Market update: Investors cool to Chile miner Antofagasta, Sainsbury’s sales rise

​Stocks fell on Tuesday after the Bank of Japan decided against adding to stimulus and concerns re-emerged over a drop in the price of oil. Talk of another North Korea nuclear weapons test hasn’t helped market sentiment.

Stocks fell on Tuesday after the Bank of Japan decided against adding to stimulus and concerns re-emerged over a drop in the price of oil. Talk of another North Korea nuclear weapons test hasn’t helped market sentiment.

The BOJ is in wait-and-see mode after its surprise move towards a negative interest rate policy. The lack of extra stimulus, which acts to debase the currency, saw the Japanese yen rise  despite the BOJ offering a more cautious view on inflation and the economy.

Brent crude has fallen to its lowest in seven-days after topping $40 per barrel and is raising questions over the sustainability of the rebound. The IEA’s call for a bottom in oil appears to have in fact called a short-term top.

The FTSE 100 was weighed down by mining shares after Chilean miner Antofagasta scrapped its dividend, which acted as a sharp reminder of the industry’s suffering after the hefty drop in metals prices.

Shares of Antofagasta tanked after the Chilean copper-miner scrapped its final dividend after annual earnings crashed over 98%. Margins are pretty slim so the 25% slump in copper prices last year decimated profits. The rise in the price of copper this year, in combination with some heavy cost-cutting has helped a dramatic rebound in the share price. If copper has put in its low, there’s a good chance this is the last time the dividend needs to be scrapped.

Legal & General shares fell after the UK’s biggest pension manager reported a rise in profits and lifted its dividend in line with expectations. A drop in retirement new business comes after the government changed to annuities laws and could be put under further pressure from this week’s budget.

Sainsbury’s shares bucked the trend, getting a lift after it saw its first quarterly sales increase in two years. The sales turnaround is a great achievement amidst what is still heavy competition from the discounters. The good Sainsbury’s results also raise a question over whether the intended purchase of Argos-owner Home Retail could see them take their eyes off the prize just as things are coming together.

US stocks look set for a weaker start after the lack of stimulus action from the Bank of Japan as the Federal Reserve begins its two-day policy meeting ahead of retail sales data.

 

USA pre-opening levels

S&P 500: 12 points lower at 2,007

Dow Jones: 84 points lower at 17,145

Nasdaq 100: 25 points lower at 4,342

 

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