while temporary power solutions provider Aggreko ended lower by 2.53% as its oil and gas clients continue to slash costs.