The FTSE 100 has seen little movement today, with a daily high of 7,058 points and a low of 7,016. Overall, the index finished in the green, up around 0.2%. Within the index, there were some notable gainers, particularly Ashtead Group. On the low side, mining companies, including Anglo American and Rio Tinto took a hit.
FTSE 100 strong performers
The top gainer in the FTSE 100 today was Ashtead Group. The company released unaudited results for the first quarter that finished at the end of July. Strong growth was seen across multiple areas. Revenue was up 21% versus Q1 last year, filtering down to a 74% increase in profit before tax. The difference in increase in revenue versus profit was thanks to a large rise in the operating profit margin, showing good control of expenses.
The share price rallied almost 6%, showing also that the outlook going forward is positive as well. Investors clearly feel that the momentum in the company is strong, which is no surprise given that the update mentions the “board now expects full-year results ahead of its earlier expectations”.
Risk sentiment was also positive for the broader market, with volatile stocks posting good gains. For example, IAG was up almost 4%, as was Rolls-Royce. These shares gained from a positive update from Ryanair, in which it said it is now expecting to fly more passengers in coming years than previously expected.
Both IAG and Rolls-Royce should indirectly benefit from this, as it highlights that the airline sector could be looking to rebound. Also, when the broader FTSE 100 market is in the green, it usually correlates with better optimism around Covid-19. Since the airline sector is closely linked to the impact of Covid-19 going forward, the correlation can be seen.
Fears around China
Although the FTSE 100 did finish in the green, there were some notable losers on the day. The main ones that stood out were mining companies. Anglo American and Rio Tinto were the two worst performers on the day, losing 3%-4%.
The main driver behind these losses was concern about a slowdown in China. Retail sales data slowed considerably in August, fuelling speculation that the Chinese economy is losing momentum. China is a huge consumer of commodities. It has been noted that the country consumes around 50% of the world supply of major base metals alone. This also doesn’t factor in the large need for oil, gold, and other commodities.
As such, any data or sentiment of a slowdown in China correlates to mining companies struggling. Nothing material has been noted yet, but the market is clearly concerned about the potential for falling revenue, hence the falling share prices those within the sector today.
Overall, the FTSE 100 had a quiet day, but still had notable performers worthy of discussion.