Markets in the UK and the US switched to selling mode today after China said that its inflation index jumped from 3.6% in September to 4.4% in October, while Cisco (NASDAQ:CSCO) disappointed with its sales forecasts.
The rise in China’s inflation makes it likely that the government will proceed with monetary policy tightening, curbing demand for oil and metals.
Cisco shares plunged after the network equipment giant said its revenues would rise just 3% to 5% in the quarter due to lower demand and a decline in government spending.
The company lost more than US$20 billion in market value in early deals.
The FTSE 100 stood just below the opening level in the last hour of trading.
Telecom group BT (LON:BT.A) led the blue chips with a gain of nearly 6%. Base metal miners Antofagasta (LON:ANTO) and Xstrata (LON:XTA) advanced 4.5% and 4% respectively. Peers Kazakhmys (LON:KAZ) and Anglo American (LON:AAL) tacked on about 3%. Silver miner Fresnillo (LON:FRES) and gold producer African Barrick Gold (LON:ABG) climbed 3.5% and 2% respectively.
Interdealer broker ICAP (LON:IAP) was the heaviest faller in the FTSE 100 with a 4% decline. Satellite telecommunications firm Inmarsat (LON:ISAT), private equity group 3i (LON:III) and insurer Aviva (LON:AV) lost 3%. Airline British Airways (LON:BAY) was down 2.7%.
US stocks were off to a negative start. The Dow Jones and S&P 500 indexes lost 0.5% and 0.75% respectively. The technology heavy NASDAQ composite slipped 1.3%.
Oil prices surged to two year highs after the US Department of Energy reported a decline of 3.3 million barrels in US crude oil stockpiles, signalling an increase in demand.
US light, sweet crude for January delivery climbed to US$88.83/barrel on the New York Mercantile Exchange (NYMEX), while February crude reached US$89.20/barrel.
December Brent Crude advanced to US$89.19/barrel. Brent for January delivery last traded at US$89.43/barrel on the ICE Exchange.
There wasn’t much going on in the oil and gas sector today. BP (LON:BP) posted a small gain, while fellow supermajor Shell (LON:RDSB) and Cairn Energy (LON:CNE) declined marginally.
BG Group (LON:BG) and Tullow Oil (LON:TLW) held steady.
Midcaps were on the rise. Salamander Energy (LON:SMDR) led the way with a 2.7% gain. Heritage Oil (LON:HOIL), Dragon Oil (LON:DGO) and Premier Oil (LON:PMO) added 1.6%, 1.4% and 1.2% respectively.
JKX Oil & Gas (LON:JKX) and Melrose Resources (LON:MRS) tacked on less than 1%.
Soco International (LON:SIA) went against the tide, shedding 1.7%.
Wood Group (LON:WG) posted a small gain. Another services company Wellstream Holdings (LON:WSM) was little moved.
Iraq focused oil exploration company Petrel Resources (LON:PET) surged 10% to emerge among the top performing small caps. Africa and the FSU operating explorer and producer Victoria Oil & Gas (LON:VOG) also did well, tacking on 6%.
Gold reaches $1,420
Spot gold prices posted fresh record highs today at over US$1,420/oz after China said its inflation rate reached 4.4% in October, a two year high and well above the government’s target of 3%.
Gold last traded at US$1,410/oz. Silver and platinum climbed to US$27.44/barrel and US$1,751/oz respectively.
Silver miner Fresnillo (LON:FRES) led the sector in the FTSE 100 with a 3.5% gain. African Barrick Gold (LON:ABG) advanced 2%, while fellow gold producer Randgold Resources (LON:RRS) rose marginally and platinum miner Lonmin (LON:LMI) posted a small loss.
Midcaps did better with silver producer Hochschild Mining (LON:HOC) and gold miner Petropavlovsk (LON:POG) tacked on more than 2.5%, while Aquarius Platinum (LON:AQP) climbed 2%.
Turkey and Saudi Arabia operating gold exploration and development company Ariana Resources (LON:AAU) and Africa operating gold producer Goldplat (LON:GDP) were among the top risers in the sector with gains of 9.5% and 6% respectively.
Base metals rise
Copper and nickel climbed to US$4.02/lb and US$11.01/lb, while zinc reached US$1.14/lb.
Antofagasta (LON:ANTO) and Xstrata (LON:XTA) led the base metal miners with gains of 4.5% and 4%. Kazakhmys (LON:KAZ) and Anglo American (LON:AAL) followed, rising 3%.
Eurasian Natural Resources (LON:ENRC) and Rio Tinto (LON:RIO) rose marginally.
BHP Billiton (LON:BLT) and Vedanta Resources (LON:VED) went against the tide, posting small losses.
London’s only listed pure iron ore producer and FTSE 250 constituent Ferrexpo (LON:FXPO) rallied 12%, reaching 400 pence. Today the company revealed that its strong recent production profile has prompted a decision to resume expansion work that was shelved in 2008.
Gold and uranium explorer and developer Red Rock Resources (LON:RRR) and Regency Mines (LON:RGM), which is focused on mining investment and on exploration of areas of nickel and copper potential led the small caps with gains of 14% and 13% respectively. South Africa coal miner Strategic Natural Resources (LON:SNR) also did well, climbing 8%.
Banks, insurance, private equity
Lloyds (LON:LLOY) outperformed the banking sector with a 1.6% gain.
Other major banks were in decline. Part-nationalised Royal Bank of Scotland (LON:RBS) and Barclays (LON:BARC) lost about 1.5%. HSBC (LON:HSBA) lost 1% and Standard Chartered (LON:STAN) declined marginally.
Insurance companies were in the red today.
Aviva (LON:AV) was at the bottom of the pile with a 3% loss. Legal & General (LON:LGEN) was down 2.5%. Standard Life (LON:SL) dropped 2%. Admiral Group (LON:ADM) and Old Mutual (LON:OML) lost about 1.5%.
RSA Insurance Group (LON:RSA) declined marginally and Prudential (LON:PRU) held steady.
Private equity group 3i (LON:III) retreated 2.5%.
Small Cap Movers
Other notable movers among the small caps included African Medical Investments (LON:AMEI) and M2M communications specialist Telit Communications (LON:TCM), which rallied 9% and 8.5% respectively. Clinical-stage stem cell business ReNeuron (LON:RENE) also did well, rising 5.5%.
Small Cap News
The US-focused shale oil specialist Nighthawk (LON:HAWK and OTCQX:NHEGY) has raised £3.275m from its equity draw-down facility. The cash will be used to fund the work on the Jolly Ranch project in Colorado and specifically the “completion and recompletion of a number of wells that have already been drilled”.
The momentum is building behind Seeing Machines (LON:SEE), which has received another substantial order for its DSS driver monitoring equipment. The system will be installed in a fleet of 32 haul trucks based at a mine in Chile. The company didn’t reveal the name of the customer.
GGG Resources (LON:GGG) is now closer to taking its Bullabulling gold project in Australia to production after raising £7.5 million in an oversubscribed placing.
Sunrise Resources (LON:SRES) shares were up more than 11 percent by midmorning after it contracted a 10-hole programme to test multiple gold targets at its Long Lake gold project in Canada.
Borders & Southern Petroleum (LON:BOR) has contracted a mobile drilling rig for its operations in the South Falklands Basin.
Equity Development is very positive about EMED Mining’s (LON:EMED) upcoming listing on the Toronto Stock Exchange (TSX).
African Minerals (LON:AMI) is set to raise a massive US$800 million to fund it through to first production from the Tonkolili iron ore project in Sierra Leone, currently set for Q4 2011.
Brewin Dolphin has started coverage of TyraTech (LON:TYR), which develops natural pesticides that are effective in controlling insects and parasites but are safe around humans, animals and the environment.
Strategic Natural Resources (LON:SNRP) is set for a considerable cash boost, with the addition of a new black economic empowerment investor to its Elitheni coal project in South Africa.
Software Radio Technology (LON:SRT) this morning said it is raising £2.5 million via a share placing to accelerate the launch of two products - its next generation boat identification system and a new man-overboard device.
Large and Mid Cap News
Ferrexpo (LON:FXPO) shares climbed over 10 percent this morning, as it revealed - in an interim management statement for the period between 1 July and 10 November - that its strong recent production profile has prompted a decision to resume expansion work that was shelved in 2008.
AngloGold Ashanti Ltd (LON:AGD, ASX:AGG, NYSE:AU, JSE:ANG) and Independence Group (ASX:IGO) have approved the development of the Tropicana Gold Project in Western Australia, the most significant gold discovery in Australia for more than a decade.