Miners fall back despite Australian rate cut but GlaxoSmithKline in demandLeading UK shares are moving sharply higher in early trading, catching up on the gains in Europe on Monday when London markets were closed for the Bank Holiday.The FTSE 100 is back above the 7000 level, up 59.48 points at 7045.43. Disappointing construction manufacturing figures have hit the pound but supported shares, on the basis that an interest rate rise in the UK receeds even further into the distance.Glencore reported its first quarter 2015 production results this morning, which were quite disappointing overall with performance in both base metals and coal behind our initial expectations. Copper production was affected by lower grades and planned maintenance. Nickel was stronger, increasing on a year on year basis, but technical issues at Koniambo slowed down the ramp up process. Coal was stronger, especially in South Africa but is expected to decline this year due to voluntary production cuts that should affect operations later this year. Today’s results do not materially alter our opinion on the stock. We reiterate our outperform rating, target price £4.50. Low bulk prices have been discounted, but now Anglo faces the prospect of weaker contribution from De Beers which will further slow an improvement in the balance sheet. We downgrade to underperform [from sector perform] with a £9 a share price target [from £11].This is far from Aberdeen’s finest hour, with most key metrics being a little disappointing and a relatively cautious short term outlook from the company. We remain comfortable with our hold recommendation, balancing the subdued near term outlook against reasonable value (in particular the total yield) and the longer term potential. Continue reading...
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