MARKET REPORT: Rio Tinto slashes its divi as miners suffer sell-off

Miners took a beating from a stock market sell-off as Rio Tinto cut its dividend and commodity prices fell.

With renewed concerns about rising interest rates on investors’ minds, the FTSE 100 fell 0.59 percent, or 47.12 points, to 7930.63 while the FTSE 250 fell 0.86 percent, or 170.56 points, to 19680 .29.

Rio has more than halved its dividend payout to shareholders.

Investors get $4.92 per share for 2022 — a 53 percent drop from the record payout of $10.40 per share in 2021.

The miner reported a 13 per cent drop in annual turnover to £46 billion and a 40 per cent drop in profits to £15 billion as it was hit by weaker iron ore and copper prices and a slowdown in demand from China.

Russ Mould, director of investment at AJ Bell, said: “Following a boom in 2021, a fall in commodity prices in 2022 has led to a major drop in both earnings and dividends.

What happens next is more important. A reopening of the Chinese economy should in theory lead to an increase in demand for commodities, offsetting potential weakness in other parts of the world.”

Like Rio, Antofagasta cut its dividend by nearly 60 percent this week after a sharp drop in earnings.

Shares in Rio fell 3.6 percent, or 221p, to 5983p, while Antofagasta fell 2.8 percent, or 48p, to 1674p. Glencore fell 1.8 percent, or 9.2p, to 494.1p and Anglo American fell 2.2 percent, or 68.5p, to 3085.5p.

In Europe, the main benchmark in Germany rose 0.01 percent, but the French Cac fell 0.13 percent. US markets were more positive a day after Wall Street posted its worst performance of the year on fears of more rate hikes.

The Dow Jones Industrial Average rose 0.28 percent, while the S&P 500 rose 0.05 percent. But the Nasdaq fell 0.3 percent.

Victoria Scholar, head of investment at Interactive Investor, said: “Inflation and interest rates appear to be a major determinant of price action in the coming months as central banks continue to try to control price levels.”

Oil fell to $82 a barrel on demand concerns. It sent BP down 2 percent, or 10.9p, to 539.4p, while Shell fell 1.5 percent, or 36p, to 2449.5p.

Among mid-cap stocks, Serco has postponed the release date of its 2022 results following audit delays at KPMG. The outsourcing giant will post an update on February 28 instead of today. Shares fell 1 percent, or 1.6 pence, to 151.8 pence.

Gooch & Housego warned that higher labor and supply chain costs would weigh on annual profits.

The maker of parts for satellites, medical devices and the manufacturing sector said it would pass on price increases, but overdue orders would lead to delays in recovering such costs. Shares fell 5.4 percent, or 30 pence, to 523 pence.

Meanwhile, Just Group rose 2.7 percent, or 2.3 pence, to 86.9 pence after Jefferies raised the pension insurer’s price target from 115 pence to 120 pence.

Speaking at its annual general meeting, language services group RWS Holdings said it is on track to meet forecasts of £779.2m in revenue and £133.3m in profit. Shares fell 2.6 percent, or 9.4 pence, to 357.8 pence.

Property services company Kinovo won a £12 million contract over five years with existing client Hyde.

The deal entails Kinovo monitoring electricity and security at the housing and healthcare provider’s household and communal properties. Shares rose 7 percent, or 2.5 pence, to 38 pence.

Elsewhere, Seeing Machines posted record interim results after an 11 percent increase in vehicles equipped with its safety monitoring technology.

The Australian-based group aims to prevent deaths from driving by installing cameras in vehicles that can detect whether a motorist is tired.

It expects sales to rise 54 percent to £20.23 million in the six months to the end of December. Shares rose 0.8 percent, or 0.1 pence, to 7.5 pence.