Overview: the FTSE 100 continuedits rally today, adding a further 1% on top of yesterday’s 1.5% gain after a UK unemployment update showed a decline of 3,000 to 2.46 million in the three months to December, while the unemployment rate stayed at 7.8%.
However, the positive impact from the update was partly offset by an increase in jobless claims of 23,500 for the month of January, while a decline was expected.
In other news, minutes from a meeting of Bank of England’s Monetary Policy Committee showed that the committee members voted unanimously to halt the £200 billion quantitative easing programme and keep the interest rates at 0.5%.
Hedge fund manager Man Group (LSE: EMG) emerged atop the leaderboard with a 6% gain. Miner ENRC (LSE: ENRC), bank Lloyds (LSE: LLOY) and plumbing and heating equipment manufacturer Wolseley (LSE: WOS) followed with gains of 4.5%. other notable risers included retailer Kingfisher (LSE: KGF) and airline British Airways (LSE: BAY), which both added 4% and other retailers Marks & Spencer (LSE: MKS) and Home Retail Group (LSE: HOME), which climbed 3%.
Just five FTSE 100 constituents were in the negative with losses of over 1% today. Scottish and Southern Energy (LSE: SSE) was at the bottom of thepile with a 3% loss, oil supermajor BP (LSE: BP) was down 2%, packaging group Rexam (LSE: REX) declined 1.5%, medical devices manufacturer Smith & Nephew (LSE: SN) lost 1.3% and telecom group BT (LSE: BT.A) shed 1.1%.
The Footsie was further lifted by a fast start on Wall Street, where the main indexes started the day with gains. The Dow Jones Industrial Average and the broader S&P 500 index climbed 0.3%, while the technology heavy NASDAQ composite rose 0.25%.
Commodities
Oil prices continued their climb today as stock markets in Asia and Europe extended gains following yesterday’s rally on Wall Street on positive corporate results and manufacturing data, while the US Dollar declined to make dollar-denominated commodities such as oil cheaper for holders of other currencies to drive up the demand.
Crude has been pressured by demand concerns as Europe was slow to find a resolution to the debt crisis that arose in Greece and several other countries including Spain and Portugal, while the world’s second largest energy consumer China continued tightening its monetary policy to curb the ongoing growth and prevent the economy from overheating by putting restraints on lending and raising reserve requirements for banks.
However, outlook for Greece’s debt problem has improved, while data from China showed high levels of bank lending in January despite tighter credit restrictions and a slow inflation growth, which declined to 1.5% from December’s 1.9%.
April Brent Crude improved to US$76.22/barrel, while US light, sweet crude reached US$77.58/barrel.
Inventories data from API (American Petroleum Institute) will be released later today.
Blue chip oil and gas producers extended gains today with the exception of BP (LSE: BP), which lost 1.5%. Fellow supermajor Shell (LSE: RDSB) rose marginally, as did BG Group (LSE: BG). Tullow Oil (LSE: TLW) added 1.2% and Cairn Energy (LSE: CNE) advanced 1.9%.
Petrofac (LSE: PFC) added less than 1%, while fellow engineering firm Amec (LSE: AMEC) climbed 1.3%.
Midcaps followed the trend with the exception of Dana Petroleum (LSE: DNX) and Dragon Oil (LSE: DGO), which made little headway.
JKX Oil and Gas (LSE: JKX) led the sector in the FTSE 250 with a 1.9% climb. Salamander Energy (LSE: SMDR) also performed well, tacking on 1.6%. Premier Oil (LSE: PMO) and Soco International (LSE: SIA) advanced 1% and Heritage Oil (LSE: HOIL) and Melrose Resources (LSE: MRS) posted insignificant gains.
Wellstream Holdings (LSE: WSM) also added 1%, while fellow services company Wood Group (LSE: WG) was flat.
North America focused oil & gas junior Pantheon Resources (AIM: PANR) led the juniors with a 6% gain, while Ukraine focused gas producer, Regal Petroleum (AIM: RPT) added 3.5%.
Mongolia-focused Petro Matad Ltd (AIM: MATD) lost 3.5% on no news.
Gold retreats below $1,120/oz as US Dollar gains
Gold retreated after making strong gains on Tuesday when it got a boost from a rally in global stock markets and weakness in the US Dollar.
Gold is seen as an alternative investment and moves inversely to the American currency, which weakened against the euro yesterday amid hopes of an imminent resolution to Greece’s debt situation, which has kept Europe’s single currency under pressure for over a month.
Stock markets were bullish yesterday, further increasing investors’ appetite for riskier assets such as precious metals. In the UK, banking group Barclays (LSE: BARC) released a strong set of full year results, while Kraft Foods (LSE: KFT) and drugmaker Merck (LSE: MRK) also gained strongly after releasing their earnings reports in the US. The Dow Jones Industrial Average and the S&P 50 index gained nearly 2%, while the FTSE 100 rallied 1.5% yesterday.
The sentiment was further lifted by an update from the New York Federal Reserve Bank said that its Empire State manufacturing index rose to 24.9 in February from 15.9 in January, signalling a higher level of manufacturing activity in New York state.
The yellow metal gave way today as the euro declined against the US Dollar after Greece got hit by a wave of strikes in protest against its economic austerity measures aimed at trimming budget deficit to meet the goal of a 4% reduction set for 2010.
Gold stood at US$1,119/oz at noon GMT, while silver and platinum were higher at US$16.17/oz and US$1,541/oz respectively.
Mining stocks were on the rise today. Platinum miner Lonmin (LSE: LMI) and silver and gold producer Fresnillo (LSE: FRES) advanced 1.8%, while fellow blue chip Randgold Resources (LSE: RRS) posted a small gain.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) also added 1.8%.
Silver producer Hochschild Mining (LSE: HOC) was one of the top performers in the FTSE 250 with a 3% improvement. Midcap gold miner Petropavlovsk (LSE: POG) moved up 2% and Aquarius Platinum (LSE: AQP) tacked on less than 1%.
Junior miners didn’t show much movement today. Lesotho operating diamond miner Kopane Diamond Developments (AIM: KDD) and Philippines focused gold producer Medusa Mining (AIM&ASX: MML) moved with the sector, tacking on nearly 4%, while Argentina focused gold explorer Patagonia Gold (AIM: PGD) moved in the opposite direction, shedding 5%.
Miners advance as base metals hold steady
Base metals were at about the same levels as late yesterday. Copper inched higher to US$3.24/lb, while nickel and zinc held steady at US$9.11/lb and US$1.05/lb.
Most mining stocks were able to post good gains today. Eurasian Natural Resources (LSE: ENRC) gained 4.6% to take the lead. Kazakhmys (LSE: KAZ) climbed 2.5%, while Anglo American (LSE: AAL), Rio Tinto (LSE: RIO) and Xstrata (LSE: XTA) added 2%. Vedanta Resources (LSE: VED) and BHP Billiton (LSE: BLT) were up 1.7% and 1.5% respectively, while Antofagasta (LSE: ANTO) rose 1%.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) was 1.5% lower, cooling off after surging from below 200 pence to 270 pence per share in less than a week.
Tunisia focused metal miner Maghreb Minerals (AIM: MMS) led the small caps, climbing 6.5%. Uranium and copper explorer Kalahari Minerals (AIM: KAH) and iron ore focused investor Red Rock Resources (AIM: RRR) added 6.2%.
Copper and gold miner EMED Mining (AIM: EMED) and Botswana operating nickel and copper miner Discovery Metals (AIM: DME) followed with gains of 4.5% and 4%.
Canada based junior gold developer Rambler Metals and Mining Plc (AIM: RMM) and Forte Energy (AIM: FTE) took a different path, sliding 5% and 3.5% respectively.
Banks, insurance, private equity
Financial stocks were in buying mode today. Part-nationalised Lloyds (LSE: LLOY) led the banking sector with a 5% gain. Barclays (LSE: BARC) added a further 3%, while Royal Bank of Scotland (LSE: RBS) and HSBC (LSE: HSBA) advanced 2% and Standard Chartered (LSE: STAN) climbed 1.5%.
Insurers also were in demand. Old Mutual (LSE: OML), Legal & General (LSE: LGEN) and Prudential (LSE: PRU) were the top performers with gains of 2.8%. Aviva (LSE: AV) tacked on 1.5%, while RSA Insurance Group (LSE: RSA) and Standard Life (LSE: SL) rose marginally and Admiral Group (LSE: ADM) was flat.
Private equity group 3i (LSE: III) moved up 2.3%.
Small Cap News
Other notable movers among the small caps included Bio-pharmaceutical company Lipoxen (AIM: LPX) and data solutions provider StatPro Group (AIM: SOG) with gains of 4.5%. Africa focused investor Lonrho (AIM: LONR) also added more than 4%.
Large and Mid Cap News
South African ferrochrome producer International Ferro Metals (LSE:IFL) has inked a deal with Rustenburg Platinum Mines (a subsidiary of Anglo Platinum (JNB:AMS)) to treat tailings from one its operations. Anglo Platinum is the world’s largest producer of platinum. The group’s largest shareholder is FTSE 100 constituent Anglo American (LSE: AAL), with holds just under 80% of the equity in the company.
Consumer packaging giant, Rexam (LSE: REX) reported better cash flow in 2009 as a wide ranging cost cutting program was said to be ahead of plan.
Chocolate shops and café group Thorntons (LSE: THT) jumped nearly 10% this morning after the company reported a 24.6% increase in profits before tax for the 28 week period ended 9 January, 2010.
Cobham (LSE: COB) has been awarded a contract worth up to US$25 million to manufacture advanced components and assemblies for the main rotor blades of the US Marine Corps' CH-53K Heavy Lift Replacement Helicopter. The company was selected by the projects prime-contractor, Sikorsky Aircraft Corp, a United Technologies Corp (NYSE:UTX) subsidiary.
FTSE 100 constituent Burberry Group (LSE:BRBY) is to take a one-off restructuring charge of €50-70 million related to the rationalisation of its loss making Spanish operations. News of the charge made little impact on the company’s share price this morning, which are currently 1.5% higher in a buoyant London market.
Small Cap News
Sable Mining Africa (AIM: SBLM) has unconditionally agreed to acquire a 29.33% stake in privately-held Delta Mining Consolidated for US$17.5m in cash. Through the deal with DMC’s minority shareholders, Sable said it will gain access to four major coal interests in South Africa and Botswana.
The Share Centre’s parent-company Share plc (AIM: SHRE) is set to acquire the majority of Wills & Co Stockbrokers’ client base. The company said it expects to transfer around 11,000 accounts to ‘The Share Centre’ within the next 1 to 2 weeks, subject to finalising legal agreements between the two parties.
Victoria Oil & Gas (AIM: VOG) reaffirmed its commitment to bring in revenues form its Logbaba gas and condensate project in Cameroon as soon as possible after results from a passive seismic spectroscopy survey suggested that the best areas on the field were yet to be explored and discovered a much larger prospect within the license block, which the company said could potentially change its size and future.
Gold exploration company Scotgold Resources (ASX: SGZ), which announced recently that it was planning to complete a secondary listing on London’s Alternative Investment Market (AIM), has confirmed the mineralisation potential of breccia pipes at its 100%-owned Beinn Udlaidh prospect in the Grampian Gold Exploration Project, Scotland.
Shares in clean energy developer Kedco (AIM:KED) took a beating this morning after the company said it had failed to secure debt finance on suitable terms to fund the development of a new 4 megawatt gasification plant.
Imperial Innovations Group (AIM: IVO) has committed an additional £2 million to investee PolyTherics, to support the development of its technologies for protein and peptide based therapeutics. Co-investors Longbow Capital and The Capital Fund also participated combined £3m funding. Consequently Imperial Innovations will now own a 35% stake in PolyTherics.
Noventa (AIM: NVTA) has appointed Patrick Lawless as its Chief Operating Officer, effective from 19th April 2010, Lawless will subsequently succeed John Allan as the company’s Chief Executive before the end of June. Allan who joined the board in July 2009 managed the company’s transition following a substantial reorganisation and he will remain on the board as a non-executive director.
African Minerals (AIM: AML) increased the JORC magnetite iron ore mineral resource estimate for its Tonkolili project in Sierra Leone to 10.5 billion tonnes based on an independent report reflecting additional drill-hole and assay data completed since the time of the previous update.
Range Resources (AIM: RRL, ASX:RRS) updated the market on progress at its key projects today, saying that the tie up to the commercial line in Texas was being installed and was ready for first production, while seismic acquisition in the Republic of Georgia was nearing end with completion expected next month.
Biocompatibles International (AIM: BII) has treated its first volunteer in its Phase I clinical trial for the type II diabetes drug, CM3. The trial represents the second development stage of the collaboration with AstraZeneca (LSE: AZN) since the companies signed a co-development agreement in December 2008. The Phase I study is now under way, in total fifty-six patients will be recruited for the trial by a Clinical Research Organisation in Germany.