Overview: the FTSE 100 gained 0.1% today after falling early in the session on yesterday’s weak US manufacturing and personal income data. Today’s update on the Chicago PMI (purchasing managers index) showed a decline from 62.3% to 56.7%, reflecting a slowdown in the rate of expansion of manufacturing activity in the Midwest. US consumer confidence figures released by the Conference Board were better, showing an unexpected increase from 51 to 53.5.
Chipmaker ARM Holdings (LON:ARM) emerged atop the leaderboard with a 7% rally. Silver miner Fresnillo (LON:FRES) and Royal Bank of Scotland (LON:RBS) followed, advancing 2.5%. Consumer goods company Reckitt Benckiser (LON:RB) added just over 2%.
InterContinental Hotels (LON:IHG) and business services company Serco Group (LON:SRP) were at the bottom of the pile with losses of nearly 3%. Quality and safety services group Intertek (LON:ITRK) lost 2%.
US stocks were off to a slow start. The Dow Jones Industrial Average tacked on 0.2%, while the broader S&P 500 index rose marginally and the technology heavy NASDAQ composite slid 0.25%.
Oil prices have been in decline so far this week, moving along with equity markets. The positive trend established late last week was reversed on Monday after an update on US personal income revealed an increase of just 0.2% in July, which was less than expected, failing to match the 0.4% rise in personal spending. As a result, the savings rate fell from 6.2% to 5.9%.
On top of that, the Dallas Fed manufacturing index turned negative in August after rising in the previous month, but dropping in June for the first time since October 2009.
Investors are now looking to Friday’s key US jobs data that will include non-farm payrolls and unemployment rate, serving as one of the main indicators of the strength of the . Expectations aren’t very high with further declines in payrolls envisioned and the current 9.5% unemployment rate projected to go up.
Apart from the movements in stock markets, oil prices will be impacted by this week’s inventories reports from the American Petroleum Institute (API) and the US Energy Department, which reported a huge gain of 4.11 million barrels in US stockpiles last week.
October Brent Crude slid to US$76.36/barrel, while US light, sweet crude for October delivery moved down to US$74.51/barrel.
Blue chip oil and gas producers were in decline today. Supermajors BP (LON:BP) and Shell (LON:RDSB) dropped 1.5%, while other FTSE 100 constituents BG Group (LON:BG) and Tullow Oil (LON:TLW) shed nearly 2%. Cairn Energy (LON:CNE) declined marginally.
Amec (LON:AMEC) was flat. Fellow oil and gas engineering firm Petrofac (LON:PFC) posted a small loss.
Most midcaps followed the trend.
Melrose Resources (LON:MRS) slid 2%. Premier Oil (LON:PMO) and Dragon Oil (LON:DGO) retreated 1.6% and 1.2% respectively. Salamander Energy (LON:SMDR) declined 1%, while Dana Petroleum (LON:DNX) and JKX Oil & Gas (LON:JKX) posted small losses.
Heritage Oil (LON:HOIL) bucked the trend, climbing 2%. Soco International (LON:SIA) was flat.
Sevices company Wood Group (LON:WG) moved with the sector, shedding 2%. Oil and gas engineering firm Wellstream Holdings (LON:WSM) did better, advancing 1.3%.
North Sea oil explorer and developer Xcite Energy (LON:XEL) outperformed the sector, tacking on 6%.
Gold reaches $1,245
Gold rallied today, stopping less than US$20 away from all time highs of US$1,265/oz as investors were increasingly pouring money into safe haven assets, driven by pessimism after yesterday’s downbeat manufacturing and personal income data and ahead of Friday’s key jobs report from the US Labor Department.
Gold is seen as one of the main safe haven assets and usually moves inversely to equities.
Gold rose to US$1,246/oz, while silver advanced to US$19.24/oz. Platinum went against the tide, sliding to US$1,518/oz.
Major mining stocks were in decline in the morning before bouncing back later in the day. African Barrick Gold (LON:ABG) was sitting just below the opening level. Silver miner Fresnillo (LON:FRES) posted a small loss before rising 2.5%, while platinum producer Lonmin (LON:LMI) clawed back the 2.5% it lost early in the session.
Randgold Resources (LON:RRS) made little headway.
Specialty chemicals firm Johnson Matthey (LON:JMAT) declined 1%.
Midcaps did better with Aquarius Platinum (LON:AQP) and silver producer Hochschild Mining (LON:HOC) rising marginally and gold miner Petropavlovsk (LON:POG) advancing 2%.
South Africa and Mozambique focused junior gold miner Pan African Resources (LON:PAF) was among the leading performers, rallying 7%. Zambia focused coloured gemstone company Gemfields Resources (LON:GEM) also did well, posting an 8.5% gain.
UK-based Botswana and South Africa operating diamond mining and exploration company Firestone Diamonds (LON:FDI) and Australia operating mining exploration company GGG Resources (LON:GGG) moved with the sector, shedding 8.5% and 6% respectively.
Base metal miners surge
Copper and zinc were flat at US$3.35/lb and US$0.92/lb, while nickel slid to US$9.37/lb.
Most base metal miners were in the black. Eurasian Natural Resources (LON:ENRC) was an exception, sliding 1%.
Rio Tinto (LON:RIO) was in the lead with a 2.4% advance. Anglo American (LON:AAL) and Vedanta Resources (LON:VED) added nearly 2% and BHP Billiton (LON:BLT) rose 1.5%. Kazakhmys (LON:KAZ) and Xstrata (LON:XTA) tacked on 1%, while Antofagasta (LON:ANTO) stood just above the opening level.
Swiss-headquartered resources company with assets in Ukraine Ferrexpo (LON:FXPO) outperformed the sector, climbing 4% to reach 300 pence per share.
Minerals exploration and development company focused on gold and base metals exploration Thor Mining (LON:THR) was in decline, shedding 15%. Australian-based minerals company Forte Energy (LON:FTE) followed with a 7% decline.
Indonesia operating gold and copper explorer and developer Finders Resources (LON:FND) and developer of the Paguanta zinc-lead-silver-gold Project in Chile Herencia Resources (LON:HER) were among the top performers in the sector with gains of 9% and 7% respectively.
Banks, insurance, private equity
Most banking stocks were on the rise today. Part-nationalised Royal Bank of Scotland (LON:RBS) and Lloyds (LON:LLOY) added 2.5% and 1% respectively. HSBC (LON:HSBA) and Standard Chartered (LON:STAN) posted small gains. Barclays (LON:BARC) went against the tide, sliding 1%.
Insurance companies didn’t show much movement today. Aviva (LON:AV), Old Mutual (LON:OML), Prudential (LON:PRU), RSA Insurance Group (LON:RSA) and Standard Life (LON:SL) posted small losses. Admiral Group (LON:ADM) and Legal & General (LON:LGEN) were little moved.
Private equity group 3i (LON:III) dropped 1.1%.
Small Cap News
Orosur Mining (LON:OMI, TSX-V:OMI) has appointed a new Chief Operating Officer - Luis Albano Tondo - who will join the company on the 1st September 2010.
Red Rock Resources (LON:RRR) said Jupiter Mines is to fast-track its Mount Ida Magnetite Project in Western . AIM-listed Red Rock is a 5.23% shareholder in Jupiter, which has a tie-up with Brian Gilbertson’s Pallinghurst Resources and Korean giant Posco.
Increased production at its flagship Co-O mine and higher gold prices have helped Medusa Mining (LON:MML) to record-breaking results in the last
Advanced Computer Software (LON:ASW) announced today it has signed a five-year contract worth up to £5.2 million with the Nursing and Midwifery Council (NMC). The company will manage and host the organisation’s IT infrastructure across two different data centres.
Gulfsands Petroleum (LON:GPX) said this morning that drilling at its Lambouka-1 well off the coast of Italy continued to plan last week. The 8 1 / 2 section was drilled to a depth of 2,785 metres and through the Aboid Formation - the main target section.
While focusing on development to boost future performance, Norseman Gold (LON:NGL) was still able to produce enough gold to remain profitable, beating investor expectations with its full year results.
Stronger gold demand made up for a rise in production costs and better grades offset a brief mining stoppage, driving Pan African Resources’ (LON:PAF, JSE:PAN) full year revenues up 30%.
Initial drill results from Ovoca Gold’s (LON:OVG) Olcha project comfortably achieve commercial status, according to Davy’s resource expert Job Langbroek. In a note to investors, the Dublin-based resource analyst reflected on Olcha’s significant drilling results. Langbroek emphasised that the ‘commercial’ grades would even support underground projects.
Finders Resources (ASX, LON: FND) has received firm commitments from investors for a placement of 75 million new ordinary shares issued at A$0.28 per share to raise gross proceeds of AUD$20.95 million.
Large and Mid Cap News
The internet gambling firm 888 Holdings (LSE: 888) has cancelled the