Overview: The FTSE 100 predictably started the day in the red, heavily dragged down by the mining sector, where almost all major stocks fell into the negative in early trade and stayed there for the rest of the day following a downgrade form JP Morgan, which also upped telecom stocks.
Yesterday’s late afternoon slip on Wall Street and a weak performance form the Asian markets also contributed, further weighing on the UK indices.
Yet, the FTSE 100 reversed early losses and got back above the water, lifted by another round of positive news from the US, where consumer confidence increased more than expected in August as outlook for the job market improved.
Metal prices and oil also picked up, providing some relief for the miners.
Key movers: in the black
Royal Bank of Scotland (LSE: RBS), which has reportedly been in talks with Standard Chartered (LSE: STAN) regarding the sale of its Chinese assets and cut the level of benefits in its pension scheme, emerged atop of the leaderboard with a 4.1% rally. Asset manager Man Group (LSE: EMG) followed with a 4% advance.
Mobile telecoms group Vodafone (LSE: VOD) got close with a 2.5% climb after JPMorgan upgraded the telecoms sector to “overweight,” adiving exposure to a few stocks, including Vodafone. Another telecommunications company Cable and Wireless (LSE: CW) also benefitted with a 2.7% improvement.
Utilities were in demand in the morning when the market was in decline, but somewhat faded away with the FTSE 100’s recovery, but United utilities managed to hold on to early gains and finished 1.6% in the black, upping its value to 459 per share.
Service company Serco Group (LSE: SRP) and real-estate investment trust Liberty International (LSE: LII) also gained, tacking on 1.8% each.
Key movers: in the red
Along with upgrading the telecoms, JP Morgan’s European equity strategy team downgraded the mining sector to “neutral” from “overweight,” causing most mining stocks to switch to selling mode.
The top fallers list was flooded with miners with a few financial stocks, including insurer Old Mutual (LSE: OML) and bank Standard Chartered (LSE: STAN) with retreats of 1.8% and 2% respectively.
Car insurer Admiral Group (LSE: ADM), whose interim results released today turned out to be about in line with expectations, was the FTSE 100’s leading faller with a 3.6% decline.
Cairn Energy (LSE: CNE) also disappointed with a 1.7% decline after saying its export pipeline from the Mangala field in India could face delay and likely would not be completed by the end of the year.
Oil prices held steady above US$73 per barrel on Tuesday. US light crude improved by over US$0.5, stopping just 7 cents shy of US$74/barrel. Brent crude was at US$73.2/barrel.
Most oil stocks were impacted by the slow start in the market and retreated, yet not by much.
Supermajors BP (LSE: BP) and Shell (LSE: RDSB) declined marginally. BG Group (LSE: BG), which reported a dry well in Brazil yesterday, rose 1%.
Mid tier energy companies mostly followed, but some were able to post good gains. Heritage Oil (LSE: HOIL) went against the tide and managed to balance above the opening level, while Dragon Oil (LSE: DGO) outperformed most midcaps, rising 1.8%.
Dana Petroleum (LSE: DNX) climbed less than 1%.
Cairn Energy (LSE: CNE) and Petrofac (LSE: PFC) both fell marginally.
Tullow Oil (LSE: TLW) and Cairn Energy (LSE: CNE) both declined over 1%.
Juniors did a much better job, producing a number of notable risers today
Gulf Keystone Petroleum (LSE: GKP) was the runaway winner with a 77% hike after reporting another oil discovery in its Shaikhan-1 exploration well in Kurdistan. Eastern Europe focused junior Aurelian Oil & Gas (AIM: AUL) and Latin American focused Gold Oil (LSE: GOO) followed, rallying 26% and 20% respectively.
Iraq operating Irish oil company Petrel Resources (AIM: PET) and Chinese coal bed methane developer Green Dragon Gas (AIM: GDG) also performed well, adding 11.7% and 6% respectively.
Atlantic Canada focused oil and gas group Enegi Oil (AIM: ENEG) got off to a strong start in the morning, but gave up most of its gains later in the day after it confirmed that it was in the midst of a placing, expected to be completed at 5 pence per share.
Africa and FSU operating oil and gas junior Victoria Oil & Gas (AIM: VOG) finished just above the opening level after slipping on profit taking.
Diversified energy investment company, Xtract Energy (AIM: XTR), Western Europe operating oil and gas company Northern Petroleum (AIM: NOP) and US focused junior Empyrean Energy (AIM: EME) gave back some of their recent gains, slipping 7.4%, 4.8% and 3.8% respectively.
Gold managed to climb back to US$950/ounce today. Silver also did well, rising to US$14.35/ounce, while Platinum fluctuated around US$1,240/ounce.
Precious metal miners were in decline today.
Aquarius Platinum (LSE: AQP) dropped over 3%, while fellow platinum miner Lonmin (LSE: LMI) retreated less than 1%, as did specialty chemicals company Johnson Matthey (LSE: JMAT).
Silver producers didn’t fare much better as FTSE 100 constituent Fresnillo (LSE: FRES) finished flat after a weak start, but mid tier silver miner Hochschild Mining (LSE: HOC) slipped 1.7%.
Gold miners Randgold Resources (LSE: RRS) and Peter Hambro Miner (LSE: POG) both retreated about 1%.
Save for a few risers, juniors also finished in the negative.
Turkey and Saudi Arabia operating gold explorer KEFI Minerals (AIM: KEF), China focused gold explorer and miner Central China Goldfields (AIM: GGG) and Kazakhstan operating gold miner Frontier Mining (AIM: FML) led the fallers with retreats of 11%, 7% and 6% respectively.
Uzbekistan focused gold miner Oxus Gold (AIM: OXS) and copper and gold miner EMED Mining (AIM: EMED) both slipped about 4%.
Fiji focused gold miner Vatukoula Gold Mines (LSE: VGM), which was correcting after making impressive gains on Monday following a production update from its gold mine, tumbled 6% early, but recouped losses and finished around the opening level.
Philippines focused gold producer Medusa Mining (AIM&ASX: MML) and Turkey focused gold miner Ariana Resources (AIM: AAU) pulled back 3%.
However, Africa operating gold and platinum recovery specialist Goldplat (AIM: GDP) and platinum junior Platmin (AIM: PPN) went against the tide, adding 2.5-3%.
Copper improved slightly, rising to US$2.86/pound, while Nickel was at US$8.85/pound. Zinc added 1 cent to reach US$0.82/pound.
Copper miner Kazakhmys (LSE: KAZ) and Antofagasta (LSE: ANTO), which is set to release its interim results tomorrow, emerged as the sector’s leading fallers, declining 1.7% each.
World’s largest miner BHP Billiton (LSE: BLT), Xstrata (LSE: XTA) and Rio Tinto (LSE: RIO) all retreated about 1%.
Anglo American (LSE: AAL) and Vedanta Resources (LSE VED) outperformed other majors, adding less than 1%.
Juniors fell into roughly the same pattern, but showed more volatility.
Tunisia focused metal miner Maghreb Minerals (AIM: MMS) and Exploration and mineral investment company Regency Mines (AIM: RGM) both dipped over 15%.
Russian operating Amur Minerals (AIM: AMC) was still correcting from last week’s huge gains in the back of a reserve estimate update for its nickel-copper project in eastern Russia, shedding a further 17% to arrive at 8.5p per share.
South Africa operating chrome miner Chromex Mining (AIM: CHX) outperformed its peers, rising 4.6%.
Banks, insurance, private equity
Financial stocks were largely mixed this morning. Royal Bank of Scotland (LSE: RBS), which is reportedly trying to sell its Chinese assets to another banking group Standard Chartered (LSE: STAN), led the majors with a 4% gain, while Standard Chartered was down 1.7%.
Lloyds (LSE: LLOY) also shed over 1%.
HSBC (LSE: HSBA) was down marginally, while Barclays (LSE: BARC) improved less than 1%.
Insurers were headed in different directions today.
Aviva (LSE: AV), Prudential (LSE: PRU) and Standard Life (LSE: SL) rose marginally, while Friends Provident (LSE: FP) added 1.5%.
Old Mutual (LSE: OML) was the worst performer among the majors with a 2% dip.
Junior home credit and motor finance specialist was an honourable mention S & U (LSE: SUS) is an honourable mention after outperforming the sector with a 3% rise in early trade.
Small Cap Movers
Other notables among the small caps included Computer-Aided Detection (CAD) and image analysis software specialist, Medicsight (AIM: MDST), which continued climbing with a 13% rally on top of yesterday’s 5% advance and shares in Rubicon Software Group plc (LSE: RUBI) soared 23%.
Large and Mid Cap News
Cardiff-based car insurer and FTSE 100 constituent Admiral Group Plc (LSE: ADM) said it raked in record profits in the first half on the back of stronger international business, expanded customer base and higher insurance rates, prompting it to raise the interim dividend and award every employee with shares.
Shares in Punch Taverns Plc (LSE: PUB) surged over 17% in the afternoon after the UK’s largest pub owner said it was on track to expectations for the full financial year, also reporting slower decline rates and debt cuts of over £1 billion.
Small Cap News
Rurelec (LSE: RUR) said its Bolivian subsidiary Empresa Guaracachi has struck a deal with the government to install a 1.4 mega watt (MW) gas fired power plant at San Matias in the Department of Santa Cruz in proximity with the Brazilian border.
Robotic Technology Systems (AIM: RTS) firmed 7.5% after the company said it would pay a special 1 pence dividend to return excess cash to shareholders. The special dividend announcement was accompanied by improved first half results, and confirmation that the company was still in offer talks that may or may not lead to an offer.
Iraq and Algeria operating Gulf Keystone Petroleum (AIM: GKP) said it had hit an extension of the discovery announced earlier this month and upped its oil-in-place estimate to up to 3.0 billion barrels, causing its stock to skyrocket.
Scheduled bus, coach and car services provider, Rotala PLC (AIM: ROL) released interim results in line with expectations this morning. Group turnover climbed 16% to £18.3 million, while basic earnings per share (EPS) climbed to 3 pence (H1 2008: 2.8 pence).
Russian focused oil and gas producer Volga Gas plc (AIM: VGAS) released a positive production update on its drilling and development activities in the Karpenskiy license area today, sending its shares up 8% in early trade.
Fusion IP (AIM: FIP), the university intellectual property (IP) commercialisation company reported positive progress at one of its investments, Magnomatics Limited. Today Magnomatics secured a “six-figure contract” with the UK Ministry of Defence (MoD) to complete a detailed study of a magnetically geared propulsion motor based on the company’s patented Pseudo Direct Drive.