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FTSE 100 rises after Dow Jones opens higher

Published: 03:03 07 Oct 2010 AEDT

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Overview: London markets were in buying mode today, sending the FTSE 100 index up 0.6% following yesterday’s 1.45% surge.

Today’s ADP employment report showed that the US private sector shed 39,000 jobs last month, while an increase was expected.

Hedge fund manager Man Group (LON:EMG) led the blue chips with a 4.5% gain. Airline British Airways (LON:BAY), Essar Energy (LON:ESSR) and copper miner Kazakhmys (LON:KAZ) followed, rising 4%. Other base metal miners Anglo American (LON:AAL), Xstrata (LON:XTA) and gold miner African Barrick Gold (LON:ABG) climbed 3.5%.

Software developer Autonomy Corporation (LON:AU) was the heaviest faller in the FTSE 100, plummeting 17% on a profit warning. Car insurer Admiral Group (LON:ADM) and chipmaker ARM Holdings (LON:ADM) followed, shedding 4% and 3% respectively. Another software company Sage Group (LON:SGE) and energy company Centrica (LON:CNA) lost nearly 2%. Beverage group SABMiller (LON:SAB) retreated 1.5%.

US markets were off to a mixed start. The Dow Jones Industrial Average rose 0.2%, the broader S&P 500 index was flat and the technology heavy NASDAQ composite declined 0.4%.

Commodities

Oil future rise

Yesterday’s crude oil inventories data from the American Petroleum Institute (API) showed a huge gain of 4.4 million barrels, which, however, did not have much of an impact on commodity markets as crude futures kept rising.

The API report also revealed a decline of 4.06 million barrels in motor fuel stockpiles, offsetting the effect from the buildup in oil inventories.

Investors are now looking to Friday’s key US non-farm payrolls data, which will determine further market direction.

Today’s ADP employment report failed to match projections, showing that 39,000 jobs were eliminated in the private sector last month, while analysts expected an increase.

Brent Crude advanced to US$84.68/barrel.

BP (LON:BP) posted a small gain, while fellow supermajor Shell (LON:RDSB) advanced 1.2%. Cairn Energy (LON:CNE) climbed 1.65%.

BG Group (LON:BG) was sitting just below the opening level and Tullow Oil (LON:TLW) dropped 1.1%.

Oil and gas engineering firms Amec (LON:AMEC) and Petrofac (LON:PFC) added 0.5% and 2.3% respectively.

Heritage Oil (LON:HOIL) led the midcaps, advancing 6%. Salamander Energy (LON:SMDR) and Melrose Resources (LON:MRS) rose 2.5% and 2% respectively. Dragon Oil (LON:DGO) climbed 1%.

Soco International (LON:SIA) tacked on less than 1%.

JKX Oil & gas (LON:JKX) moved in the opposite direction, sliding 1.2%. Premier Oil (LON:PMO) declined marginally.
Dana Petroleum (LON:DNX) was flat.

Wood Group (LON:WG) added 1%, while another services company Wellstream Holdings (LON:WSM) dipped 3.2%.

EU operating oil and gas producer and explorer Mediterranean Oil & Gas (LON:MOG) was the leading performer in the sector, soaring 32%. Iraq focused producer Gulf Keystone Petroleum (LON:GKP) advanced 7%.

Gold sets yet another record

Gold prices set a new record at US$1,349/oz today, driven by a strong safe haven demand and further declines in the US dollar.

Safe haven buying intensified after rating agency Fitch cut Ireland’s sovereign rating to A+ just a day after peer Moody’s warned it may revise its stance on Ireland.

Fitch’s move added to the concerns over the fiscal situation in Europe. Last week, Moody’s downgraded Spain to Aa1, projecting its economy to expand by just 1% per annum in the next few years.

Gold has also benefitted from weakness in the US dollar, which has been in decline against the euro with the EUR/USD rate rising well above 1.38.

Meanwhile, financial services firm Morgan Stanley (NYSE:MS) has hiked its forecasts for gold prices for 2011 by 14% to an average of US$1,315/oz.

Gold climbed to US$1,345/oz, while silver and platinum reached US$22.90/oz and US$1,699/oz respectively.

Mining stocks were in demand today. Gold producer Randgold Resources (LON:RRS) posted a small gain, while peer African Barrick Gold (LON:ABG) advanced 3.5%. Platinum producer Lonmin (LON:LMI) and silver miner Fresnillo (LON:FRES) added 2.3% and 1.4% respectively.

Midcaps followed the trend. Aquarius Platinum (LON:AQP) and silver producer Hochschild Mining (LON:HOC) added nearly 3.5%, while gold miner Petropavlovsk (LON:POG) rose 2.5%.

Junior companies did very well today. Coloured gemstone company focused on Zambian emeralds Gemfields (LON:GEM) and Turkey and Saudi Arabia operating gold and copper explorer KEFI Minerals (LON:KEFI) were among the top performers on the AIM market, surging 40% and 30% respectively.

Gold exploration and development company Ariana Resources (LON:AAU), Philippines operating gold producer Medusa Mining (LON:MML) and Norseman Gold (LON:NGL), which operates Australia’s longest continuously running gold mining operation, each rallied 9.5%.

Solomon Islands and Australia operating copper and gold explorer Solomon Gold (LON:SOLG) and African Aura Mining (LON:AAAM), which is focused on developing gold and iron-ore deposits in sub-Saharan Africa, advanced 7% and 6% respectively.

Gold producer with assets in West Africa Cluff Gold (LON:CLF) also did well, tacking on 5.5%.

Miners surge as base metals climb

Copper and nickel climbed to US$3.74/lb and US$11.23/lb, while zinc reached US$1.04/lb.

Kazakhmys (LON:KAZ) led the base metal miners with a gain of almost 4%. Anglo American (LON:AAL) and Xstrata (LON:XTA) followed, advancing 3.5%. Antofagasta (LON:ANTO) added 3.2%. BHP Billiton (LON:BLT) and Rio Tinto (LON:RIO) climbed 2.5%.

Eurasian Natural Resources (LON:ENRC) rose 2% and Vedanta Resources (LON:VED) posted a small gain.

London’s only listed pure iron ore producer and FTSE 250 constituent Ferrexpo (LON:FXPO) outperformed the sector, surging 4.5%.

Gold and base metals focused explorer Thor Mining (LON:THR) led the juniors with a 17% rally.

Banks, insurance, private equity

Lloyds (LON:LLOY) led the banks with a 1.3% gain. Fellow part-nationalised bank Royal Bank of Scotland (LON:RBS) tacked on nearly 1%.

Barclays (LON:BARC) and Standard Chartered (LON:STAN) posted small losses.

HSBC (LON:HSBA) was little moved.

Old Mutual (LON:OML) was the top performing insurance company with a 2.5% gain. Aviva (LON:AV) advanced 1.4%. Legal & General (LON:LGEN), Prudential (LON:PRU) and Standard Life (LON:SL) each added 1%.

Admiral Group (LON:ADM) was at the bottom of the pile with a 4.5% loss. RSA Insurance Group (LON:RSA) dropped 1%.

Private equity group 3i (LON:III) stood just above the opening level.

Small Cap Movers

Other notable movers among the small caps included voltage optimisation specialist Active Energy (LON:AEG), which soared 25%. Insecticide and parasiticide products developer TyraTech (LON:TYR) also did well, rising 7.5%.

Small Cap News

Eco-friendly pesticides group TyraTech (LON:TYR) revealed it received a second “significant reorder” from its American partner Terminix. TyraTech has been asked to supply more of its SafeShield product, a natural insecticide. Details of the order were not revealed.

Machine-to-machine (M2M) sector specialist Telit Communications PLC (LON:TCM) said revenues in the first nine months of 2010 have grown more that 60 percent over the same period a year earlier to around US$98 million.

Gulfsands Petroleum (LON:GPX) has found oil to the south of its producing Yousefieh oilfield in Syria. The Yousefieh South -1 (YSO-1) exploration well encountered 11.5 gross metres of an oil bearing reservoir, however more work is required on the well, as initial flow testing did not recover commercial volumes.

AIM listed healthcare company African Medical Investments (LON:AMEI) has appointed an interim chief executive. He is Amit Thakker, who has been working with the company for several months as chief medical officer.

Minera IRL (LON:MIRL, TSX:IRL) told investors that the feasibility study and key activities at its Don Nicolas project in Argentina are on track.

Mediterranean Oil & Gas (LON:MOG) was among the ‘Top Risers’ on London’s AIM market with a 35% gain, on news that gas production came on-stream from its Anzano-1 (ANZ-1) well onshore Italy.

LonZim’s (LON:LZM) 51%-owned telecoms business ForgetMeNot Africa has signed new deals with Globacom and Essar Telecom in Nigeria and Kenya, respectively.

Green Dragon Gas (LON:GDG) has agreed to acquire an equity interest in Sinoenergy, moving towards its goal of building a significant coalbed methane (CBM) upstream business in China.

Finders Resources’ (ASX:FND, LON:FND) capital placing has received “overwhelming” shareholder support, raising funds for the development of its flagship Wetar copper project in Indonesia.

Nyota Minerals (LON:NYO, ASX:NYO) has begun an airborne geophysical survey over its exploration properties in Ethiopia. The company is undertaking the extensive assessment after it acquired an 80% stake in a portfolio of exploration tenements in June.

Petro Matad (LON:MATD) shares made another new high this morning, after the Davsan Tolgoi follow-up well found ‘significant hydrocarbons’. Davsan Tolgoi 2 (DT2) was drilled on the same structure as the DT-1 discovery well, which encountered a 71m thick section of the targeted Tsagaantsav formation back in July.

EMED Mining (LON:EMED) today gave an overview of the progress made at its key gold and copper projects in Spain and Slovakia during the past quarter. The company’s key asset is Proyecto Rio Tinto (PRT) in Spain with its efforts currently focused on restarting the major copper mine.

Medusa Mining (LON:MML, TSX:MLL, ASX:MML) has reached a new milestone as a public company, after shareholders approved its proposal to start paying dividends.

Aurelian Oil & Gas (LON:AUL) said the disappointing exploration results in Bulgaria will have minimal impact on the company’s finances. Earlier today, JKX Oil & Gas (LON:JKX) reported that the ‘Staro Oryahovo South R-01’ exploration well is being plugged and abandoned, after testing demonstrated the target was 'water wet’.

African Aura Mining Inc (LON:AAAM, TSX-V:AUR) announced it is now debt-free, after holders of 2.3 million worth of convertible debt notes opted to convert the notes to shares at a price of 112 pence per share.

Epistem’s (LON:EHP) chief executive Matthew Walls believes the new GeneDrive product represents an exciting new area for the business. Walls told Proactive Investors that the new Personalised Medicine division is likely to provide the strongest revenue growth over the coming year.

Shares in Gemfields (LON:GEM) shot up 83 per cent after the group posted a maiden profit and revealed that production at the Kagem mine in Zambia hit record levels in the first month of the new financial year.

Australian Strategic Materials signs US$600 million LoI

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