British Airways, ENRC, Legal & General, ICAP and Rolls-Royce lead FTSE 100 higher
Overview: the FTSE 100 moved in line with pre-trade projections, climbing 0.65% as commodities recovered from yesterday’s falls with mining companies emerging as the top performers among the blue chips.
Airline British Airways (LSE: BAY) was in the lead, climbing 3.8%. Miner Eurasian Natural Resources (LSE: ENRC) and insurer Legal & General (LSE: LGEN) followed with gains of 3.3% and 2.8% respectively. Other notable risers included interdealer broker ICAP (LSE: IAP) and turbine manufacturer Rolls-Royce (LSE: RR), which both added 2%.
Just four FTSE 100 constituents lost 1% or more. Security services group G4S (LSE: GFS), which slid 3% after releasing its final results today. Insurer Prudential (LSE: PRU) was down 1.4%, while caterer Compass Group (LSE: CPG) and consumer goods company Reckitt Benckiser (LSE: RB) lost 1%.
US stocks opened higher ahead of today’s Federal Reserve policy meeting. The Dow Jones Industrial Average added 0.3%, while the broader S&P 500 index climbed 0.5%, as did the technology heavy NASDAQ composite.
Commodities
Oil prices rose ahead of the Federal Reserve’s interest rates decision. Investors will also be looking to Wednesday’s meeting of the OPEC (Organisation of Petroleum Exporting Countries), which will make a decision on its production quotas. Saudi Arabia’s oil minister Ali Naimi has said that the organisation would not allow the oil market put too much pressure on the prices.
May Brent Crude improved to US$80.12/barrel, while US light, sweet crude reached US$81.12/barrel.
Blue chip oil and gas producers didn’t show much movement today. Shell (LSE: RDSB) was in the lead with a 1.3% gain, while fellow supermajor BP (LSE: BP) rose marginally, as did BG Group (LSE: BG). Cairn Energy (LSE: CNE) added nearly 1%.
Oil and gas engineering firms Amec (LSE: AMEC) and Petrofac (LSE: PFC) were flat.
Midcaps were mixed. Dana Petroleum (LSE: DNX) and Salamander Energy (LSE: SMDR) were in the lead with gains of 1.7%. Heritage Oil (LSE: HOIL), JKX Oil & Gas (LSE: JKX) and Soco International (LSE: SIA) made little headway. Dragon Oil (LSE: DGO) and Premier Oil (LSE: PMO) posted marginal losses, while Melrose Resources (LSE: MRS) slid to the bottom of the pile with a 2.7% decline.
Services companies headed in different directions as while Wood Group (LSE: WG) tacked on 1.8%, Wellstream Holdings (LSE: WSM) dropped 2.5%.
EU operating Rome-based oil junior Mediterranean Oil & Gas (AIM: MOG) was in decline, shedding 4%. North American based explorer Nighthawk Energy (AIM: HAWK) and Mongolia-focused Petro Matad Ltd (AIM: MATD) both lost 3%.
Gold climbs ahead of Fed meeting
Gold advanced ahead of today’s meeting of the Federal Open Market Committee (FOMC), which is set to make a decision on interest rates. While no change is expected to the current ultra-low rates, the Fed’s report could give indications as to when it could raise the borrowing costs, which depends on the strength of the ongoing economic recovery.
A positive assessment of the economy could signal an imminent decision on hiking the interest rates, which could come as soon as Q3. Low interest rates support the demand for gold, which is seen as an inflation hedge.
US dollar declined to further strengthen gold, which is seen as a riskier investment alternative and usually moves inversely to the American currency.
Gold was on the rise yesterday despite speculation of the possible launch of a European Monetary Fund to confront the debt problems that have been ravaging several euro zone countries, keeping the euro under pressure for weeks. Last Friday, the president of the European Central Bank Jean-Claude Trichet said that such a proposal could be considered.
Gold rallied to US$1,123/oz late in the afternoon, while silver reached US$17.43/oz. Platinum declined to US$1,619/oz, cooling off after last week’s rally.
All major miners posted gains today with the sole exception of silver producer Hochschild Mining (LSE: HOC), which lost less than 1%.
Silver and gold miner Fresnillo (LSE: FRES) led the sector in the FTSE 100 with a gain of 1.6%. Gold producer Randgold Resources (LSE: RRS) followed, adding nearly 1%, while platinum miner Lonmin (LSE: LMI) rose marginally.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) held steady.
Gold miner Petropavlovsk (LSE: POG) led the midcaps, advancing 2.3%, while Aquarius Platinum (LSE: AQP) added 1.5%.
Kazakhstan operating gold producer and copper developer Frontier Mining (AIM: FML) was one of the leading performers among the juniors, advancing 4.5%.
Africa operating gold miner GMA Resources (AIM: GMA) and South American based explorer Mariana Resources (AIM: MARL) slipped 12% and 5.5%.
Copper and nickel rally to boost miners
Base metals followed as copper and nickel reached US$3.36/lb and US$9.95/lb respectively, while zinc rose to US$1.04/lb.
Eurasian Natural Resources (LSE: ENRC) led the base metal miners, climbing 3.5%. Antofagasta (LSE: ANTO) and Kazakhmys (LSE: KAZ) added 2.3% and 1.9%, while BHP Billiton (LSE: BLT) and Rio Tinto (LSE: RIO) both tacked on 1.6%. Vedanta Resources (LSE: VED) moved up 1.1%, Anglo American (LSE: AAL) added nearly 1% and Xstrata (LSE: XTA) rose marginally.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) also posted a small gain.
Tantalum concentrate supplier with assets in Mozambique Noventa (AIM: NVTA) led the juniors with a 6% gain.
Russia focused copper and nickel miner Amur Minerals (AIM: AMC) headed in the opposite direction, slipping 7%.
Banks, insurance, private equity
Barclays (LSE: BARC) led the banking sector, climbing 2.5%. Royal Bank of Scotland (LSE: RBS) and Standard Chartered (LSE: STAN) both gained 1.5%, while HSBC (LSE: HSBA) and Lloyds (LSE: LLOY) added less than 1%.
Insurance companies were mixed. Legal & General (LSE: LGEN) rose 3.2%, Aviva (LSE: AV) and Standard Life (LSE: SL) added 1.8% and 1.5% respectively, while Old Mutual (LSE: OML) tacked on 1% and RSA Insurance Group (LSE: RSA) posted a marginal gain. Prudential (LSE: PRU) slipped into the red, shedding 1.3%, while Admiral Group (LSE: ADM) declined marginally.
Private equity group 3i (LSE: III) advanced 1.7%.
Large and Mid Cap News
Infrastructure group Balfour Beatty (LSE: BBY) said that its recently acquired professional services business Parsons Brickerhoff (PB) has landed three new contracts to manage high-speed and intercity passenger rail projects in Illinois, Ohio and Florida.
Now that China appears to be repairing bridges with Australia in general, and Rio Tinto (ASX:RIO, LSE:RIO) in particular, there is strong speculation that Rio may be taking co-operation with the Chinese to the next stage by partnering with Chinalco in its investment in the giant Oyu Tolgoi gold/copper project in Mongolia, close to the Chinese border.
Scottish and Southern Energy’s (LSE: SSE) Renewables unit has been awarded exclusive rights to develop a combined 800MW of wave and tidal energy in the Pentland Firth and Orkney Waters, North Scotland. The company was awarded four of the ten lease rights tendered by The Crown Estate in the world’s first commercial leasing programme for wave and tidal energy generation.
Small Cap News
Medusa Mining (ASX, AIM: MML, TSX: MLL) said the commissioning of the mill expansion is at the Co-O mine in the Philippines is progressing well and the company is set to meet its targeted production of 25,000 ounces of gold this quarter.
NetPlay TV plc (AIM: NPT) announced that its managing director, Gavin Whyte, intends to step down from the board to explore new opportunities. Whyte has decided to establish his own mobile gaming business, but he will continue to assist NetPlay with its mobile strategy on a freelance basis.
Goldplat PLC (AIM: GDP) said it has, through its Ghanaian business Gold Recovery Ghana Ltd (GRG), signed an ongoing agreement with AngloGold Ashanti Ltd’s (LSE, ASX: AGG; NYSE: AU) unit in the country to purchase gold bearing materials for processing at its operations in Tema, Ghana.
Range Resources (ASX: RRS; AIM: RRL) has announced an update on the company’s US Gulf Coast interests following the successful connection of the Smith #1 well in Texas to the sales line late last month.
Synchronica (AIM: SYNC) said that, as previously announced , its distribution partner for the MessagePhone low-cost device has received the first purchase orders for devices from subsidiaries of tier-1, multi-national mobile operator groups in Africa and Latin America. It has now received the first purchase order from the distributor for the Mobile Gateway email product worth US$203,000.
Aurelian Oil & Gas (AIM: AUL) said its strategy to test prospective areas in Bulgaria with minimal investment was on track after the company secured a zero-cost option over a new exploration license, called Provadia, while partner Sorgenia has exercised its farm-in option to drill on Aurelian's 30% owned B1-Goliza license.
Vatukoula Gold Mines (AIM: VGM) has finalised the Vatukoula trust deed and made the first payment of Fiji$1.5 million (US$0.77 million) to the trust account of the Social Assistance Trust, formalising a number of key concessions and exemptions to the company’s wholly owned subsidiary Vatukoula Gold Mines in Fiji.
Finders Resources (AIM&ASX: FIN) has released its financial report for the six months to 31 December 2009 to comply with AIM regulations after changing its financial year-end from 30 June to 31 December.
Medical and technology investor Amphion Innovations (AIM: AMP) and its partner companies have performed well in the full year and continued to make progress throughout 2009. In the year ended 31 December 2009, Amphion increased revenues by 22% to US$8.6m, subsequently gross profits increased almost 70% to US$5.8m.
Rusina Mining (ASX: RML; AIM: RMLA) has focused its efforts on developing projects with shorter pay-off period in the six months to 31 December 2009, while raising funds to improve its cash balance.
Red Rock Resources’ (AIM: RRR) associate Resource Star (ASX: RSL) has signed a joint venture agreement with Globe Metals & Mining (ASX: GBE), to earn up to 80% interest in the advanced Livingstonia uranium project in Malawi. The AIM listed company also noted that, through two transactions this month, it has increased its shareholding in Resource Star to 26.3%, up from 24.4% when its associate relisted on the ASX in February.
Allenby Capital said that Plant impact (AIM: PIM), the developer of technologies that improve crop productivity, has world-class products and its sales are growing. According to the broker, increasing pressure on arable land, coupled with a consumer driven shift away from synthetic chemical agricultural products is creating a mass market, worth US$105bn, for ecologically sound alternatives.
Institutional investment bank Fairfax has issued a positive note on Medusa Mining (ASX, AIM: MML, TSX: MLL) following the company’s update on the commissioning of mill expansion at the Co-O mine in the Philippines earlier today.
