Overview: contrary to pre-trade projections, the FTSE 100 advanced 0.4% instead of shedding more than 1% as banks, miners and oil and gas stocks recovered, posting gains after recent declines.
Standard Chartered (LSE: STAN) led the blue chips, advancing 4.5%. Credit information group Experian (LSE: EXPN) and chipmaker ARM Holdings (LSE: ARM) added nearly 3%. Cable & Wireless Worldwide (LSE: CW) and London Stock Exchange Group (LSE: LSE) rose 2.5%, while platinum miner Lonmin (LSE: LMI), oil and gas producer Cairn Energy (LSE: CNE) and commercial property company British Land (LSE: BLND) added more than 2%.
Hedge fund manager Man Group (LSE: EMG) tumbled 9% to slide to the bottom of the pile. Tour operator Thomas Cook (LSE: TCG) lost 3%. Insurer Aviva (LSE: AV) and another tour company TUI Travel (LSE: TT) declined 2.5%. Engineering firm Invensys (LSE: ISYS) and turbine manufacturer Rolls-Royce (LSE: RR) lost nearly 2%. Security services group G4S (LSE: GFS) and telecom group BT (LSE: BT.A) were down 1.5%.
US stocks were in decline this morning. The Dow Jones Industrial Average was down 0.9%, the broader S&P 500 index retreated 0.8% and the technology heavy NASDAQ composite slid 0.65%.
Commodities
Oil prices generally improved today with July Brent Crude reaching US$78/barrel, while US light, sweet crude for June delivery, which was the most traded contract on the New York Mercantile Exchange (NYMEX), rose to US$71.76/barrel.
Crude prices rebounded after hitting a three month low earlier today, still under pressure from the European fiscal crisis with investors apparently having little faith in the EU’s ability to tackle its debt problem with a number of euro zone member states facing a debt crisis similar to that which led to a €110 billion bailout of Greece to allow it to avoid a default. The EU has recently agreed on a €750 billion bailout fund to back up other euro zone members with soaring sovereign debts with the biggest contribution coming from Germany, where public opinion polls and a recent election campaign have shown staunch opposition to the government’s agreement to rescue Greece and participate in the bailout deal.
The recent developments in the debt crisis have only “bought time” but did not provide a solution to the problem with the issue of introducing uniform economic regulations for the EU yet to be decided upon.
The debt crisis has muddied the outlook for oil demand and boosted the US dollar to make dollar-denominated commodities such as crude more expensive for holders of other currencies to dent demand.
The demand for oil does indeed seem to be falling as last week’s inventories reports from the American Petroleum Institute (API) and Energy Information Administration (EIA) showed further build-ups in US crude stockpiles.
Blue chip oil and gas producers did well today. BP (LSE: BP) was in the lead with a gain of nearly 3%. Fellow supermajor Shell (LSE: RDSB) added 1%, while Cairn Energy (LSE: CNE), BG Group (LSE: BG) and Tullow Oil (LSE: TLW) climbed 2.5%, 2% and 1.5% respectively.
Oil and gas engineering firms followed with Amec (LSE: AMEC) and Petrofac (LSE: PFC) rising 1.5% and 0.5% respectively. Most midcaps were in decline. Dana Petroleum (LSE: DNX), Melrose Resources (LSE: MRS) and Soco International (LSE: SIA) shed nearly 1.5%. Dragon Oil (LSE: DGO) lost less than 1%, while Salamander Energy (LSE: SMDR), Premier Oil (LSE: PMO) and Heritage Oil (LSE: HOIL) were flat.
JKX Oil & Gas (LSE: JKX) went against the tide, tacking on 1%.
Wood Group (LSE: WG) posted a small gain, while fellow services company Wellstream Holdings (LSE: WSM) declined 1.3%.
Atlantic Canada operating oil and gas group Enegi Oil (AIM: ENEG) and Peru, Colombia and Cuba operating oil and gas explorer and producer Gold Oil (LSE: GOO) led the juniors, rallying 18.5% and 14% respectively.
Gold, silver and platinum inch lower
Gold was slightly lower, still cooling off from its recent rally, which saw the yellow metals hit all time highs at US$1,250/oz. Gold has been in demand as investors were increasingly pouring money into safe haven assets, primarily precious metals.
Gold inched lower to US$1,228/oz. Other precious metals followed with silver and platinum dropping to US$19.15/oz and US$1,690/oz respectively.
Major miners were on the rise. Platinum producer Lonmin (LSE: LMI) led the way, advancing 3.5%. Randgold Resources (LSE: RRS) and silver miner Fresnillo (LSE: FRES) climbed 2.5% and 0.5% respectively.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) was unmoved.
Midcaps were mixed. Gold miner Petropavlovsk (LSE: POG) rose 2.5%, while silver producer Hochschild Mining (LSE: HOC) was down 1.8% and Aquarius Platinum (LSE: AQP) posted a marginal loss.
UK-registered China operating copper and gold miner Central China Goldfields (AIM: GGG) led the small caps with a 12.5% surge. Uzbekistan focused gold miner Oxus Gold (AIM: OXS) advanced 12% after recommencing mining at its 50% owned Amantaytau Goldfields JV in Uzbekistan. Tajikistan operating gold miner Kryso Resources (AIM: KYS) and Fiji focused gold miner Vatukoula Gold Mines (AIM: VGM) also did well, tacking on nearly 5%.
Turkey and Saudi Arabia operating gold explorer KEFI Minerals (AIM: KEF) declined 10%.
Base metals decline, but mienrs rise
Base metals fell today. Copper and nickel dropped to US$3.02/lb and US$9.34/lb respectively. Zinc slid to US$0.88/lb.
Most mining companies rose today. Anglo American (LSE: AAL) and Eurasian Natural Resources (LSE: ENRC) were the top performers with gains of 2.2% and 1.2% respectively. Antofagasta (LSE: ANTO), BHP Billiton (LSE: BLT), Kazakhmys (LSE: KAZ) and Vedanta Resources (LSE: VED) added less than 1%.
Xstrata (LSE: XTA) was flat, while Rio Tinto (LSE: RIO) went against the tide, posting a loss of nearly 1%.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) retreated 3.9%. The company’s share price nearly reached 400 pence this year, nearly double its value at the start of 2010.
Most junior companies were in decline today. Philippines operating nickel miner Rusina Mining (ASX: RML; AIM: RMLA) lost 14.5%, while South American focused junior miner Herencia Resources (AIM: HER) and Botswana operating nickel and copper miner Discovery Metals (AIM: DME) followed, slipping 7% and 6.5% respectively.
Banks, insurance, private equity
Standard Chartered (LSE: STAN) led the banking sector led the banking stocks, rallying 4.7%. HSBC (LSE: HSBA) added nearly 1%, while Lloyds (LSE: LLOY) posted a marginal gain. Royal Bank of Scotland (LSE: RBS) and Barclays (LSE: BARC) headed in the opposite direction, shedding less than 1%.
Most insurance companies were in decline. Admiral Group (LSE: ADM) was an exception, advancing 1.2%. Aviva (LSE: AV) was at the bottom of the pile with a loss of 2.7%. Legal & General (LSE: LGEN), RSA Insurance Group (LSE: RSA) and Standard Life (LSE: SL) lost nearly 1.5%. Old Mutual (LSE: OML) declined 1% and Prudential (LSE: PRU) shed less than 1%.
Private equity group 3i (LSE: III) added 1.7%.
Small Cap Movers
Other notable movers among the small caps included mobile email and data synchronisation group Synchronica PLC (AIM: SYNC) with a 6% gain and environmental science and technology company Accsys Technologies (AIM: AXS) and African focussed soft commodity specialist, Agriterra Limited (AIM: AGTA), which slid 6% and 8.5% respectively.
Large and Mid Cap News
Man Group (LSE:EMG) has beefed up its funds under management through the acquisition of New York listed hedge fund GLG Partners (NYSE:GLG) in a $1.6 billion deal.
Small Cap News
Norcon (AIM: NCON) has signed further consultant and project management services contracts with Saudi Telecom Company, which it said provided “significant visibility” for the rest of the year.
Turkey and Ethiopia operating gold miner Stratex International (AIM: STI) has commenced the 2010 exploration programme at its fully owned Öksüt high-sulphidation gold project located in central Turkey.
Baobab Resources PLC (AIM: BAO) reported encouraging results from scout diamond drilling at the Chimbala prospect at the Tete iron/vanadium/titanium project in Mozambique.
Uzbekistan focused gold miner Oxus Gold (AIM: OXS) has recommenced mining at its 50% owned Amantaytau Goldfields JV (joint venture) in Uzbekistan after operations were suspended in March 2009 pending the refining of an accumulated stockpile of 18.2 tonnes of silver doré, which AGF had been unable to process through the Almalyk silver refinery on a timely basis. The Uzbek government holds the remaining stake in AGF.
Mobile email, instant messaging and data synchronisation provider Synchronica PLC (AIM: SYNC) said a mobile operator in Panama has signed a contract to offer the mobile email product Mobile Gateway to its more than 1.6 million user subscriber base.
Philippines focused nickel and copper miner Metals Exploration (AIM: MTL) reported on a busy full-year to end-December 2009, a period which saw continued progress for its flagship Runruno gold-molybdenum project in the Philippines.
Commodity asset development company Mercator Gold (AIM: MCR) has placed 42.5 million shares to raise £425,000 to “satisfy institutional demand,” add and realise value from its existing portfolio of assets and “take advantage of opportunities as they arise".
Specialist Energy Group PLC (AM: SEGR) said finance director Nick Flanagan bought 140,000 shares in the company today at a price of 42.5 pence per share, and thus holds approximately 0.57 percent. of the issued share capital.
South Africa based coal exploration and production company Strategic Natural Resources (AIM: SNR), which has recently completed a £2.9 million fundraising, said it has commissioned Golder Associates to update the Competent Person's Report (CPR) with an additional 29 boreholes drilled, on its western area of its Phase 1&2 mining right, all yielding coal. The updated CPR is expected to be released later this year.
Asterand PLC (LSE: ATD), a provider of human tissue and human tissue-based research services to pharmaceutical and biotechnology companies engaged in drug discovery research, said chief financial officer John Stchur has received the ‘Financial Director of the Year Outside the FTSE 350 Award’ at the annual FDs' Excellence Awards held last week in London.
Shares in Chaarat Gold Holdings (AIM, CGH), the Kyrgyzstan-focused miner, rose more than 12 percent after the company said findings of the preliminary feasibility study at its Chaarat project indicate the potential of implementing an initial high grade, low-cost, open pit mine within the T0700 project area.
Planet Payment’s first quarter results passed muster, according to Daniel Stewart & Co analyst James Hollins, who reckons the remainder of the year should see a marked improvement in performance.
EMED Mining Public Ltd (AIM: EMED) updated investors on the progress of reports relating to the permitting of the Rio Tinto copper mine (Proyecto Rio Tinto or PRT) that are being submitted to the relevant regulatory authorities of the Junta de (Government of) Andalucía.
Southern Africa focused Chromex Mining PLC (AIM: CHX) said it has made the strategic decision to move away from the contractor based model for the processing of its chrome ore and developing its own in-house skills. In line with this strategy as of 1 June 2010, the company will be taking full operational control of the Stellite opencast chrome mine processing plant, located on the Western Limb of the Bushveld Complex in South Africa.
Shareholders in European Nickel (LSE:ENK) have been kept busy the last few days digesting two updates from the junior mining company. This morning European Nickel announced that project financing for the its key Çaldağ nickel laterite project in Turkey will be provided by a consortium of western banks – a new direction on previous discussions to forge a deal with a consortium of Chinese backers that was flagged by the company in March as a possible alternative financing route.