Miners celebrated victory after Australia scrapped a controversial 30 per cent tax on their “super profits” from coal and iron ore, the country’s most valuable exports.
The minerals resource rent tax, intended to distribute the benefits of a decade-long resources boom, proved predictably unpopular with an industry latterly wrestling with much-reduced commodity prices and steeper costs.
Its repeal came after a multimillion-dollar advertising campaign by Rio Tinto, BHP Billiton and others, which blew a hole in the popularity of the Labor government that introduced it in 2012. The miners argued that it damaged their competitiveness and crimped investment in Australia. The country’s Senate voted to withdraw the mining tax, and the bill will now head to the House of Representatives, where it is also expected to be approved. In response, Rio Tinto rose 5½p to £32.36½, BHP 15p to £19.20 and Glencore 5¾p to 367½p.
Sentiment towards another of the world’s biggest mining companies, Anglo American, was bolstered by comments from its chief executive. The shares rose 38½p to £15.62 after Mark Cutifani indicated that he would be “open to a takeover offer”.
The wider stock market failed to get out of first gear. Waiting at first for Wall Street to return from the Labor Day holiday, then for the European Central Bank to decide later in the week whether to pump money into the eurozone economy, all the while chewing over the prospects of Scottish independence, trading in London was woefully slow. The FTSE 100, a few points lower for most of the session, eventually settled 3.8 points higher at 6,829.2. Stock markets around Europe were similarly range-bound.
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A couple of bosses unsettled prices. After Steve Morgan, Redrow’s chairman, said that the recent housing market slowdown marked a return to normality, housebuilders were offered. Crest Nicholson lost 8½p to close on 351½p, while Redrow itself fell 2¾p to 278¼p. AstraZeneca fell 36½p to £45.41 after Pascal Soriot, its chief executive, drew some of the heat from speculation that Pfizer, of the United States, may return to bid.
London’s friskier punters were still looking to America, from where they picked up (and passed on) rumours of “private equity” interest in Foot Locker, the sportswear retailer. Mike Ashley, the founder of Sports Direct International, off a penny at 731p, was woven into the tale somehow.
Weir Group ran 67p higher to £27.06 after a push from Credit Suisse, which advised clients to switch into the Glasgow-based maker of industrial pumps and out of another engineer, IMI, which then slipped 25p to £13.29.
An oil strike near Scunthorpe lifted a trio of companies with stakes in the Wressle-1 well. Egdon Resources added 4.4 per cent to 24p, Europa Oil & Gas advanced 10.2 per cent to 8¼p and Union Jack Oil jumped 11.5 per cent to 0.34p. Zac Phillips, an analyst at SP Angel, slapped a target price of a penny on Union Jack’s shares and urged clients to buy them. Yesterday’s result, “while not definitive, is highly encouraging”, he said.
Finally, there were whispers that Nostra Terra Oil and Gas, another junior oil company with something of a following among private investors, is poised to unveiled its biggest asset purchase yet, probably in Wyoming. Nostra Terra, up 3.7 per cent at 0.28p, is building a portfolio of assets in America.
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Consumer goods: Switch is pressed for promotion
Dixons, that well-known purveyor of batteries and flatscreen televisions, is poised to return to the FTSE 100 for the first time since 2007.
A little more than a month after its merger with Carphone Warehouse, the combined entity — known as Dixons Carphone — commands a market value of roughly £4.3 billion, earning Dixons’ inclusion in the top flight for a fourth time.
Carphone Warehouse has managed only one spell in the Footsie, for a year until September 2008.
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Based on last night’s closing prices, and subject to confirmation by a FTSE committee today, the reshuffle of its indices will lead to Dixons Carphone and Direct Line Insurance being included in the FTSE 100 a fortnight on Monday, at the expense of Rexam, the packaging specialist, and Barratt Developments. Like other housebuilders, Barratt has been unsettled by talk of higher interest rates, tighter mortgage availability and regulation.
It and Rexam are likely to be joined in the FTSE 250 by recently floated companies, including Saga, the over-50s insurer, TSB Banking Group, Zoopla, a property website, and Card Factory.
Wall Street report
Stocks in the United States slid as the price of oil and shares in energy and natural resources groups wilted under pressure from falling commodities prices. The Dow Jones industrial average closed on 17,067.56 points, down 30.89.