Overview: US stocks inched higher in early trading today despite the speculation of a possible increase in interest rates by the Federal Reserve, which sent the main stock index futures sliding in the morning. The market was lifted by the upgrades of American Express (NYSE: AXP), Capital One Financial Group (NYSE: COF) and Discover Financial Services (NYSE: DFS) by Merrill Lynch.
Fed Chairman Ben Bernanke, who is scheduled to speak at the Economic Club of Washington today, is expected to give an indication about the Fed’s policy following Friday’s upbeat US unemployment update.
The Dow Jones Industrial Average rose 0.2%, as did the broader S&P 500 index and the technology heavy Nasdaq composite.
The FTSE 100 trimmed losses to a minimum following the better than expected start on Wall Street and despite losses in the financial and mining sectors.
Royal Bank of Scotland (LSE: RBS) was the biggest faller among the blue chips today, shedding 4.4%, while fellow part-nationalised bank Lloyds (LSE: LLOY) declined 2%, as did Barclays (LSE: BARC). Miner ENRC (LSE: ENRC) lost 3.5%.
Other notable fallers included airline British Airways (LSE: BAY) and engineering firm Amec (LSE: AMEC), which both retreated 1.2%.
Tour companies TUI Travel (LSE: TUI) and Thomas Cook Group (LSE: TCG) emerged atop the leaderboard along with specialist distribution group Bunzl (LSE: BNZL) with gains of over 2%.
Defence contractors Cobham (LSE: COB) and BAE Systems (LSE: BA), broadcasting group BSkyB (LSE: BSY), education and media conglomerate Pearson (LSE: PSON) and hospitality company Whitbread (LSE: WTB) followed, tacking on about 1.5%.
Commodities
Oil prices fell further today with January Brent Crude sliding to US$76.95/barrel, while US light, sweet crude for January delivery fell to US$74.35/barrel.
Major oil and gas stocks were mixed today. BG Group (LSE: BG), Tullow Oil (LSE: TLW) and Petrofac (LSE: PFC) lost less than 1%, while Cairn Energy (LSE: CNE) posted a marginal gain, as did supermajors BP (LSE: BP) and Shell (LSE: RDSB).
Midcaps were mixed as while Dragon Oil (LSE: DGO) retreated 1.6%, Heritage Oil (LSE: HOIL) advanced 1.2% and Dana Petroleum (LSE: DNX) rose marginally.
Peru, Colombia and Cuba operating oil and gas explorer and producer Gold Oil (LSE: GOO) and Irish oil and gas exploration company Petroceltic International (AIM: PCI) were the top performers among the small caps, rallying 10%. US focused junior Empyrean Energy (AIM: EME) also rose, climbing 3.5%.
US focused oil and gas junior Caza Oil & Gas (AIM: CAZA), Atlantic Canada operating oil and gas group Enegi Oil (AIM: ENEG) and energy investor Xtract Energy PLC (AIM: XTR) declined, sliding 6%, 5.5% and 5%, respectively. Europe focused oil and gas developer Ascent Resources (AIM: AST) and Iraq and Algeria operating Gulf Keystone Petroleum (AIM: GKP) both slipped 4.5%.
Miners slide as gold and silver tumble
Precious metals also were in decline today. Gold continued its freefall, retreating to US$1,141/oz after hitting $1,200 last week. Silver and platinum were down to US$17.96/oz and US$1,427/oz respectively.
Platinum miner Lonmin (LSE: LMI) recovered from early losses, posting a small gain. However, fellow FTSE 100 constituents gold miner Randgold Resources (LSE: RRS) and silver miner Fresnillo (LSE: FRES) dropped 1% and 2.4% respectively.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) declined marginally.
Midcaps were in decline. Gold miner Petropavlovsk (LSE: POG) and Aquarius Platinum (LSE: AQP) were at the bottom of the pile with losses of over 3%, while silver producer Hochschild Mining (LSE: HOC) declined marginally.
Copper and gold miner EMED Mining (AIM: EMED) was among the top performers in the sector with an 11% advance, while most other small caps declined.
Philippines focused Metals Exploration (AIM: MML) led the retreat, slipping 7%. Philippines focused gold producer Medusa Mining (AIM&ASX: MML) was down 6%, while South American based explorer Mariana Resources (AIM: MARL) and Western Australia operating Norseman Gold (AIM: NGL) lost 5.5%. Africa focused gold deposit developer Cluff Gold (AIM: CLF), Brazil focused gold miner Horizonte Minerals (AIM: HZM) and Australian gold and copper prospector Solomon Gold (AIM: SOLG) pulled back 4%.
Base metals mixed
Base metals headed in different directions as while copper and zinc slid to US$3.14/lb and US$1.03/lb respectively, nickel inched higher to US$7.24/lb.
Base metals focused blue chips were mixed. Antofagasta (LSE: ANTO) posted a 1.2% gain, while BHP Billiton (LSE: BLT) and Rio Tinto (LSE: RIO) rose marginally.
Anglo American (LSE: AAL), Kazakhmys (LSE: KAZ) and Vedanta Resources (LSE: VED) headed in the opposite direction, posting marginal losses. Xstrata (LSE: XTA) was down 1.3%, while Eurasian Natural Resources (LSE: ENRC) sank to the bottom of the pile with a 3.7% loss.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) moved with the sector, sliding 3.1%.
Most juniors declined. Laterite nickel specialist European Nickel (AIM: ENK) retreated 6.7%, while tantalum concentrate supplier with assets in Mozambique Noventa (AIM: NVTA) and cement operator Prosperity Mineral Holdings (AIM: PMHL) lost 4.5% and 3.5% respectively. Zinc mining and recycling specialist ZincOX (AIM: ZOX) also lost 3.5%.
Banks, insurance, private equity
Royal Bank of Scotland (LSE: RBS) was the biggest faller in the banking sector, slipping 4.7%. . Another part-nationalises bank Lloyds (LSE: LLOY) lost 3.6%, while Barclays (LSE: BARC) was down 2.3%. HSBC (LSE: HSBA) and Standard Chartered (LSE: STAN) lost more than 1%.
Insurers didn’t show much movement today. Legal & General (LSE: LGEN), Old Mutual (LSE: OML) and Prudential (LSE: PRU) were flat, while Admiral Group (LSE: ADM), Aviva (LSE: AV) and RSA Insurance Group (LSE: RSA) posted marginal gains.
Private equity group 3i (LSE: III) rose marginally.
Small Cap Movers
Other notable movers among small caps included machine to machine (M2M) communications specialist Telit Communications (AIM: TCM), which rose 5%, while emerging speciality pharmaceutical company Alliance Pharma (AIM: APH) and drug discovery and development group Immupharma (AIM: IMM) lost 4%.
Gemfields Plc (AIM: GEM) tumbled 14%.
Large and Mid Cap News
International mining giants, BHP Billiton (LSE: BLT, ASX: BHP) and Rio Tinto (LSE: RIO, ASX: RIO) signed binding agreements in relation to the proposed Iron Ore Production Joint Venture, in the Pilbara mining district, Western Australia. This 50:50 collaboration follows years of on-off negotiations, with many previous JV’s and potential mergers falling by the way-side. BHP and Rio believe the JV’s unique production and development synergies will be in excess of US$10 billion.
Europe’s largest independent waste manager, Shanks Group plc (LSE: SKS) received an unsolicited takeover bid of 135p per share, from a private equity group. After careful consideration of the ‘highly preliminary’ offer, Shanks said a cash offer in excess of 150p per share would deliver an ‘appropriate value’ to shareholders.
UK Support services company, VT Group (LSE: VTG) closed the initial phase of the Governments ‘Building Schools for the Future’ programme for the London Borough of Greenwich Council. The FSTE250 constituent is the project’s Strategic Partner Organisation.
Engine and power system manufacturer, Rolls-Royce (LSE: RR.) announced a new contract win, to supply 24 lightweight waterjets for the UAE Navy's fleet of fast patrol boats. The new order adds to the 150 Rolls-Royce waterjets already in service across the region. The FTSE100 constituent said it is working with Abu Dhabi Ship Building (ADSB) to establish a waterjet service centre in order ‘to provide in-service support for our growing customer base’.
British construction and support service group, Carillion (LSE: CLLN) sold equity in two of its Public Private Partnership (PPP) projects for a combined £86.9 million. The FTSE250 constituent now expects to move into a positive net cash position by year end.
Small Cap News
Broker Canaccord Adams has revisited its valuation of Labrador Iron Mines Holdings (TSX: LIM) following the recent project update, which included permitting progress and doubling of mineral resources at the first two deposits to be mined, retaining its “buy” recommendation and raising the target price for the stock.
Jubilee Platinum’s (AIM: JLP/JSE: JBL) decision to acquire Braemore Resources appears to be reaping dividends. The key asset in the Braemore portfolio was the ConRoast Smelter technology in South Africa, which unlike more conventional smelting, can process lower grade ore, or ore with high chrome content.
Atlantic Coal (AIM: ATC) has entered into a non-binding memorandum to acquire Montana-based clean burning coal development company Maple Carpenter Creek (MCC) for 1.33 billion shares representing 49% of the enlarged group’s capital.
Fusion IP PLC (AIM: FIP), the university commercialisation company which turns university research into business, has invested £300,000 into Diurnal, an early stage Fusion portfolio company from the University of Sheffield which is developing a novel approach to drug delivery which will help patients suffering from reduced cortisol and testosterone levels.
Biocompatibles International (AIM: BII) and AstraZeneca (LSE: AZN) have announced that they will initiate clinical trials for their jointly developed type II anti-diabetes drug CM3 in January after the pre-clinical phase of the programme was completed ahead of schedule.
Cove Energy PLC (AIM: COV) said the operator of the Ruvuma licence in Mozambique, Anadarko Petroleum Corp (NYSE: APC), has reported hydrocarbon shows from the onshore concession and will commence the drilling of the fully funded offshore four well programme in the next few days.
Shares in Plant Impact (AIM: PIM) came in demand this morning after the developer of technologies that improve crop productivity released its interim results, reporting a nearly fourfold increase in revenues while losses narrowed.
Shares in Plant Impact (AIM: PIM) came in demand this morning after the developer of technologies that improve crop productivity released its interim results, reporting a nearly fourfold increase in revenues while losses narrowed.
Shares in Renewable Energy Generation Limited (AIM: RWE), the wind power and biomass focused energy group, held steady this morning despite confirmation of a five year contract to supply electricity and heat to the Port of Dover from its biofuel fired combined heat and power system.
Gemfields (AIM: GEM) said it intended to concentrate on further slashing operating costs and positioning the business for growth for when the conditions in the gemstone market improve, while reporting first revenues from emerald sales in the previous financial year along with successful post-period auctions as production increased.
Marketing software specialist smartFOCUS Group PLC (AIM: STF) said it has been selected by Bournemouth-based friendly society Liverpool Victoria (LV=) to streamline and simplify the financial services group’s entire marketing strategy.
Independent News & Media PLC (LSE: INM) said it has sold its 49 percent interest in Verivox Holdings Ltd, a German online price comparator for energy and telecom services, for €16 million net to VVX Investments Ltd, an Oakley Capital Private Equity LP unit. An additional €1 million will be payable in 2010 if Verivox reaches EBITDA targets in the current year.
Regency Mines PLC (AIM: RGM) said it is confident it has come out of the market downturn far stronger than it went in and is focusing on progressing the early listing of the DNi joint venture with Direct Nickel Pty Ltd in connection with the Botue-Mambare laterite nickel-cobalt project in Papua New Guinea.
Irish oil and gas exploration company Petroceltic International (AIM: PCI) reported flow rates of 4.9 mmscf/d (million standard cubic feet per day) following fracture stimulation at the AT-2 well, which was in line with expectations and signaled an extension of the Ain Tsila gas discovery.