Overview: the US non-farm payrolls update turned out to be a disappointment, showing 263,000 job cuts in September instead of the expected 175,000 and causing the Footsie, which was weak in early trade but kept its losses to about 0.6%, to fall well below the 5,000 mark it recaptured a few weeks ago. Wall Street also tumbled following the US jobs report, but managed to recover with the Dow Jones industrial average trimming its losses to just 15 points.
Beverage group SABMiller (LSE: SAB) and Aviva (LSE: AV) were the only FTSE 100 constituents to weather the storm with both adding more than 1%.
Miners and banks emerged as the leading fallers with baoiled out bank RBS (LSE: RBS) leading the group with a 7% dip. Copper miner Kazkahmys (LSE: KAZ) and another partly nationalised banking group Lloyds (LSE: LLOY) also were in selling mode, shedding more than 5%.
Engineering firm Invensys (LSE: ISYS), pest control and cleaning company Rentokil Initial (LSE: RTO), airline British Airways (LSE: BAY) and hotel group InterContinental Hotels (LSE: IHT) also showed up on the leading fallers list with losses of about 4%.
Commodities
Oil prices declined today with November Brent Crude moving down to US$69.2/barrel, while US light, sweet crude for November delivery barely held on to US$70/barrel.
Cairn Energy (LSE: CNE) and Petrofac (LSE: PFC) emerged as the leading fallers among the blue chips in the sector, with both declining over 3%. Fellow FTSE 100 constituent BG Group (LSE: BG) was down 1.2%.
Supermajors BP (LSE: BP) and Shell (LSE: RDSB) declined marginally.
Tullow Oil (LSE: TLW) managed to outperform its sector peers, holding on to marginal gains.
Mid caps also were in decline. Dana Petroleum (LSE: DNX) lost 2.8%, Heritage Oil (LSE: HOIL) shed 1.6%, while Dragon Oil (LSE: DGO) declined marginally.
Atlantic Canada operating oil and gas group Enegi Oil (AIM: ENEG) led the juniors, soaring 47%.
European focused oil and gas developer Ascent Resources (AIM: AST) and EU operating Rome-based oil junior Mediterranean Oil & Gas (AIM: MOG) both added about 3%.
Africa and FSU operating oil and gas junior Victoria Oil & Gas (AIM: VOG) was among the leading fallers in the sector, slipping 7.3%. Latin America operating Gold Oil (AIM: GOO) followed with a loss of almost 7%.
Eastern Europe focused junior Aurelian Oil & Gas (AIM: AUL) and energy investor Xtract Energy PLC (AIM: XTR) both shed 5%.
Western Europe operating oil and gas company Northern Petroleum (AIM: NOP) and North American focused oil & gas junior, Pantheon Resources (AIM: PANR) both declined 4%, as did Gulfsands Petroleum (AIM: GPX), an oil and gas company with assets in Iraq, Syria and Gulf of Mexico.
Gold volatile following US payroll update, Silver and Platinum hold steady
Gold was very volatile today, dipping to US$984/oz following the US payroll update but then recovering to US$1,004/oz, while Silver and Platinum were fluctuating around morning’s levels. Silver was sitting at US$16.34/oz, while Platinum was at US$1,275/oz.
Lonmin (LSE: LMI) was still sliding after a downgrade Deutsche Bank, which changed its recommendation for the company to “sell” from “hold” yesterday. The platinum miner was the leading faller among the major mining stocks with a 4.6% drop.
Silver miner Fresnillo and another FTSE 100 miner Randgold Resources (LSE: RRS) shed 3% and 2% respectively.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) lost 2.5%.
Mid caps didn’t do much better.
Gold producer Petropavlovsk (LSE: POG) was down 1.7%, while silver miner Hochschild Mining (LSE: HOC) finished with marginal losses. Aquarius Platinum (LSE: AQP) dipped almost 4%.
Most small caps in the sector were in selling mode on Friday. Argentina focused gold explorer Patagonia Gold (AIM: PGD) and Uzbekistan focused gold miner Oxus Gold (AIM: OXS) slipped almost 7%.
African focused gold deposit developer Cluff Gold (AIM: CLF) and copper and gold miner EMED Mining (AIM: EMED) both shed more than 4%, while Western Australia operating Norseman Gold (AIM: NGL) and Philippines focused gold producer Medusa Mining (AIM&ASX: MML) declined 4%.
Fiji focused gold producer Vatukoula Gold Mines (AIM: VGM), Australian gold and copper prospector Solomon Gold (AIM: SOLG), Canada based junior gold developer Rambler Metals and Mining Plc (AIM: RMM) and commodity asset development company Mercator Gold (AIM: MCR) all lost 3%.
Lesotho operating diamond miner Kopane Diamond Developments (AIM: KDD) was one of the few bright spots in the sector with an 8% surge.
Copper and Nickel decline, push miners lower
Copper and Nickel slid, dragging down base metals focused stocks. Copper was down to US$2.66/pound, while Nickel managed to recoup some of its early losses, but failed to get back to the morning level, standing at US$7.83/pound. Zinc fluctuated between US$0.83 and US$0.84/pound.
With the exception of Anglo American (LSE: AAL), which held on to small gains, all base metals focused miners declined on Friday.
Kazakhmys (LSE: KAZ) emerged as the leading faller with a 5% drop. Rio Tinto (LSE: RIO), Vedanta Resources (LSE: VED) and Xstrata (LSE: XTA) followed with declined of over 3%. Eurasian Natural resources (LSE: ENRC) lost nearly 3%.
The world’s largest miner BHP Billiton (LSE: BLT) lost 1%, while Antofagasta (LSE: ANTO) posted marginal declines.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) was down 1.7%.
Zinc mining and recycling specialist ZincOX (AIM: ZOX) said the construction of its partly owned Jabali open pit zinc mine was behind schedule to achieve production of 63% of capacity by September 2010, which constituted a default on its US$120 million bond, giving the right to the bondholders to demand repayment of the bond. Talks with the bondholders are ongoing. Meanwhile, shares in ZincOx dipped 13% on the news.
Northern Mozambique operating Irish mineral sands producer Kenmare Resources (AIM: KMR) and tantalum miner Noventa (LSE: NVTA), which also operates in Mozambique, followed with declines of 10% and 7% respectively. Laterite nickel specialist European Nickel (AIM: ENK) also shed 7%.
Indonesia operating coal miner Churchill Mining (AIM: CHL) was down 5.8%
Iron ore focused investor Red Rock Resources (AIM: RRR) declined 4%. Canada based junior gold developer Rambler Metals and Mining Plc (AIM: RMM), copper and nickel explorer Regency Mines (AIM: RGM) and coking and thermal coal producer New World Resources (LSE: NWR) dropped over 3%.
Banks, insurance, private equity
Almost all financial stocks were in decline today.
Bailed out banks Lloyds (LSE: LLOY) and Royal Bank of Scotland (LSE: RBS) were at the bottom of the pile with losses of 7% and 5% respectively. Barclays (LSE: BARC) and HSBC (LSE: HSBA) both shed 1.5%.
Standard Chartered (LSE: STAN) was down 1%.
Insurers Aviva (LSE: AV) and Friends Provident (LSE: FP) went against the tide with Aviva gaining 1.5%, while FP was sitting just above the opening level. However, their sector peers didn’t do that well.
Prudential (LSE: PRU) dropped 2.2%. Legal & General (LSE: LGEN) lost 1.5%, while Old Mutual (LSE: OML) and RSA Insurance Group (LSE: RSA) dropped more than 1%.
Standard Life (LSE: SL) incurred marginal losses.
Private equity group 3i (LSE: III) was down 1.6%.
Large and Mid Cap News
FTSE 250 Oil & Gas producer Emerald Energy Plc (LSE: EEN) released an operational update of its exploratory drilling in Colombia. In Emerald’s Matamo block in Upper Magdalena Valley, the Gigante Caballos 2# well has produced natural flow rates almost 3 times higher than in previous testing. Emerald now plans to conduct an extended flow and formation pressure build-up test.
Bloomberg has reported that BHP Billiton (ASX: BHP), the world’s largest mining company, may report full-year earnings 22 percent greater than earlier forecast because of higher metal prices, Royal Bank of Scotland Group Plc said.
Consumer healthcare company SSL International (LSE: SSL) announced the completion of Gainbridge, a holding company for operating companies primarily engaged in the packaging and distributing of condoms and medical products in Ukraine.
Cheltenham headquartered Spirax-Sarco Plc (LSE: SPX) announced the acquisition of its long standing Turkish distribution partner ‘İnter Valf Sanayi ve Ticaret Limited Şirketi’ (InterValf). The newly formed Spirax-Sarco subsidiary ‘Spirax InterValf’ will be well positioned to benefit from the Turkish Government's energy saving measures.
Small Cap News
Zinc mining, recycling and refining group ZincOx Resources PLC (AIM: ZOX) said talks have begun with holders of a US$120 million bond arranged for building the Jabali open pit zinc mine in Jemen, seeking to assure them of the merits of the project after it emerged that a production milestone is likely to be delayed by two to three months.
Edison Investment Research said Rome-based Mediterranean Oil & Gas’ (AIM: MOG) share price of 50.5 pence represents a “material discount” to the company’s net asset value, which was upped to 84 pence per share after the company reported a cash position of €7.6 million with the short-term funding requirements for its Guendalina project covered by an existing €9.4 million facility with HBOS.
Edison Investment Research said Western Europe focused oil and gas company Northern Petroleum (AIM: NOP) has the potential to provide material returns as production is expected to hike to 6,000 barrels of oil equivalent per day (boepd) from the current 330 boepd by 2013, when all of the company’s fields are in production.
UK registered technology firm, Oxford Instruments (LSE: OXIG) has won an order to supply an additional 9 tonnes of superconducting wire to ITER at a value of approximately £5 million. Investors welcomed the news which underlines Oxford Instrument’s role in one of the world largest scientific projects. The Company's shares rose over 3% to trade at £1.99.
Broker Shore Capital said the ongoing recovery in oil prices will strengthen demand for alternative energy sources, boosting the potential of companies like GEM BioFuels (LSE: GBF), which is nearing Jatropha crude oil production.
Rambler Metals & Mining PLC (TSX: RAB; AIM: RMM) said it has raised £5.5 million before expenses through an oversubscribed placing of 27.5 million shares at 20 pence each, or approximately C$0.345 per share. The placing was announced earlier this week.
Ambrian Capital has issued a note on SeaEnergy PLC (AIM: SEA), a week after the name change from Ramco Energy and the strategic shift from oil services company to pure-play offshore wind energy play came into effect. The broker has a ‘buy’ rating on the stock and places an 81 pence valuation on SeaEnergy, based on a sum-of-the-parts of the portfolio of assets it holds.
Xcite Energy Ltd (TSX-V, AIM: XEL), a developer of heavy oil assets in the UK North Sea, said it has conditionally placed 10.14 million new shares at a price of 21 pence, or C$0.37, per share to raise approximately £2.1 million before expenses, or C$3.8 million, from investors in the UK and Canada.
Ceramic Fuel Cells (AIM, ASX: CFU), which manufactures power products for homes, announced its first commercial agreement with an Australian energy utility, which has agreed to install its BlueGen gas-to-electricity generator in a showcase sustainability home.
India-based animation and gaming group DQ Entertainment PLC (AIM: DQE) said it is producing a live action TV series, 'Toomai The Story of an Elephant Boy'. It is due for completion by late 2010 for an early 2011 release, and is supported by ABC of Australia and other major global broadcasters.
Shares in Upstream Marketing and Communications (AIM: UPS) soared after the company reported progress on its radical makeover campaign, having entered into a conditional agreement to sell its PR subsidiaries Upstream Asia and Camber Communications, which the company said would result in a “fundamental change of business”.
Platinum producer Platinum Australia (ASX: PLA, AIM: PLAA) has raised $30 million (£16 million) from an institutional placement of 37.5 million shares priced at $0.81 per share (44 pence) after an earlier proposed equity raising fell through.
Inspired Gaming Group (AIM: INGG) announced the renewal and four year extension of its exclusive contract with bookmaker Paddy Power (LSE: PAP). Under the agreement, Inspired Gaming will continue to supply Paddy Power's 79 outlets in the UK with 316 gaming machines. The existing three year relationship, resulted in 81% growth in machine income for the bookmaker.
Venture capital investor SPARK Ventures (AIM: SPK) said today its partly owned online and mobile services provider IMImobile has entered into an agreement to become telecom operator MTN Group’s strategic managed services and hosting partner.