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Shares in Randgold Resources (RRS) are bottom of the UK Index pile this morning as the UK’s flagship UK 100 equity index breaks above 7000 for the first time since June 2015 to trade just 80pts below last April’s 7135 all-time highs.
A weak GBP is helping propel ever higher the army of international-exposed UK Index names that benefit from helpful currency conversion gains while Housebuilders are enjoying the prospect of the UK Chancellor Phillip Hammond’s £5bn UK housebuilding stimulus. Sterling’s decline comes via UK PM Theresa May finally putting a time-line on Brexit at the weekend, sending GBP/USD to 31yr lows. This is compounded by hawkish USD-strengthening comments from the Fed’s Loretta Mester last night about the potential for a US rate hike just days before November’s US Presidential Election.
Nonetheless these comments aren’t exactly spooking investors who would far rather that low rates and accommodative monetary stick around for ever. Gold prices are thus suffering (closing in on September lows) from the double whammy of a UK Index rally reducing safehaven demand and a stronger USD making the yellow metal more expensive. Voila why the Gold miner is delivering the weakest performance so far this morning, although not exactly tanking, and well off its lows. Note Fresnillo (FRES) and Polymetal (POLY) hovering around breakeven.
Mike van Dulken, Head of Research, 4 Oct
This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.
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