FTSE 100 to make modest gains although investors fear for iron ore price


he FTSE 100 was set to make modest gains today as the outlook for the iron ore price dominated traders’ minds.

The price of the metal critical for making steel plunged yesterday after China warned of a tough crackdown on its producers if they tried to drive up prices.

It warned it would “closely follow the trend of commodity prices” and have “zero tolerance” for illegal price supporting activities such as monopoly agreements or hoarding of the metal.

That hit sentiment in commodity stocks and could weigh on the index again today after yesterday’s subdued 0.5% gain on the FTSE 100.

Today it was set to rise around 9 points at the opening to 7064 according to traders on the IG platform – a gain of just 0.1%.

The iron ore price was expected to hold steady in early trading but sentiment could change as the session continues.

Bitcoin has been staging a slight revival, gaining 9% in the past 24 hours to $38,092. On some recent trading days, equity markets have moved in apparent sympathy with the crypto, so those looking for direction today may take heart.

Also, the Nikkei in Japan gained 0.5% and Hong Kong’s Hang Seng had a decent morning, too, up 1.4%, after US stocks ended in positive territory last night.

Fears of inflation took a back seat for now, keeping down bond yields and the dollar and tempting buyers of riskier equities back into the market.

Chinese stock hit a two-and-a-half month high as banks, consumer facing companies and tourism stocks fared well. The CSI300 index jumped 1.9%.

Tech stocks led the way on Wall Street last night despite US Treasury deputy secretary Wally Adeyemo saying he was hopeful that his G7 peers would back 15% minimum global tax on big tech companies.

For some in the industry it has been greeted with relief as President Joe Biden had pledged to go for 21% for US companies’ overseas income. While the package covers all US comapnies’ overseas earnings, most focus is on the impact on big tech.

Royal Dutch Shell could see its shares tick up after Jefferies highlighted how its $596 million sale of a Texas refinery suggested prices for such assets were improving, albeit still not being back to pre-pandemic levels.

Shell is selling its 50% stake in the Deer Park refinery to its partner Pemex in a deal set to complete in the fourth quarter of the year.

While Jefferies says the sale is somewhat surprising given Shell’s stated strategy of focusing on its Gulf of Mexico operations, but says the plant had particular characteristics that made it less attractive for Shell to hold. Currently at £14.09, Jefferies says Shell stock is a Buy up to £19.30.

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