Overview: the FTSE 100 turned negative today as investors were cautious following yesterday’s comments from Fed Chairman Ben Bernanke, who warned of the “formidable headwinds” that the global economy was set to encounter on its way to full recovery.
The blue chip index stood 70 points, or 1.3% below the opening level in early afternoon with financial and property stocks emerging as the biggest fallers.
Royal Bank of Scotland (LSE: RBS) hit the bottom of the sector with a 4% decline while peers Barclays (LSE: BARC) and HSBC (LSE: HSBA) followed with losses of 2% and 1%. Commercial property companies also weighed on the Footsie with Land Securities Group (LSE: LAND), British Land (LSE: BLND) and Hammerson (LSE: HMSO) shedding about 2%.
Other notable fallers included retailer Tesco (LSE: TSCO), which lost 2.5% after releasing its Q3 results, and investment management business Man Group (LSE: EMG), which declined 2%.
Not much was happening on the leaderboard as just three FTSE 100 constituents managed to tack on more than 1%. Publisher Pearson (LSE: PSON), communications services group WPP (LSE: WPP) and tour operator Thomas Cook (LSE: TCG) led the market with gains of 2.2%, 1.7% and 1.3% respectively.
Stock index futures in the US pointed to a mixed open on Wall Street as futures for the Dow Jones Industrial Average and Nasdaq composite declined, while futures for the broader S&P 500 index inched up.
Commodities
Oil prices rose this morning with January Brent Crude reaching US$76.80/barrel, while US light, sweet crude for January delivery improved to US$74.10/barrel.
Major oil and gas stocks were mixed. Cairn Energy (LSE: CNE) lagged behind with a loss of nearly 1%, while BG Group (LSE: BG) declined marginally. BP (LSE: BP) added almost 1%, while fellow supermajor Shell (LSE: RDSB) rose marginally, as did other FTSE 100 constituents, Petrofac (LSE: PFC) and Tullow Oil (LSE: TLW).
Midcaps also headed in different directions as while Dragon Oil (LSE: DGO) and Heritage Oil (LSE: HOIL) posted small gains, Dana Petroleum (LSE: DNX) shed 2%.
Juniors didn’t show much movement in morning trade. Europe focused oil and gas developer Ascent Resources (AIM: AST) was at the bottom of the pile with a 9% loss after terminating an asset management agreement with Swiss based investment company San Severina Holdings.
Atlantic Canada operating oil and gas group Enegi Oil (AIM: ENEG) and Iraq and Algeria operating Gulf Keystone Petroleum (AIM: GKP) also were in decline, shedding more than 3%.
Miners mixed as gold and silve recover
Precious metals rose today as gold reached US$1,160/oz, while silver and platinum improved to US$18.22/oz and US$1,451/oz, respectively.
Blue chip miners were mixed. Gold miner Randgold Resources (LSE: RRS) was the top performer in the sector in the FTSE 100 with a 1.2% advance, while silver producer Fresnillo (LSE: FRES) followed with a gain of less than 1%. Platinum miner Lonmin (LSE: LMI) moved in the opposite direction with a 1% slide.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) also declined 1%.
Midcap miners all declined this morning as gold miner Petropavlovsk (LSE: POG), Aquarius Platinum (LSE: AQP) and silver producer Hochschild Mining (LSE: HOC) all declined marginally.
Most small caps miners were in decline. Philippines focused Metals Exploration (AIM: MML) was among the biggest fallers with an 8% loss, while Turkey and Ethiopia operating gold miner Stratex International (AIM: STI) tumbled 7%. South Africa and Botswana operating diamond miner Firestone Diamonds (AIM: FDI) followed with a 6% slide and South American based explorer Mariana Resources (AIM: MARL) pulled back 4.5%.
Copper and nickel rise
Base metals were on the rise as copper and nickel improved to US$3.20/lb and US$7.26/lb respectively and zinc reached US$1.05/lb.
The base metals focused majors also were mixed this morning. Vedanta Resources (LSE: VED) was in the lead with a 1.2% gain, while Antofagasta (LSE: ANTO) added nearly 1%. Kazakhmys (LSE: KAZ) rose marginally, while Eurasian Natural Resources (LSE: ENRC), Anglo American (LSE: AAL) and Rio Tinto (LSE: RIO) were flat. BHP Billiton (LSE: BLT) posted a small gain, while Xstrata (LSE: XTA) sank to the bottom of the pile with a 1.6% loss.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) posted a loss of less than 1%.
Australia focused coking coal producer Caledon Resources (AIM: CDN) was the biggest faller in the sector with a 30% plunge after deciding against the sale of the company, citing the positive outlook for coal and the “opportunities at hand” as the rationales for retaining the status of an independent coal producer.
Zinc mining and recycling specialist ZincOX (AIM: ZOX) and mineral sands producer Kenmare Resources (LSE: KMR) also were in decline, shedding 5.5% and 3.5%, respectively.
Laterite nickel specialist European Nickel (AIM: ENK) advanced 10%.
Banks, insurance, private equity
Royal Bank of Scotland (LSE: RBS) continued sliding today, posting a 4.3% loss, while fellow part-nationalised bank Lloyds (LSE: LLOY) rose marginally. Standard Chartered (LSE: STAN) was flat, while Barclays (LSE: BARC) and HSBC (LSE: HSBA) shed 2% and 1% respectively.
Insurance stocks were in selling mode today with the exception of Admiral Group (LSE: ADM), which added 1%. Aviva (LSE: AV), Prudential (LSE: PRU) and RSA Insurance Group (LSE: RSA) declined marginally, while Legal & General (LSE: LGEN) shed 1% and Standard Life (LSE: SL) retreated 1.3%.
Private equity group 3i (LSE: III) was down 1.5%.
Small Cap Movers
Other notable movers among the small caps included African Aura Mining (AIM: AAAM) and African Medical Investments (AIM: AMEI), which gained 5% and 8% respectively.
Large and Mid Cap News
This morning mid-tier oil producer, Tullow Oil (LSE: TLW) reported a number of developments among its exploration projects.
FTSE100 constituent Xstrata (LSE: XTA) announced total write-downs of approximately US$2.45 billion relating to its nickel businesses and its copper-zinc custom smelting operations in Canada. In its nickel businesses the international miner expects to incur US$1.9bn in impairments. In Canada the FTSE100 miner will permanently close it copper and zinc metallurgical plants at the Kidd mine incurring total charges of $545.
In its third quarter management statement for the period ended 28 November 2009, FTSE100 retailer Tesco (LSE: TSCO) revealed an improving performance with an 8.8% increase in group sales (excluding fuel). The supermarket giant said it has seen strong growth in its UK operations and the overall group continues to perform in-line with expectations.
Small Cap News
African Medical Investments (AIM: AMEI) has entered into an agreement with African insurer Interhealth Technologies Limited, whose members will now be directed towards African Medical’s portfolio of private boutique hospitals, trauma centres and Well Woman clinics, should they require medical attention.
Chinese coal bed methane developer Green Dragon Gas (AIM: GGG) is now debtless after raising US$75 million via an equity issue to repay US$55 million to redeem in full the only remaining outstanding convertible bond.
European computer game retailer, The GAME Group (LSE: GMG) disappointed investors with its interim trading statement, in the pre-Christmas update the FTSE250 retailer said it was cautious ahead of the critical period. In the year to date groups sales have been in decline. Investors haven’t taken kindly to the news - the company’s shares dropped over 14% this morning.
Britain’s largest care home provider, Southern Cross Healthcare (LSE: SCHE) announced its preliminary results for the year ended 27th September 2009. Over the course of the year revenues increased by 5.4% to £937.1m and net debt was reduced by £64.4m to £33.1m. The FTSE250 healthcare company said that it plans to re-instate its dividend in the coming year.
European Nickel PLC (AIM, PLUS: ENK) said Endeavour Financial Corp has agreed to increase the US$4 million bridge loan facility currently in place by US$1 million and to extend its maturity date to March 1 2010.
Australia focused coking coal producer, Caledon Resources (AIM: CDN, ASX: CCD) confirmed this morning that after approximately ten months of negotiations with possible suitors, that it had decided to end takeover discussions.
AFC Energy (AIM: AFC) has entered into a binding heads of agreement with Linc Energy (ASX: LNC) to integrate the AFC Fuel Cell System for use in Linc Energy’s Underground Coal Gasification projects, to tap into what AFC called a “rapidly emerging” and the largest potential market for power generation from underground coal.
Oil and gas exploration and production company Ascent Resources PLC (AIM: AST) announced the termination of the asset management joint venture with Switzerland-based San Severina Holdings SA entered in October 2008.
Tajikistan operating gold miner Kryso Resources (AIM: KYS) has announced the appointment of founding director and Chief Executive of ALTUS Resource Capital Limited (LSE: ARCL) Steven Poulton as a non-executive director pursuant to the subscription for shares in Kryso by ALTUS from three months ago.
Zimbabwe focused investment company LonZim PLC (AIM: LZM) said its 60 percent-held and Zimbabwe Stock Exchange-listed business Celsys Ltd has reported improvements in its trading performance for the first quarter of the 2009/2010 financial year.
Environmental science and technology company Accsys Technologies (AIM: AXS) has proposed an equity issue to raise €17 million for working capital purposes and to support the Accoya wood production at its plant in Arnhem.