Three consecutive trading sessions have seen the beleaguered miner Glencore swing from lows of 66.7p to intraday highs of 92.8p.
On Monday a note by Investec, saying that Glencore’s equity value would “evaporate” if commodity prices remain at current levels triggered a mass sell-off, sending its shares down 30pc.
However, a day later the company said its business was “operationally and financially robust”, prompting a rally in afternoon trade. Yesterday, Deutsche Bank cautioned that Glencore had broken “the equity trust” in a company where reputation was integral, and as such it would require a “reformation of its shareholder commitments”.
Glencore’s shares continued to gain momentum, however, as the company’s chairman, Tony Hayward, made a very public vote of confidence in the business, buying 100,000 shares at 91p apiece. The stock reversed Monday’s losses, to make gains of 22.9p, or 31pc, in two consecutive trading sessions to close at 91.6p.
Although Deutsche Bank suggested Chinese metal demand will slow dramatically over the next five years, mining stocks continued to inch higher, with Anglo American up 1.4pc to 550.9p and BHP Billiton rising 2.7pc to £10.05.
Glencore 3-day graph (Source: Bloomberg)
After a torrid start to the week, the FTSE 100, Britain’s benchmark index, rebounded yesterday, lifted by the supermarket and mining sectors. It closed 152.37 points, or 2.58pc, higher at 6,061.61.
Mike McCudden of Interactive Investor said: “Despite enduring the worst quarter since 2011 equities have flown out of the traps.”
Supermarket stocks dominated the biggest FTSE risers, with J Sainsbury leading the pack after it surprisingly revised its profit guidance upwards. The group said it expects underlying full-year pre-tax profits to be moderately ahead of consensus figures of £548m, despite a “challenging” market.
However, Clive Black of Shore Capital warned: “We remain nervous about the broader trading environment.”
The grocer enjoyed its biggest one-day rise in eight years, up 31.7p, or 13.8pc, to 261p. Its rival Tesco rose 6.9pc to 183.2p while Wm Morrison was up 6.4pc to 166.1p.
The precious metals miner Fresnillo became the sole faller on the blue chip index as spot gold prices tumbled by as much as 1.7pc in intraday trade to $1,111.83 an ounce.
It was little helped by Deutsche Bank, with analysts expecting gold prices to continue to drift lower. The stock closed down 0.8pc to 591.5p.
Entertainment One hit its lowest level since December 2013 after announcing it will buy 70pc of Astley Baker Davies, the creator of Peppa Pig, for £140m. The move increases its control of the rights to the franchise to 85pc.
Paul Richards of Numis viewed the transaction as “strategically sensible” as it enables full control of the global roll-out of Peppa Pig. Shares plunged 24p, or 8.8pc, to 248p.
The rumour mill sent Paragon Diamonds down 6.4pc after posting half-year results, as talk surfaced that the City had turned down the Aim-listed company’s request for £8m funding.
Finally, the oil company Zoltav Resources, which is backed by the son of Roman Abramovich, the billionaire owner of Chelsea Football Club, gained 11.4pc to 44p after it appointed the former boss of TNK-BP Ukraine, Alexander Gorodetsky, to the board.