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Market:	ASX
Sector:	Media
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Web Site:	Proactive Investors Australia
Other Articles:	11-08-201006-08-201005-08-2010

HSBC, Barclays and RBS disappoint, insurers dip, FTSE 100 lurches back into negative territory

Overview: London markets continued to climb for the better part of the day thanks to a combination of better than expected GDP data from Germany and France yesterday, a positive finish last night from US indexes, and higher oil and metal prices.

 

But US futures were headed south on Friday after a disappointing read from the Consumer Price Index (CPI), which was unchanged in July. The news dragged down the Footsie after the index tested the 4,800 mark, causing it to sink deep into the red by the end of the day.

 

Key movers

 

In the red:  Vodafone and TUI join financials to drag FTSE 100 down

 

After another good start this morning, the FTSE 100 ended up struggling to stay above water as the banking sector along with insurers dragged the Footsie down, joined by a few heavyweights, including mobile operator Vodafone (LSE: VOD), and tour operators TUI Travel (LSE: TT.) and Thomas Cook Group (LSE: TCG), who both reported declines in bookings and offered mixed outlooks this week.

 

Financials also were weak on Friday. The Prudential (LSE: PRU) gave back some of yesterday’s gains when it announced a hike in its dividend and ruled out selling its UK business.

 

Other notable fallers included oil facilities provider Petrofac (LSE: PFC) with a 3% loss and miner Eurasian Natural resources (LSE: ENRC), which weighed on the index with a 2.5% drop despite an otherwise strong performance from the mining sector today.

 

Retail stocks were also out of favour, hit by poor results from Asda, which reported slower sales growth in the second quarter and offered a mixed outlook for 2010. Morrison Supermarkets (LSE: MRW), which said earlier this week it would create 7,000 jobs this year, and fellow supermarket chain Sainsburys (LSE: SBRY) moved down in sympathy, shedding 2% and 1.5% respectively.

 

In the blue: commercial property up on British Land takeover rumour, miners climb

 

British Land (LSE: BLND) rallied 4% amid reports that a joint bid for the company is in works between Indian steel tycoon Lakshmi Mittal and the Abu Dhabi ruling family.

 

The speculation initially lifted the property sector, but most of the gains were handed back by the time trading closed. Liberty International (LSE: LII), Hammerson (LSE: HMSO) and Land Securities Group (LSE: LAND) started with gains over 4%, but finished with small gains.

 

Balfour Beatty (LSE: BBY) stayed in the blue, with a gain of almost 2%, after it said it had landed a contract to widen the M25 motorway.

 

Airline British Airways (LSE: BAY) was in the headlines again, announcing it would soon allow advertising on boarding passes, and saying it had renewed its partnership with American Express. The company surged to the top of the leaderboard by the end of the day with a 2.5% improvement.

 

Commodities

 

Oil prices initially rose, but quickly corrected after the US dollar climbed on the US CPI data.

 

US light crude retreated to US$70.60/barrel, while Brent crude was aroundUS$71.5/barrel.

 

Oil stocks responded to the firmer oil price in the morning.  Supermajors BP (LSE: BP) and Shell (LSE: RDSB) both made insignificant gains. Mid tier companies Cairn Energy (LSE: CNE), Dana Petroleum (LSE: DNX) and Tullow Oil (LSE: TLW) all were up over 1%. Dragon Oil (LSE: DGO) managed to outperform the sector, recording an almost 2% gain. Oil and gas player BG Group (LSE: BG) tacked on less than 1%.

 

Juniors also basked in the sun.

 

Iraq and Algeria operating Gulf Keystone Petroleum (AIM: GKP), Irish oil company Petrel Resources (AIM: PET) and African and FSU focused oil and gas junior Victoria Oil & Gas (AIM: VOG) were in the lead, shooting up 12.8%, 14% and 13.4% respectively.

 

Energy investor Xtract Energy (AIM: XTR) climbed 6.7%, while Latin America operating oil and gas producer Gold Oil (AIM: GOO) soared over 10%.

 

Ukraine focused gas producer, Regal Petroleum (AIM: RPT), European operating oil and gas developer Ascent Resources (AIM: AST), Eastern Europe focused junior Aurelian Oil & Gas (AIM: AUL) and Kazakhstan-focused oil and gas company Max Petroleum (AIM: MXP) followed, advancing 6%, 2.3%, 3.7% and 5.2% respectively.

Precious metal stocks mixed

 

Metal prices showed some improvement on Friday, but then retreated below yesterday’s levels, reversing the progress made by most precious metal stocks in the morning. Gold spiked $10/ounce lower to US$945 just as UK markets closed, down from Thursday’s level. Silver and Platinum followed suit, correcting sharply.

 

Platinum miner Aquarius Platinum (LSE: AQP) performed well, posting a 1.9% rise. Fellow FTSE 100 constituent silver miner Fresnillo (LSE: FRES) gained 3% in the morning, but ended the day with marginal losses. Platinum company Johnson Matthey (LSE: JMAT) dropped 1.8%, while mid-tier silver producer Hochschild Mining (LSE: HOC) gained 1%. Platinum major Lonmin (LSE: LMI) also finished in the red.

 

Gold producer Peter Hambro Mining (LSE: POG) barely stayed above the water, but fellow gold miner Randgold Resources (LSE: RRS) dipped 1.8%.

 

Juniors also were mixed closer to the end of the day, but some companies managed to hold on to the big advances they made in the morning. Notable movers included Turkey focused gold miner Ariana Resources (LSE: AAU), which led the sector with a 13% hike. Fiji focused gold miner Vatukoula Gold Mines (AIM: VGM) also did not disappoint investors, perking up 6%. Western Australia operating Norseman Gold (AIM: NGL) added over 2%, but Africa focused gold deposit developer Cluff Gold (AIM: CLF) lost the 2% it gained earlier in the day.

 

South American focused Mariana Resources (AIM: MARL) rose 5.4%.

 

Gold, copper and molybdenum explorer Stratex International (AIM: STI), Uzbekistan focused gold miner Oxus Gold (AIM: OXS) and Africa operating gold miner GMA Resources (AIM: GMA) followed later in the day, climbing 5%, 3.6% and 3% respectively.

 

Diversified mining junior Regency Mines (AIM: RGM) was in the lead with a 20% spike.

 

Base metals sector steady

 

Metal prices followed a similar pattern to oil and precious metals, handing back gains just as UK markets were winding up for the weekend. The mining sector was impacted by the sliding prices, causing most majors to tumble after a strong performance in morning trade.

 

Anglo American (LSE: AAL), Antofagasta (LSE: ANTO) and copper miner Kazakhmys (LSE: KAZ) barely held on to the opening levels. BHP Billiton (LSE: BLT) and Rio Tinto (LSE: RIO) pulled back over 1% and Vedanta Resources (LSE: VED) declined marginally.

 

Juniors performed slightly better.

 

Indonesia operating copper miner Finders Resources (AIM: FND) did well with a 7.5% hike, while tantalum concentrate supplier with assets in Mozambique Noventa (AIM: NVTA) improved 3%, but Australian focused coking coal producer Caledon Resources (AIM & ASX: CDN) moved down 2.6%.

 

Banks, insurers, private equity

 

The banking sector faded as the FTSE 100 slowed down later in the day.

 

Partly nationalised banking groups didn’t last that long in the blue and slipped back into the negative by the end of the day. Lloyds (LSE: LLOY) and Royal Bank of Scotland (LSE: RBS) were in the red after tacking on about 1% in midmorning trade. Barclays (LSE: BARC) also tumbled, losing early gains to finish with a 1% decline. HSBC (LSE: HSBA) stayed 2.5% down until the end of the day.

 

Insurers on cold streak

 

After receiving a blast from Prudential yesterday, insurers cooled off and sank into the red on Friday.

 

Old Mutual (LSE: OML) and Prudential (PRU) dipped 4.3%, and 3% respectively. Aviva (LSE: AV), Standard Life (LSE: SL) and Friends Provident (FP) all retreated 2%. Legal & General (LSE: LGEN) went against the tide, posting a slight improvement.

 

Home credit and motor finance specialist S & U (LSE: SUS) managed to outperform the declining sector, rising for a third day in a row. The stock added 1.7% on Friday.

 

Telecommunications, technology and pharmaceuticals

 

Notable movers among juniors included vaccines specialist Lipoxen (LSE: LPX) and stamp-collecting and memorabilia group Stanley Gibbons (LSE: CGI) with improvements of 5.7% and 3% respectively.
Marketing software developer smartFOCUS (AIM: STF) rose 5.1%.

 

Computer-aided detection (CAD) and image analysis software specialist Medicsight (AIM: MDST) dipped 6% today after the company said the Food & Drugs Administration (FDA) requested more information on ColonCAD 3.1, which was submitted for regulatory approval earlier this year, hitting the company’s 2009 growth ambitions.

 

Large and Mid Cap News

 

UK-based payment services group Paypoint plc (LSE: PAY) reported an 11% slump in revenues resulting from fewer top-ups, but said trading performance was satisfactory and earnings in line with expectations. Paypoint, which operates in the UK, Ireland and Romania, processed 167 million transactions in the period from 30 March 2009 to 26 July 2009, marking a 2% year on year increase.

 

Small Cap News

 

Southern Bear PLC (AIM: STBR) was lifted by its full-year results statement, which showed pretax profit rising 190 percent to 1 million and revenue up at £18.8 million from £8.7 million a year earlier, on the back of acquisitions completed in the period to end-March 2009. Shares were up 33 percent in late morning trade, off earlier highs of more than 54 percent above yesterday’s closing level.

 

Shares in Titan Europe PLC (AIM: TSW) took a beating after the manufacturer of steel wheels and undercarriages for the off-highway vehicles industry reported grim first half results which reflected extremely difficult trading conditions in all its markets and for all its product groups, with the second quarter particularly weak.  Revenue in the six months to June 30 2009 fell to £149.1 million from £233.4 million a year earlier and the company swung to a pretax loss of £11.4 million from a £6.9 profit in the previous first half.  Shares in Titan were trading down nearly 14 percent by midmorning.

 

Holders of GoIndustry-DoveBid PLC (AIM: GOI) stock were in for a ride in yesterday’s and today’s trading sessions: after soaring yesterday on takeover speculation, peaking at 2.9 pence a share, the price came crashing down in opening trade today after the company issued a statement saying it knew of no reason for the recent rise. The stock was trading down 40 percent in midmorning deals at around the 1.6p mark.

 

Computer-Aided Detection (CAD) and image analysis software specialist, Medicsight (AIM: MDST) reminded investors today that while it has limited revenues, the company’s strong cash position (£13.75 million) affords it time to continue commercialising its disease detection and diagnosis products. The company reiterated previously reported progress on several fronts, including the launch of ColonCAD in Canada, and MedicRead™, a CAD-enabled CT colonography reviewing tool, in Europe.

 

China focused gold explorer and miner Central China Goldfields (AIM: GGG) said it received the first payment for the sale of its 30% stake in the Nimu Project through its wholly owned Chinese-registered business Chengdu Zhong Cheng Mining Technology Development Company. Central China Goldfields announced back in June that it was approached by its local joint venture partner Sichuan Bureau of Metallurgy and Geological Exploration (SBMGE) with an offer of about £6.43 million for its 30% stake in the Project.

 

Shares in Unitech Corporate Parks (AIM: UCP) dropped nearly 10 percent after the India-focused commercial real estate investment group reported a drop in net asset value per share to £1.04 at the end of the full-year to March 31 2009 from £1.37 a year earlier and £1.16 at the half-year stage. The company swung to a full-year pretax loss of £13.6 million from a £2.33 million profit last year, impacted by a £15.8 million fair value adjustment on investment property.

 

Sterling Energy (AIM: SEY), the junior oil and gas exploration and production company with interests in the Middle East, Africa and the Gulf of Mexico, issued a wide ranging and seemingly well received update to the market today. The update was nothing short of company changing. Sterling is proposing to issue 4.8 billion shares at 1.3 pence per share (a 52.6% discount to the closing middle market price on 13 August 2009) to raise £62.5 million (£60.8 million net).

 

Performance management consultancy Avisen PLC (AIM: AVI) said it has now completed the acquisition of Inca Holdings Ltd and its subsidiaries it announced in mid-July and raised an additional £500,000 via a subscription for 3.278 million shares at 15.25 pence each.

 

Bankers Petroleum Ltd (TSX, AIM: BNK) reported second-quarter revenue of US$20.1 million, up 53 percent from the first quarter, mainly due to higher Brent prices, but down from US$34.16 in the previous second quarter as prices were lower year-on-year.

 

Irish oil and gas junior, Providence Resources (AIM: PVR) rose 6% after the company confirmed that its partners in the Dunquin Licence, located in the Porcupine Basin off the west coast of Ireland, had agreed move to the second phase of exploration, which will include one exploration well.

 

Daisy Group PLC (AIM: DAY) said it is buying Redstone PLC’s (AIM: RED) telecommunications division for £17 million in cash, and the deal is expected to complete on August 28 2009. Under the agreement, Daisy will acquire Redstone Telecom, comprising the assets of Redstone’s fixed line business and its wholly owned subsidiary Symphony Holdings Ltd which provides mobile services and distribution. Supply of fixed line and mobile services to Daisy is also part of the deal.

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