As the sell-off in equities intensified, stunned City traders fled to the traditional havens. Randgold Resources, the African goldminer, one of only two FTSE 100 stocks to have made gains over the past seven days amid the rout, was briefly the only riser on the leading London index.
Investors have been snapping up the stock as a proxy for gold, which has rallied on receding signs of a US interest rate rise next month and in the face of the exit from equities and the fall in the dollar.
In a sea of red, the stock flashed green on screens yesterday afternoon as gold, moving towards seven-week highs, was one of the few commodities to make gains in a trading session of indiscriminate selling that hit most asset classes.
Randgold, off 94p to £41.48, was given another leg up by an upgrade from analysts at RBC, from “sector perform” to “outperform” as the broker talked up the company’s balance sheet, low operating costs and capital expenditure profile.
The miner’s management has mentioned possible M&A deals, and Jonathan Guy, an RBC Capital Markets analyst, told clients that although there was a “short-term risk of indigestion from a transaction, we note that management has not previously overpaid for assets”.
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On the wider market, the turmoil that beset global shares at the end of last week continued after a sharp sell-off in China, leading to what was swiftly dubbed “Black Monday”.
The FTSE 100 extended its losing streak to ten sessions, the second-worst performance since the index began in 1984. It is one losing session away from matching the record set in January 2003.
The moves worldwide were so brutal that traders were lost for printable exclamations. The Footsie shed 288.78 points, or 4.67 per cent, to 5,898.87 — one of the sharpest one-day falls in recent years, and the mining stocks again led the collapse.
Fears of a slowdown in China are smashing commodities prices, trading at about six-year lows, in turn hitting the global mining stocks, of which a hefty number trade on the Footsie.
Glencore, trading at record lows, has more than halved in value over the past six months. It lost 20½p, or 13 per cent, to a shade below 138p. Anglo American, whose sale of two Chilean copper mines to the investment firm Audley Capital for $300 million was lost in the turmoil, slumped 72½p to 660¼p.
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With Brent crude trading lower at less than $44 a barrel, plagued by an oil glut and concerns about global growth, BP was among the biggest fallers, down 26¼p to about 331p.
One blue chip advanced. Amid expectations that RSA Insurance will ask the Takeover Panel to extend today’s deadline for Zurich Insurance to make a bid, it rose 3¾p to 495p.
The FTSE 250, which is usually less affected by the fluctuations in global markets because it has a greater contingent of UK-exposed stocks, was not spared, tumbling 662.32 points, or 3.92 per cent, to 16,214.28.
Only a handful of stocks were above water, including N Brown, the home shopping business, up 7p to 305½p after an upgrade to “buy” from N+1 Singer, which said that recent selling presented a buying opportunity.
UTV Media gained 3p to 160p after it confirmed that it was in discussions with ITV over the sale of its television assets.
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Wall Street report: Investors took a stomach-churning ride as the Dow Jones industrial average plunged more than 1,000 points after the opening bell. Shares regained ground as the session wore on, but the Dow still closed 588.47 points lower at 15,871.28.
Shares surge on supply deal
A potash explorer in the Republic of Congo backed by Phil Edmonds — the former England cricketer — and a hot topic on bulletin boards was keeping punters interested again yesterday.
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Shares in African Potash jumped to an eight-month high after the AIM-quoted company announced that it had struck a memorandum of understanding with a Zambian fertiliser supply group.
The tiddler is set to supply more than 50,000 metric tonnes of fertiliser in what is the first deal it has entered into through a free trade union — the Common Market for Eastern and Southern Africa — of 20 African countries, of which the company informed the market this month. The shares have been volatile, hitting 2.14p last week, having changed hands at 0.3p at the start of the month, before the company said it was not aware of any reason for the movement apart from the arrangement with Comesa.
The company, led by Chris Cleverly, also denied speculation last week of an impending placement at a significant discount to the share price. Those who follow the stock wonder how the company will finance its Lac Dinga potash project in the Republic of Congo.
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