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Miners and financials rise, FTSE 100 stays in the blue

Published: 11:27 30 Jul 2009 EDT

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It was clear the tone in the market would be set by the numerous quarterly and interim results from high profile companies that came out this morning. While the FTSE 100 was still dragged by a few heavyweight fallers, the corporate news was mostly positive and the index was up 60 points (1.33%) by midday. FTSE 100 got a good grip on the 4,600 barrier and preserved the gains until the end of the day.

 

US markets opened with strong gains; the Dow Jones added 170 points, increasing almost 2%, further boosting the Footsie.

 

Key fallers included publisher Reed Elsevier (LSE: REL) disappointed with declines in profits and plans to place almost 10% of share capital to raise money to pay off the company’s debts. The news sparked a share selloff sending the publisher down 14%, making it the day’s top faller.

 

Royal Dutch Shell (LSE: RDSB) opened weak after reporting a 70% year on year quarterly profit decline in the wake of the weaker oil price, but then recovered to finish with insignificant losses. BAE Systems’ (LSE: BAE) interim losses and growing pension deficit sent the company down 6%.

 

On the positive side,  construction equipment manufacturer Wolseley (LSE: WOS) jumped 9.5% after another positive update on UK house prices, which have been on the rise for three months, while the number of mortgage approvals has reached its highest in over a year.  Nationwide building society said house prices were up 1.3% in July they would be higher at the end of the year. Builder supplier Travis Perkins (LSE: TPK) was also helped by the news and gained 12.5% after beating expectations for H1 profits, becoming the leading riser in FTSE 250.

 

Aircraft engine maker Rolls-Royce (LSE: RR) also improved after reporting higher H1 profits and stating it would maintain guidance for this year, boosting the stock 8.7%.

 

Satellite TV provider BSkyB (LSE: BSY) climbed almost 5% after it reported a 4% hike in annual profits and said it was luring customers at the fastest rate in 5 years, adding 124,000 net subscribers in the past 3 months.

 

Miners were once again among the top risers as Xstrata (LSE: XTA) climbed 5.4% after saying its H1 coal and copper production rose 11% and 1% respectively. The company was outpaced by platinum miner Lonmin (LSE: LMI), which posted a solid 7% gain, surging back to the top.

 

Commodities

 

Commodoties made up for a part of the losses they sustained on Wednesday, further bolstering the mining sector, which made strong gains today on production updates.

 

Gold showed signs of recovery after a recent slump, rising slightly to USD 931/ounce. Other precious metals also rose after declining on Wednesday. Silver was at USD 13.39/ounce, while Platinum added USD 6 arriving at USD 1177/ounce.

 

Base metals also were in demand. Copper improved to USD 2.52/pound after falling on mixed Chinese demand outlook, Zinc rallied to USD 0.75/pound, while Nickel improved to USD 7.67/pound. NYMEX Crude improved 3% to USD 65/barrel.

 

Precious Metal Companies perform better

 

Lonmin set the pace for other platinum miners, helped by a partial recovery of the platinum price. Aquarius Platinum (LSE: AQP) moved up 6.5% to 250p per share. Johnson Matthey (LSE: JMAT) posted gains for a second day in a row, adding 4%.

 

Gold producers opened with gains, but retreated by the end of the day. Peter Hambro Mining (LSE: POG) climbed 4.7%, but Randgold Resources (LSE: RRS) and Yamana Gold (LSE: YAU) made little headway.

 

Silver producer and FTSE 100 constituent Fresnillo (LSE: FRES) upped 1.7% however FTSE 250 silver miner Hochschild Mining (LSE: HOC) slipped 1.3%.

 

Junior Gold companies were mixed. Oxus Gold (AIM: OXS) lost 1.3%, Kryso Resources (AIM: KYS), Pan African Resources (AIM: PAF) and Patagonia Gold (AIM: PGD) were all flat, while Medusa Mining (AIM & ASX: MML), Cluff Gold (AIM & TSX: CLF) and Norseman Gold (LSE: NGL) surged 6%, 3% and 4.3% respectively. Central China Goldfields (AIM: GGG) recovered after Wednesday’s steep fall, adding 7%. Gold and Silver exploration junior Mariana Resources (AIM: MARL) initially slipped 2% on profit taking, but recovered later and finished flat.

 

Big Miners climb, helping Footsie rise

 

BHP Billiton (LSE: BLT) climbed 5.2%, Anglo American (LSE: AAL) and Rio Tinto (LSE: RIO) also rose, adding 5.1% and 7% respectively.

 

Copper miners were mostly on the rise, helped by positive H1 results. Vedanta (LSE: VED) was up 7%, while Antofagasta (LSE: ANTO) and Kazakhmys (LSE: KAZ) both released production updates, gaining 8.2% and 6% respectively. First Quantum Minerals (LSE & TSX: FQM) added 6.8%.

 

Oil producers mostly unmoved

 

Oil supermajor BP (LSE: BP.) posted small gains in the morning, but finished roughly at the opening level.

 

Cairn Energy (LSE: CNE) and Dragon Oil (LSE: DGO) moved up less than 1%, while Dana Petroleum (LSE: DNX) was in the red, declining slightly.

 

Juniors did not move by much either. Victoria Oil & Gas (LSE: VOG) slipped 4.6%, Empyrean Energy (AIM: EME)Green Dragon Gas (LSE: GDG) and Gulfsands Petroleum (AIM: GPX) were all flat. Northern Petroleum (AIM: NOP) continued to see profit taking, losing 2.4% today after declining over 4% on Wednesday. Ascent Resources (AIM: AST) was also in the red after posting good gains yesterday, retreating 5.7%. Max Petroleum (AIM: MXP) again opened in the blue but finished flat.

 

Insurance, banks, private equity rise

 

Financial stocks mostly rose during the day after Wednesday’s strong gains driven by the partly nationalised Lloyds and RBS after Lib Dem Treasury spokesman said it could take 10 years before the banks could be fully privatized again. RBS Chairman Philip Hampton said yesterday the European Commission asked the banks to dispose of more assets, saying the statement was more directed at Lloyds than RBS.

 

RBS (LSE: RBS) was up 3.5%, Lloyds Group (LSE: LLOY) added 1%, HSBC (LSE: HSBA) also gained going up 3.9%, while Barclays (LSE: BARC) climbed 4.7%. Standard Chartered (LSE: STAN) opened in the red, but finished just above the opening level.

 

Insurance groups were mostly flat. Legal & General (LSE: LGEN) and Aviva (LSE: AV.) both added 1.5%, Prudential (LSE: PRU) rose 2.2%. Old Mutual (LSE: OML) and RSA Insurance Group (LSE: RSA) gained 1% and 2.3% respectively.

 

Private equity group 3i (LSE: III) was up again, adding 7%.

 

Large Cap News

 

Copper miner Kazakhmys (LSE: KAZ) saw higher output in the first half and said it is poised to meet the goals set for 2009 despite anticipating lower production levels  in the second half.

 

Kazakhmys today released its production summary for H1 and Q2 2009, reporting an 8% rise in gold production, which went up to 67.0 koz (thousand ounces), a 10% hike in silver production to 9,145 koz and a 15% increase of zinc concentrate output to 76 kilotonnes (kt).

 

Royal Dutch Shell PLC (LSE: RDSA) warned substantial further staff reductions are likely as it reported a drop in second quarter and first-half profits due to a slump in energy demand and falling oil prices.

 

“Conditions are likely to remain challenging for some time, and we are not banking on a quick recovery,” the oil giant said in a statement.

 

BAE Systems PLC (LSE: BA) reiterated comments made in May that it continues to expect good growth for 2009 despite a lower level of land vehicle sales as it reported solid profit and sales rises for the first half to June 30 2009.

 

Sales were up at £9.94 billion from £7.75 billion in the previous first half, while underlying EBITA increased to £979 million from (£820m). Exchange translation, primarily relating to US dollar-denominated businesses, generated £126 million of the increase.

 

Fixed-line phone company BT Group (LSE: BT.A) is having its best day in the market in 9 years after releasing better than expected quarterly results following a string of disappointing news.

 

BT’s adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was at £1.37 billion, posting a year on year decline from Q1 2008, but beating BT’s expectations of £1.28 billion. Q1 profits dipped 33% year on year to £214 million.

 

UK’s biggest newspaper group Trinity Mirror (LSE: TNI)’s slowdown appears to go smoother than expected, as investors reacted positively to the half yearly financial report from the company today, which said Trinity was positioned for growth amid improving rates of decline.

 

The Canary Wharf headquartered Trinity, which owns the Daily Mirror, Sunday Mail and 240 regional newspapers, said group revenues declined 16.9% year on year to £383 million from the first half of 2008, while the company’s operating profit reached £49.1 million, down from £80.5 million a year before.

 

Small Cap News

Performance management consultancy Avisen PLC (AIM: AVI), the result of a the reverse takeover of Avisen Group Ltd by AIM quoted cash shell Z GROUP PLC in February 2009, reported a £505,000 pretax profit in the 11 months to end-January 2009 compared with a £4.9 million loss in the year to February 28 2008.

 

Since January, Avisen completed the acquisitions of Wexner Global Ltd, Eon Enterprises Ltd and Quadrum Consulting (Propriety) Ltd. Completion of a fourth acquisition, Inca Holdings Ltd, is imminent, the group said.

 

Discovery Metals Ltd (ASX: DML; AIM: DME) said the bankable feasibility study at its Boseto copper project in Botswana is 50 percent complete and remains on track for completion in the March quarter of 2010.

 

In a quarterly report for the April 1-June 30 2009 period, the group also said it completed the infill drilling programme at Boseto’s Zeta prospect and expects the infill drilling at Plutus/Petra to be completed in September 2009.

 

Gulf Keystone Petroleum Ltd (AIM: GKP) denied press speculation that its chairman and CEO Todd Kozel and business development director Ali Al-Qabandi are in discussions with Indian Oil Corp and the Oil India joint venture about a takeover of the company.

 

It did confirm that it is contemplating a placing of common shares to raise additional funds for the company's Kurdistan development programmes and a further announcement will be made in due course.

 

Mineral exploration company Nautilus Minerals Inc (TSX & AIM: NUS) said it has reached an agreement with Fugro to provide services for Nautilus’ 2009 programs in Papua New Guinea and the Solomon Islands.

 

The services provided by Fugro under the terms of the contract will include regional geophysical and geochemical surveys and target testing, which consists of detailed geophysical surveys, geological traversing and sampling of SMS prospects with a Remote Operated Vehicle.

 

After closing a deal in South America earlier this month, data synchronisation provider Synchronica (LSE: SYNC) turned its attention to the booming mobile phone market in Africa, receiving a USD 165,000 order for its award winning product Mobile Gateway.

 

The company said the offer came from an undisclosed North African operator and it is for an initial 20,000 user license of Mobile Gateway, Synchronica’s product which offers carrier-grade push email and synchronization services.

 

Finders Resources Ltd (AIM,  ASX: FND) announced that trading in its ordinary shares on the Australian Securities Exchange has been halted pending the release of an announcement in relation to a capital raising.

 

This announcement is expected to be released within the next two days, at which stage trading in Finders shares will resume on the ASX.  Finders shares will continue to trade on AIM throughout this period.

 

Greatland Gold PLC (AIM: GGP) said the Western Australian government has granted it the title to the mineral rights for a large new gold project, named  Ernest Giles, two contiguous tenements covering 686 square kilometres in the desert 250 kilometres north east of Laverton.

 

The Ernest Giles region hosts the recently discovered Tropicana gold prospect, operated by AngloGold Ashanti Australia Ltd, which lies about 200 kilometres to the south of the Ernest Giles project.

 

A plethora of better than anticipated updates this morning helped propel UK indices higher. One of the contributors to the strong rise was Hornby plc (LSE: HRN) which jumped 10% this morning after the company said it was seeing strong demand for its hobby products. Shares in Hornby have risen by nearly 50% in the past few weeks alone.

 

Speaking before the company’s Annual General Meeting (‘AGM’), Chairman Neil Johnson provided an update for the period covering 1 April 2009 to 30 July 2009.

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