Overview: the FTSE 100 rallied 1.5% today to get well above the 5,000 level after US initial jobless claims were shown to have dropped by 21,000 last week.
Temporary power provider Aggreko (LON:AGK) led the blue chips with a 5% advance. Part-nationalised banks Lloyds (LON:LLOY) and Royal Bank of Scotland (LON:RBS) followed with gains of over 4%. Other notable risers included quality and safety services provider Intertek (LON:ITRK) with a 4% climb, asset management firm Schroders (LON:SDR) and fashion house Burberry (LON:BRBY), which added 3.5%.
Retailer Sainsbury’s (LON:SBRY) was at the bottom of the pile with a loss of 1.5%. No other FTSE 100 constituent shed more than 1%. Essar Energy (LON:ESSR) and Cable & Wireless Worldwide (LON:CW) shed nearly 1%.
US stocks extended yesterday’s gains in early trade. The Dow Jones industrial Average added 0.4%, while the broader S&P 500 index rose 0.15% and the technology heavy NASDAQ composite moved up 0.1%.
Commodity markets responded positively to yesterday’s surge on Wall Street as oil prices rose to nearly US$75/barrel just a few days after crude slipping below US$72/barrel.
Markets switched back to buying mode following two weeks of declines, which saw the Dow Jones Industrial Average in the US slip below the key 10,000 level, while the FTSE 100 dipped below 5,000. The sell-off was triggered by disappointing US and Chinese manufacturing data coupled with last week’s US unemployment update, which showed a decline of 125,000 in non-farm payrolls and just 83,000 jobs created in the private sector.
Now, however, the fears of a double dip recession that were propelled by last week’s flow of negative data seem to have diminished after US based bank State Street said its Q2 earnings would surpass expectations, lifting banking shares in the US and Europe and inspiring optimism ahead of the upcoming corporate reporting season. The International Monetary Fund (IMF) added to the sentiment today, upping its forecast for global growth for this year from 4.2% to 4.6%.
August Brent Crude reached US$74.19/barrel, while US light, sweet crude for August deliver climbed to US$74.67/barrel.
Blue chip oil and gas stocks were in demand today. Shell (LON:RDSB) was in the lead with a 4% gain, while fellow supermajor BP (LON:BP) added 2.7%. BG Group (LON:BG) rose 1%, Tullow Oil (LON:TLW) moved up 2.4% and Cairn Energy (LON:CNE) tacked on 3.2%.
Oil and gas engineering firms Amec (LON:AMEC) and Petrofac (LON:PFC) added 1.6% and 3.3% respectively.
Most midcaps followed the trend. JKX Oil & Gas (LON:JKX) advanced 3.1% to take the lead. Premier Oil (LON:PMO) and Heritage Oil (LON:HOIL) added 1.3% and 1.1% respectively. Dragon Oil (LON:DGO) and Soco International (LON:SIA) tacked on nearly 1%. Dana Petroleum (LON:DNX) and Salamander Energy (LON:SMDR) were flat, while Melrose Resources (LON:MRS) slipped 1.7%.
Peru, Colombia and Cuba operating oil and gas explorer and producer Gold Oil (LON:GOO) led the juniors with a 6% gain.
Energy investor Xtract Energy PLC (LON:LXTR) went in the opposite direction, slipping 7.5%.
Gold slips below $1,200
Gold was in decline today as safe haven demand faded amid yesterday’s rally in global stock markets, which continued into today. Stocks in the US, Asia and then Europe rose after US custody bank State Street said it was on track to beat Q2 expectations, boding well for the upcoming corporate reporting season.
Gold slid to US41,198/oz, while silver and platinum slid to US$17.99/oz and US$1,525/oz respectively.
Most mining stocks posted gains today. Gold miner Randgold Resources (LON:RRS) was an exception, staying at the opening level. Silver miner Fresnillo (LON:FRES) and platinum producer Lonmin (LON:LMI) advanced 3.1% and 2.4% respectively.
Specialty chemicals firm Johnson Matthey (LON:JMAT) added 1%.
Silver producer Hochschild Mining (LON:HOC) led the midcaps with a 2.9% gain. Gold miner Petropavlovsk (LON:POG) and Aquarius Platinum (LON:AQP) climbed 2.4% and 1% respectively.
Commodity asset development company Mercator Gold (LON:MCR) and Uzbekistan focused gold miner Oxus Gold (LON:OXS) were among the top performing stocks in the sector with gains of 6% and 5.5% respectively. Copper and gold miner EMED Mining (LON:EMED) and Brazil focused gold miner Horizonte Minerals (LON:HZM) climbed 5%.
Base metla miners advance
Base metals headed in different directions. Copper slid to US$3.01/lb, while nickel and zinc rose to US$8.74/lb and US$0.82/lb respectively.
Antofagasta (LON:ANTO) and Xstrata (LON:XTA) led the base metal miners with gains of 3.3%. Anglo American (LON:AAL), BHP Billiton (LON:BLT), Kazakhmys (LON:KAZ) and Vedanta Resources (LON:VED) all added more than 2%. Rio Tinto (LON:RIO) and Eurasian Natural Resources (LON:ENRC) climbed 1.9% and 1.5% respectively.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) outperformed the sector, rallying 5.7%.
Specialty minerals exploration and development company Thor Mining (LON:THR) soared 28% to emerge among the top performers in the market. Mineral sands producer Kenmare Resources (LON:KMR) also did well, advancing 13.5%. London Mining (LON:LOND) added 5%.
Banks, insurance, private equity
Financial stocks were on the rise today. Lloyds (LON:LLOY) rallied 5% to take the lead in the banking sector. Fellow part-nationalised bank Royal Bank of Scotland (LON:RBS) advanced 4.5%. Barclays (LON:BARC) surged 4%, Barclays (LON:BARC) tacked on 2% and Standard Chartered (LON:STAN) posted a gain of less than 1%
Legal & General (LON:LGEN) and Prudential (LON:PRU) advanced 4% to take the lead among the insurance companies. Old Mutual (LON:OML) rose 3.5%, while Admiral Group (LON:ADM) and Standard Life (LON:SL) added nearly 2.5%. Aviva (LON:AV) and RSA Insurance Group (LON:RSA) climbed 1.6% and 1% respectively.
Private equity group 3i (LON:III) climbed 2.6%.
Small Cap Movers
Other notable movers among the small caps included Zimbabwe focused investor LonZim (LON:LZM) with a 6% gain and Planet Payment (LON:PPT), which slipped 12%. Mobile email and data synchronisation group Synchronica PLC (AIM: SYNC) also declined, shedding 7%.
Small Cap News
Medusa Mining (ASX, LON:MML; TSX:MLL) has appointed Peter Jones, a retired Canadian mining engineer, as non-executive chairman of its board effective immediately.
In a letter to shareholders, Thor Mining (LON:THR, ASX:THR) chairman Mick Billing said that he and his fellow directors were delighted with results to date from the recently acquired Dundas gold project in Western Australia’s Albany-Fraser belt.
Investment bank Matrix Corporate Capital stated that Patagonia Gold (LON:PGD) does not just “chase ounces” and called the Argentina focused gold explorer a “cheap entry” to gold production that could reach a level of 230,000 ozpa (ounces per annum) by 2015.
In a H1 trading statement, Specialist Energy Group (LON:SEGR) told investors that its primary subsidiary, the Hayward Tyler Group, continues to make significant advances in underlying gross and operating margins, and the company's overall trading performance is in line with market expectations.
Following Specialist Energy Group’s positive trading statement published earlier today, London-based stockbroker Fairfax Securities said that the company’s valuation has “some catching up to do” as the company continues to make progress in “what remains a tricky environment”.
In its initiating coverage on Asterand (LON:ATD), Mumbai-based investment bank Religare Capital Markets said that the company is building a strong franchise that “should help shape the future of a niche US$700m preclinical research market”.
Plant Impact PLC (LON:PIM), which develops and markets ecologically friendly crop nutrition and protection products, announced that the company has appointed Dr Steven Adams as director of product development. Steven is not being appointed to the board of Plant Impact at this time.
Large and Mid Cap News
FTSE100-listed alternative investment managers, the Man Group (LON:EMG) reported that sales have “remained subdued” in its first quarter as the company has “seen a return to increased volatility and uncertainty in financial markets”.
Recruitment company Hays (LON:HAS) returned to year on year growth in net fees during the “encouraging” Q4 after making progress in its international business, which now accounts for nearly 60% of the total.