Higher Commodites Lift UK Stocks

123jump.com Staff
19 May, 2008
New York City

UK stocks closed higher on a sustained rally in commodities and mining related stocks. A sharp rise in crude oil and coal prices lifted stocks in the sector. Crude oil, coal, copper and zinc hovered near record levels and Baltic Dry Index also indicated rising freight rates for commodities. UK newly listed homes asked 1.2% more than in May as sellers expect prices to rise. The private research group indicated that sellers may be forced to sell properties at a lower price.

[R]1:00PM New York, 5:00PM London - U.K. stocks rose on higher commodity prices and rising crude oil prices. Newly listed homes in May were priced 1.2% higher than a month ago despite tougher borrowing conditions for buyers.[/R]

London stock averages traded in positive territory driven by commodity stocks that were buoyed by rising oil and commodity prices. However, gains were pared by weak homebuilders.

Market sentiment

In London trading FTSE 100 rose 1.50% or 72.2 to 6,376.50.

Of the 102 FTSE 100 stocks 72 gained, 28 declined, and 2 were unchanged. Vedanta Resources led advancers in the index shares with a rise of 8.55% after crude oil prices and metal prices traded near record highs.

Average newly listed home prices rise 1.2% in May

Rightmove Plc reported on its Web site today that the average asking prices across the UK on sale advanced 1.2% to £242,500 from the previous month in May. The increase was 0.3% higher than the previous record of £241,642 in October.

Asking prices increases are driven by a 4.2% increase in the Southeast region as bigger and more homes are added on sale list in the spring months.

The web site also noted that whilst the southern regions of the country is still “showing year-on- year increases”, the extent of the slowdown is more marked in the North, with 6 out of 10 regions now show price declines. In the north-west asking prices were 2.5% lower than a year ago.

In addition, average unsold property stock per estate agency branch jumped from 69 to a record 73.

Shipside said in the press release, “Sales are still happening where sellers are pricing realistically, especially where they are getting similar reductions on the home they are buying. With the current mortgage famine forecast to last for 2 years, sellers need to focus on trying to attract the limited number of buyers who have access to funds.

Sellers who are hanging out to achieve last year’s prices need to accept that the market has fallen and that they will end up being punished by a lower price in the long run.”

Gainers & Losers

Vedanta Resources led advancers in the FTSE 100 index shares with a rise of 8.55% followed by increases in Eurasian Natural of 6.30%, in Kazakhmys of 6%, in Lonmin Plc of 4.23%, and Anglo America of 3.95%.

Vedanta Resources gained as crude oil prices added $1.15 to $127.44 a barrel after president of OPEC Chakib Khelil said the market had ample supplies of the commodity and oil cartel will only meet in September to make decisions on output.

High oil prices, coupled with a sliding dollar lifted spot gold to a record high of $913.35 in London trading. Platinum advanced 2.2% to $2,161 an ounce after Johnson Matthey said in a report prices could top $2,500 an ounce on supply disruptions in South Africa and robust demand.

Other commodity stocks rose as well. Royal Dutch Shell-A increased 3.16% and Xstrata advanced 2.48%.

British Airways Plc led decliners in the FTSE 100 index shares with a drop of 4.40% followed by losses in Royal Bank of Scotland of 3.94%, in Wolseley of 3.63%, in Alliance Leicester of 2.44%, and Unilever Plc of 1.83%.

Homebuilders fell after Rightmove Plc reported that homeowners listing property in May asked 1.2% more than the previous peak in October and said that the strategy may backfire as buyers find it difficult to get mortgage approval.

British Land Co edged down 1.50%, Hammerson Plc fell 1.35%, and Persimmon dropped 0.63%.

Retailers also fell. Kingfisher shed 1.15%, Sainsbury slumped 1.74% and Tesco fell 0.85%.

World markets

In Tokyo Nikkei 225 Index closed higher 50.13 or 0.35% to 14,269.61, in Hong Kong Hang Seng index increased 123.37 or 0.48% closed to 25,742.23. In Australia ASX 200 index higher 18.40 or 0.31% to close 5,949.40. Market of Malaysia was closed today.

In South Korea Kospi Index decreased 3.51 or 0.19% to close at 1,885.37. Indonesia JSE Index edged increased 25.42 or 1.71% to 2,510.96. Market of Thailand and India were closed today.

In London FTSE 100 Index closed higher 72.20 or 1.15% to 6,376.50, in Paris CAC 40 Index increased 64.06 or 1.26% to close at 5,142.10 and in Frankfurt DAX index higher 69.39 or 0.97% to close at 7,225.94. In Zurich trading SMI increased 125.22 or 1.64% to close at 7,778.93.