Overview: the FTSE 100 extended gains today, adding 0.8% on top of yesterday’s 0.9% advance after getting support from commodities, property stocks and financials, which were recovering from yesterday’s falls on disappointing results from HSBC (LSE: HSBA).
Airline British Airways (LSE: BAY) and chipmaker ARM Holdings (LSE: ARM) led the blue chips, rising 5%.
Commercial property company Hammerson (LSE: HMSO) and silver miner Fresnillo (LSE: FRES) both added 3.5%. Interdealer broker ICAP (LSE: IAP), Royal Bank of Scotland (LSE: RBS) and hedge fund manager Man Group (LSE: EMG) added slightly more than 3%, while InterContinental Hotels Group (LSE: IHG) and another property stock Segro (LSE: SGO) were up 3%.
Just four FTSE 100 constituents lost more than 1% today. Prudential (LSE: PRU) was at the bottom of the table with a 8% loss, while Vedanta Resources (LSE: VED) was down 5% and car insurer Admiral Group (LSE: ADM) dropped 4.2%. Associated British Foods (LSE: ABF) lost 1.4%.
US stocks also were higher today. The Dow Jones Industrial Average climbed 0.2%, the broader S&P 500 index added 0.3% and the technology heavy NASDAQ composite opened 0.35% higher.
Crude firmed today ahead this week’s key inventories reports on positive economic data that came out in the US, Europe, Japan and Australia to boost the demand outlook for oil.
A key US manufacturing update from the ISM (Institute of Supply Management) showed a seventh consecutive month of expansion, though at a slower pace than in January as the ISM’s index declined from 58.4 to 56.5 for February. Personal income and spending also increased with income growing 0.1% in January, while spending rose 0.5% and saving rates was lower at 3.3% compared to 4.2% for the previous month.
Australia added to the sentiment today after its central bank raised a key interest to 4% to reflect an improvement in the economic outlook. Meanwhile, the unemployment rate in the euro zone remained at 9.9% and Japan’s jobless rate surprisingly declined to 4.9%.
Further direction for crude will be set by inventories data for the week to 26 February from the American Petroleum Institute (API), which is set to be released later today, while a more closely watched stockpiles report from US Energy Information Administration (EIA) is due out tomorrow.
April Brent Crude rose to US$77.62/barrel, while US light, sweet crude reached US$79.40/barrel on the New York Mercantile Exchange (NYMEX).
Major oil and gas producers posted small gains today. Tullow Oil (LSE: TLW) added less than 1%, as did BP (LSE: BP), while fellow supermajor Shell (LSE: RDSB) gained nearly 1%, as did another FTSE 100 constituent Cairn Energy (LSE: CNE). BG Group (LSE: BG) outperformed its peers, climbing 1.2%.
Petrofac (LSE: PFC) gained 1%, while fellow oil and gas engineering firm Amec (LSE: AMEC) was flat.
Midcaps were mixed. Dana Petroleum (LSE: DNX) was in the lead with a 1.8% climb. Dragon Oil (LSE: DGO) and JKX Oil & Gas (LSE: JKX) followed with gains of nearly 1%. Heritage Oil (LSE: HOIL) rose marginally, while Salamander Energy (LSE: SMDR) and Soco International (LSE: SIA) were flat.
Premier Oil (LSE: PMO) posted an insignificant loss, while Melrose Resources (LSE: MRS) dropped 1.4%.
Services companies Wood Group (LSE: WG) and Wellstreeam Holdings (LSE: WSM) did well, advancing 1.3%.
Small caps showed little movement today with the exception of EU operating Rome-based oil junior Mediterranean Oil & Gas (AIM: MOG), which rallied 8%.
Gold reaches $1,120 ahgead of key updates
Precious metals recovered today with gold reclaiming the US$1,120/oz after the earthquake in Chile drove up copper prices as investors were anticipating a supply shortage due to the damage to the mining infrastructure in the world’s largest producer of the base metal. Gains in copper supported other metals with movement in currency markets also factoring in.
Gold defied the trend of moving inversely to the US dollar, which extended gains on other major currencies today as the euro remained under pressure from Greece’s debt crisis and the pound was pushed down by uncertainties over the upcoming elections, raising questions about the country’s ability to find a solution to its own debt problem.
The Greek debt crisis has been dragging on for months to weigh down Europe’s single currency. Greece’s government worked out an economic austerity plan to cut the budget deficit by 3% to meet the European Union’s targets, sparking mass protests around the country. The country was urged to implement more austerity measures yesterday to seek further improvement in its current financial situation.
The instability in the currency markets boosts gold’s appeal as a safe haven for investors, driving up the demand and supporting the prices at the current level despite a stronger dollar.
Other precious metals tracked gains in gold as silver and platinum advanced to US$16.57/oz and US$1,557/oz respectively.
Miners were mixed today. Fresnillo (LSE: FRES) led the sector with a 2.6% gain after reporting record silver production for 2009. Gold miner Randgold Resources (LSE: RRS) rose 1.6%, but platinum producer Lonmin (LSE: LMI) went against the tide, posting a small loss.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) rose marginally.
Gold producer Petropavlovsk (LSE: POG) led the midcaps with a 1.2% advance. Aquarius Platinum (LSE: AQP) added less than 1%, while fellow FTSE 250 constituent, silver producer Hochschild Mining (LSE: HOC), lost nearly 1%.
Turkey and Ethiopia operating gold miner Stratex International (AIM: STI) led the juniors with a 14% rally after announcing a preliminary gold resource for Ortacam zone at its Oksut project tin Turkey.
Africa operating gold miner GMA Resources (AIM: GMA) and Tajikistan operating gold miner Kryso Resources (AIM: KYS) followed, climbing 7.5% and 6.5% respectively.
Stellar Diamonds (AIM: STEL), Gemfields Resources (AIM: GEM) and commodity asset development company Mercator Gold (AIM: MCR) headed in the opposite direction, slipping 7%, 4.5% and 4% respectively.
Copper and nickel climb after earthquake in Chile
Base metals also advanced. Copper stabilized at US$3.33/lb after rallying on the earthquake in Chile, which is the world’s largest producer of the base metal. Nickel rose to US$9.73/lb. Zinc, however, was flat at US$0.99/lb.
All base metal miners posted gains with the sole exception of Vedanta Resources (LSE: VED), which tumbled 4.5% after launching an offering of US$775 million of convertible bonds.
Kazakhmys (LSE: KAZ) was the top performer in the sector with a 2.3% gain. Xstrata (LSE: XTA) tacked on nearly 2%, while Anglo American (LSE: AAL), Antofagasta (LSE: ANTO) and BHP Billiton (LSE: BLT) added 1.4%, 1.3% and 1.2% respectively. Eurasian Natural Resources (LSE: ENRC) and Rio Tinto (LSE: RIO) added about 1%.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) held steady at 292 pence.
Philippines operating nickel miner Rusina Mining (ASX: RML; AIM: RMLA) led the juniors with a 13.5% rally after completing its due diligence requirements for the scheme of arrangement with laterite nickel specialist European Nickel (AIM: ENK). Russia focused copper and nickel miner Amur Minerals (AIM: AMC) and copper and gold miner EMED Mining (AIM: EMED) were up 6% and 4% respectively.
Specialty minerals exploration and development company Thor Mining (AIM: THR) was at the bottom of the sector with a 22% decline. South Africa based coal exploration and production company Strategic Natural Resources (AIM: SNR) and Tunisia focused metal miner Maghreb Minerals (AIM: MMS) dropped 6% and Mineral sands producer Kenmare Resources (LSE: KMR) slipped 4%.
Banks, insurance, private equity
Most financial stocks were in buying mode today. Royal Bank of Scotland (LSE: RBS) and Standard Chartered (LSE: STAN) le the banking sector, tacking on more than 3%. Barclays (LSE: BARC) added 2.3%, while HSBC (LSE: HSBA) rose 1.9% and Lloyds (LSE: LLOY) advanced 1.6%.
Prudential (LSE: PRU) was at the bottom of the insurance sector with an 8% slide after buying AIG’s (NYSE: AIG) Asian assets for £24 billion. Admiral Group (LSE: ADM) also declined, shedding 4%, while Standard Life (LSE: SL) declined marginally.
Legal & General (LSE: LGEN) was flat, while Aviva (LSE: AV) added 1% and RSA Insurance Group (LSE: RSA) and Old Mutual (LSE: OML) climbed 1.6% and 1.8% respectively.
Private equity group 3i (LSE: III) rose marginally.
Small Cap Movers
Other notable movers among the small caps included mobile email and data synchronisation group Synchronica PLC (AIM: SYNC), which fell 15%.
Large and Mid Cap News
Renovo Group (LSE: RNVO) and Shire Pharmaceuticals (LSE:SHP) have amended a licensing agreement originally signed in 2007 to Juvista, a drug which reduces scarring by enhancing tissue regeneration.
Chile's largest insurer, Royal & SunAlliance Seguros Chile, a subsidiary of the RSA Insurance Group (LSE: RSA), told investors that the weekend's earthquake, which measured 8.8 on the Richter scale, will cost the company an estimated 30m in claims.
Aerospace and defence group Meggitt (LSE: MGGT) was hit by the economic downturn in the year ended 31 December 2009, reporting a 1% fall in revenues to 1.15bn while pre-tax profit dropped 4% to 234m compared to 243m in 2008. At 25.3p, earnings per share (EPS) was 5% lower than the previous year.
Mexico City-headquartered precious metals miner and FTSE 100 constituent Fresnillo (LSE: FRES) reported record attributable silver production of 37.9 Moz (million ounces) for the year to end-December 2009, which marked a 9% improvement over the previous year, while gold production rose 5% to 276,584 oz, helping the full year revenues to a 18% increase to US$860 million.
Set-top box developer and FTSE 250 constituent Pace (LSE: PIC) has agreed to acquire Paris-based IP and cable gateways specialist Bewan Systems SA for up to €12.5 million, depending on the achievement of earn-out targets.
Small Cap News
Stratex International (AIM: STI) has released what it called an "extremely encouraging" preliminary in-house resource estimate at its Öksüt gold project, located in the Central Anatolia region of Turkey. The in-house resource estimate determined that the Ortacam Zone, contained a total of 147,814 ounces of oxide gold across all resource categories. The in-house estimate was carried out to JORC standards.
Marketing software specialist smartFOCUS Group PLC (AIM: STF) said UK online travel and leisure retailer lastminute.com has selected its multi-channel marketing software and services to drive proactive customer life-cycle management and reactive marketing through the lastminute.com website.
European Nickel (AIM, PLUS: ENK) and Rusina Mining NL (AIM: RMLA, ASX: RML) announced that they have satisfied the due diligence conditions of their proposed merger. The transaction is now expected to complete in May 2010. In February European Nickel signed an agreement to acquire Rusina in an equity-based deal, with a capped value of up to 27.1m.
Advanced Computer Software (AIM: ASW) has acquired Surrey-based software firm Cerrus Ltd for 0.37m in cash. The deal adds Cerrus' Saturn software suite, which is designed for community care and support management services.
Connemara Mining (AIM: CON) has intersected high grade zinc-lead mineralisation in another drill hole at the Stonepark North zone located in Limerick, Ireland. The company said the latest results suggest the presence of a continuous zone of zinc-lead mineralisation, at a depth of approximately 200-220m. At Stonepark, Hole 36 intersected 5.35m at 13.2% zinc and 3.2% lead from a depth of 202.7m
Orosur Mining (AIM: OMI) has upped the resource grade estimate of its Arenal Deeps gold deposit at the San Gregorio project in Uruguay after Mine Development Associates carried out a NI43-101 compliant estimate.
Caza Oil & Gas (AIM: CAZA, TSX: CAZA) has contracted Patterson-UTI Energy Inc to drill the Matthys-McMillan Gas Unit #2 development well in the Wharton West Wilcox field in Texas, a direct offset to Caza's Matthys-McMillan Gas Unit #1 well that was completed by Caza in July 2007 and has produced approximately 2.4 bcfge (billion cubic feet of gas equivalent) to date.
Minera IRL (AIM: MIRL) has announced the appointment of Napoleon Valdez Ferrand as a non-executive director of the company.
Imperial Innovations Group (AIM: IVO) said its partner company Membrane Extraction Technology (MET), in which it holds a 20 percent stake, was sold to to Evonik Industries AG, a privately-owned German chemical manufacturer, for £4.5m in cash. Imperial Innovations received a cash payment of 903,976, resulting in a net payment of £653,409 after deducting the Imperial College's share of the proceeds.
African focused mineral explorer and mine developer Discovery Metals (AIM: DME) was tipped in this week’s Shares magazine. The weekly said that the news flow stemming from development of the Boseto copper mine in Botswana will drive the company’s share price in the coming months.
Xtract Energy’s (AIM: XTR) 50%-owned joint venture Extrem Energy AS plans to spud the Menekselik-1 well in April. The new prospect is located on the Siraseki licence in Turkey. The well is targeting the Aslantis sandstones which were identified from the results of recent seismic and geochemical surveys.
Rodinia Minerals (TSX-V: RM; OTC: RDNAF) said it has received positive initial sample results from its auger drill exploration program on its Salar de Diablillos lithium-brine project in Argentina. According to Rodinia, these initial results may be indicative of high concentrations of lithium and potash. The company is encouraged by the results but it believes that the nucleus of the salar has yet to be intersected.