Overview: contrary to expectations, the UK market was off to a slow start with the FTSE 100 tacking on just 0.2% despite a number of high profile risers, yesterday’s US GDP data that caused the markets to take off and today’s upbeat economic updates released in the UK.
Nationwide Building Society said today that UK housing prices rose for the sixth consecutive month, increasing 0.5% in October after improving 0.9% in September and 1.4% in both July and August. The average cost amounted to £162,038, marking a year on year increase of 2%, the first since March 2008. Gfk NOP added to the momentum, reporting an increase in the index of sentiment to minus 13 in October, which reached the highest level in 21 months.
Partly nationalised banks Lloyds (LSE: LLOY) and Royal Bank of Scotland (LSE: RBS) were still in demand, adding 4.7% and 1.7% on top of yesterday’s solid gains. The two day rally was triggered by Lloyds’ yesterday’s confirmation of capital raising moves.
Investment management business Man Group (LSE: EMG) emerged atop the leaderboard with a 6% surge, eliminating most of its recent losses. Communications services group WPP (LSE: WPP) followed, climbing 4.5%.
Clothing retailers also did well as Next (LSE: NXT) and Burberry (LSE: BRBY) both added 3%.
However, losses in the insurance and mining sectors kept the Footsie’s gains to a minimum.
Car insurer Admiral Group (LSE: ADM) was one of the leading fallers in the FTSE 100 with an almost 2% slide. Sector peers Old Mutual (LSE: OML), Aviva (LSE: AV) and Prudential (LSE: PRU) also weighed on the FTSE 100 with losses of 1-2%.
Most miners turned negative early. Xstrata (LSE: XTA), Eurasian Natural Resources (LSE: ENRC) and Fresnillo (LSE: FRES) all shed more than 1%, mingling with the insurers on the top fallers list.
Stock index futures in the US pointed to a lower start on Wall Street, which will be correcting after yesterday’s rally which saw the Dow Jones, S&P 500 and Nasdaq indexes gain 1.5-2%.
Oil prices fluctuated around the morning levels with December Brent Crude rising to US$77.22/barrel, while US light, sweet crude for December delivery inched lower to US$79.13/barrel.
With the exception of Tullow Oil (LSE: TLW), which held on to a small gain, all oil and gas stocks in the FTSE 100 turned negative in early trade. Supermajors BP (LSE: BP) and Shell (LSE: RDSA) as well as fellow blue chips BG Group (LSE: BG) and Petrofac (LSE: PFC) lost less than 1%, while Cairn Energy (LSE: CNE) declined marginally.
Midcaps were more volatile in the morning. Heritage Oil (LSE: HOIL) and Dragon Oil (LSE: DGO) outperformed the sector with gains of 2.3% and 1.8%, while Dana Petroleum (LSE: DNX) followed the majors and retreated 1.5%.
Junior energy companies mostly rose.
Europe focused oil and gas developer Ascent Resources (AIM: AST) was in the lead with a gain of more than 7%. US focused junior Empyrean Energy (AIM: EME) and Iraq and Algeria operating Gulf Keystone Petroleum (AIM: GKP) followed, advancing 6.3% and 5.7%.
Energy investor Xtract Energy PLC (AIM: XTR) and North Sea explorers Xcite Energy (AIM: XEL) added 4% and 3% respectively, while Peru, Colombia and Cuba operating oil and gas explorer and producer Gold Oil (LSE: GOO) declined 4% after reporting full year results.
Miners tumble on weak metal prices
Precious metals were in decline today with Gold retreating to US$1,042/oz after testing US$1,050, while Silver slid to US$16.52/oz. Platinum fell to US$1,322/oz.
Most major miners were in decline today, responding to the declines in metals prices.
Silver miner Fresnillo (LSE: FRES) was at the bottom of the pile with a 3% slide. Platinum miner Lonmin (LSE: LMI) and gold producer Randgold Resources (LSE: RRS) lost more than 1.5%.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) went against the tide, climbing 1%.
Midcaps fell into the same pattern. Aquarius Platinum (LSE: AQP) led the fallers in the sector with a 3.6% decline, while silver producer Hochschild Mining (LSE: HOC) posted marginal losses. Gold miner Petropavlovsk (LSE: POG) did well with a marginal gain.
Juniors mostly rose.
Kazakhstan operating gold producer and copper developer Frontier Mining (AIM: FML) was in the lead with a 10% surge. Africa operating gold and platinum miner Goldplat (AIM: GDP), South American based explorer Mariana Resources (AIM: MARL) and Uzbekistan focused gold miner Oxus Gold (AIM: OXS) added more than 8%. Canada based junior gold developer Rambler Metals and Mining Plc (AIM: RMM) rose 7%.
Tajikistan operating gold miner Kryso Resources (AIM: KYS) and Brazil focused gold miner Horizonte Minerals (AIM: HZM) went in a different direction, shedding 6% and 4% respectively.
Copper and Nickel slide to weaken miners
Base metals also declined. Copper inched lower to US$2.98/pound, while Nickel moved down to US$8.40/pound. Zinc once again slipped below US$1/pound.
Almost all major base metal focused stocks plunged into the red in the morning. Rio Tinto (LSE: RIO) and Anglo American (LSE: AAL) were able to post small gains.
Kazakhmys (LSE: KAZ) and ENRC (LSE: ENRC) led the fallers with losses of 2%. BHP Billiton (LSE: BLT) and Xstrata (LSE: XTA) moved down 1.5%, while Vedanta Resources (LSE: VED) declined 1%.
Antofagasta (LSE: ANTO) declined marginally.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) outperformed the sector with a 2% climb.
Some of the juniors were able to post good gains in the morning.
South American focused junior miner Herencia Resources (AIM: HER) was in the lead with a 20% hike. Tantalum concentrate supplier with assets in Mozambique Noventa (AIM: NVTA) was close with a 9% gain, while iron ore focused investor Red Rock Resources (AIM: RRR) and Australia focused coking coal producer Caledon Resources (AIM: CDN) advanced 7%.
Banks, insurance, private equity
Lloyds (LSE: LLOY) was the leading riser among the financials with a 4.5% climb. Barclays (LSE: BARC) followed with a 2% gain, while HSBC (LSE: HSBA) and Royal Bank of Scotland (LSE: RBS) tacked on less than 1%.
Standard Chartered (LSE: STAN) rose marginally.
Most insurers were in selling mode today. Friends Provident (LSE: FP) outperformed the sector, climbing 3%, while Legal & General (LSE: LGEN) gained 1.3%. Standard Life (LSE: SL) also started the day in the black, rising marginally.
Car insurer Admiral Group (LSE: ADM), which lost 2%, was the leading faller in the market in early trade, but was later surpassed by Old Mutual (LSE: OML), which declined 2.3%.
Aviva (LSE: AV) lost 1.3%, while Prudential (LSE: PRU) and RSA Insurance Group (LSE: RSA) shed less than 1%.
Private equity group 3i (LSE: III) advanced 1.4%.
Large and Mid Cap News
Vedanta’s (LSE: VED) India based subsidiary Sterlite Industries Ltd (BSE: STER) announced that its wholly owned subsidiary Sterlite Energy Limited has filed a Prospectus with the Stock Exchange Board of India and as such is proposing an initial public offering (IPO) of its equity shares to raise INR51,000m (Approx £659m). The equity Shares of Sterlite Energy are proposed to be listed on the Bombay Stock Exchange. J.P. Morgan and Morgan Stanley are among the Global Co-ordinators and Book Running Lead Managers to the IPO.
Rolls-Royce (LSE: RR.) has won an order worth $720m, for its ‘Trent 700’ engines to power ten Virgin Atlantic Airbus A330 aircraft, deliveries are expected to start in 2011. The order continues a strong relationship with Virgin Atlantic, which first ordered Rolls-Royce engines in 1997.
International Power (LSE: IPR) announced that, together with its partners, it has completed a £235m (A$425) project refinancing for the 687km SEA Gas pipeline, which links Victoria and South Australia. The new financing replaces the existing financing and will run until October 2012.
Ferrexpo plc (LSE: FXPO) has declared it will pay an interim dividend of 3.3 US cents per share for the first six months of 2009. In August, the company deferred its decision due to market uncertainties.
National Express (LSE: NEX) appears to be losing the support of its major shareholder following yesterday’s decision to reject Stagecoach’s merger approach. Spain’s Cosmen Family, which own 18.5% of National Express, said in a statement this morning that they were “disappointed” by National Express’ decision to turn down an offer from Stagecoach.
Small Cap News
African Medical Investments PLC (AIM: AMEI) has agreed a US$47 million equity line with an investment fund managed by New York based Harbinger Capital Partners LLC.
Gold Oil (LSE: GOO) said its revenues doubled over the year to 30 April, while profits turned into losses as the company had to operate amid “difficult circumstances.”
Stock broker Ambrian released an initiating coverage report on Cinpart (AIM: CINP), giving the UK based electrical components producer and supplier a “speculative buy” rating, highlighting the high potential of voltage optimization products that is addressing an extensive market that is at the moment covered by just three players, including Cinpart’s Active Energy.
Nyota Minerals (‘Nyota’) (ASX & AIM: NYO) released their quarterly update this morning, highlighting the transformation of the company after the acquisition of Minerva Resources.
Western Australia operating Norseman Gold (AIM & ASX: NGL) has achieved record capital and ore development levels, posting a 50% quarter on quarter increase in development tones, however production was below forecast as a result.
Brisbane-based nickel and copper developer Discovery Metals (AIM: DME, ASX: DML) released its quarterly results today, saying the bankable feasibility study of its Boseto copper project in Botswana was 60% complete and remained on schedule.
Shares in Forte Energy NL (ASX, AIM: FTE) rose in London trade after the uranium and copper explorer announced encouraging assay results from its Bir En Nar and Bir Moghrein projects in Mauritania, West Africa. The share was trading up more than 16 percent in late morning deals at around 10.25 pence a share.
Endeavour International Corp (NYSE Amex: END; LSE: ENDV) said it has acquired 50 percent of the working interest owned by Cohort Energy Co in 24 wells located in five fields and certain proved undeveloped locations associated with the proved developed gas assets in North Louisiana and East Texas for US$15 million.