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FTSE struggles on weaker gold miners and sterling strength

Friday, 20th October 2017
An apparent improvement in the mood around Brexit talks helped lift the pound and put pressure on the FTSE 100. The bias of the index towards overseas earnings means it tends to head in the opposite direction to the pound.

A dip in the price of gold to $1,281 per ounce weighed on gold miners such as Fresnillo (FRES) and Randgold Resources (RRS). Fresnillo declined 3.6% and Randgold fell 1.3%, respectively.

As investors continued to digest negative news this week from two of the biggest blue chip constituents, Reckitt Benckiser (RB.) and Unilever (ULVR), retreated 2.6% and 3.6% to £66.10 and £41.61.

The FTSE was flat at 7,523.

Brent crude oil advanced 0.5% to 57.53 per barrel and copper was 0.4% lower at $3.14 per pound.


Banking stocks gained momentum in the US following the approval of a budget blueprint for next year by the Senate as it raises the potential of significant tax cuts.

The Dow Jones rose 0.3% to 23,232 on Friday.


A dispute with the Tanzanian government continued to take its toll on gold miner Acacia Mining (ACA), down 8.1% to 194.8p. The company revealed that the export ban in Tanzania hit sales by 40% in its third quarter and its cash position sharply dropped from $302m a year ago to $95.3m.

Holiday Inn owner InterContinental Hotels (IHG) dipped 0.9% to £40.62 as the market focused on weaker growth in the US and overlooked a robust performance in Europe.

Support services company Serco (SRP) announced its chief operating officer Ed Casey is returning to the US for a role with another firm at the end of the year. Investors took the news in their stride as the stock was resilient at 117p.


On AIM, miner Ncondezi Energy (NCCL) jumped 14.9% to 6.7p on an initial deal with China Machinery Engineering and General Electric South Africa. The agreement is to enter exclusive negotiations over the development and operation of a coal fired power project and open pit coal mine in Mozambique.

Henry Boot (BOOT) pleased the market after announcing that its performance will be 'materially ahead of expectations.' The share price rallied 8.4% to 333.5p on the news.

Elsewhere, embattled delivery firm DX (DX.) reported no profit in the year to 30 June. Sales rose 1.4% to £291.9m although pricing pressure and operational difficulties offset any profit. Despite the bad news, the share price accelerated 17.6% to 12.5p.

Renewable fuels specialist Velocys (VLS) sealed a site option deal for its first US bio refinery site in Mississippi, prompting the share price to rise 16% to 38.4p.

A share price placing at both Jersey Oil & Gas (JOG) and President Energy (PPC) weighed on the stocks, which slid 14.6% and 13%, respectively.

Struggling infrastructure group Interserve (IRV) rose 15% at 75.3p on a contract win worth £227m to provide facilities management services for the Department for Work and Pensions. The company's share price tumbled by over 30% on Thursday on a profit warning and announcement that it might breach its banking covenants.

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