logo-loader

FTSE 100 sheds 1% as Dow Jones, S&P 500 and NASDAQ decline on employment data

Published: 16:17 06 Aug 2010 BST

no_picture_pai

Overview: the FTSE 100 retreated 1% after today’s employment data from the US Labor Department showed a steeper than expected decline in non-farm payrolls to trigger a selloff in US and European equity markets.

Satellite telecommunications company Inmarsat (LON:ISAT) emerged atop the leaderboard with a 5.4% advance. Hospitality company Whitbread (LON:WTB) and African Barrick Gold (LON:ABG) added 3%.

Platinum miner Lonmin (LON:LMI) slid to the bottom of the pile with a 3.5% loss. Insurer Aviva (LON:AV), food manufacturer Unilever (LON:ULVR) and interdealer broker ICAP (LON:IAP) followed with losses of just over 2%. Beverage group Diageo (LON:DGE) moved down 2%. Peer SABMiller (LON:SAB), Financial Times publisher Pearson (LON:PSON) and fashion house Burberry (LON:BRBY) lost more than 1.5%.

US stocks opened sharply lower today. The Dow Jones Industrial Average slipped 1.3%, while the broader S&P 500 index and the technology heavy NASDAQ composite declined 1.5%.

Commodities

Oil declines on US employment data

Oil prices

declined, tracking losses in equity markets after today’s disappointing US employment update. Non-farm payrolls were shown to have declined by 131,000 in July, while analysts expected a drop of 60,000-70,000. On top of that, the June figures were revised to show 221,000 jobs lost compared to a previously reported reduction of 125,000. The private sector created 71,000 new jobs after adding 31,000 jobs in June.

The negative impact was partially offset by a lack of change in the unemployment rate, which remained at 9.5% instead of an expected rise to 9.6%.

September Brent Crude declined to US$81.01/barrel, while US light, sweet crude for September delivery fell to US$81.78/barrel on the New York Mercantile Exchange (NYMEX).

BP (LON:BP) led the sector with a 1.2% gain after cementing the Macondo well. Fellow supermajor Shell (LON:RDSB) and Cairn Energy (LON:CNE) were flat, while BG Group (LON:BG) and Tullow Oil (LON:TLW) posted small losses, as did oil and gas engineering firms Amec (LON:AMEC) and Petrofac (LON:PFC).

Midcaps were mixed. Dragon Oil (LON:DGO) climbed 2% for the lead. Melrose Resources (LON:MRS) and Premier Oil (LON:PMO) followed with gains of less than 1%.

Heritage Oil (LON:HOIL) was in the red with a 1.5% loss. JKX Oil & Gas (LON:JKX), Salamander Energy (LON:SMDR) and Soco International (LON:SIA) posted small losses.

Dana Petroleum (LON:DNX) was flat.

Services companies Wood Group (LON:WG) and Wellstream Holdings (LON:WSM) shed less than 1%.

Most junior companies were in decline. US focused oil and gas junior Caza Oil & Gas (LON:CAZA) and Peru, Colombia and Cuba operating oil and gas explorer and producer Gold Oil (LON:GOO) lost 6%. Energy investor Xtract Energy PLC (LON:XTR) slipped 5.5%.

Gold reaches $1,200

Gold prices surged today, finding enough support to stay above the key US$1,200/oz level as safe haven buying intensified following the US employment update, which showed larger than expected reductions in non-farm payrolls in July and an upward revision of last month’s job losses.

Gold has recently been supported by increased physical demand, which came from bargain hunters after the prices slipped below US$1,200/oz and Indian jewellers, which were buying bullion ahead of the festival season in that country.

This week, China’s People’s Bank said that it would allow more banks to export and import gold, spurring expectations of an increase in demand.

Chief Executive of FTSE 100 gold producer Randgold Resources (LON:RRS) Mark Bristow has started that South Africa has “run out of gold” and was “too deep to mine,” while gold itself was “damn scarce” and could be worth US$1,500/oz as soon as in 2011 as gold market was “ex-growth.” Bristow also said that he expected a “big correction” again next year.

Gold and silver improved to US$1,206/oz and US$18.48/oz respectively, while platinum slid to US$1,568/oz.

Gold and silver miners were on the rise today, while platinum producers declined. Majors Randgold Resources and African Barrick Gold (LON:ABG) added 1.5%, while midcap Petropavlovsk (LON:POG) gained nearly 2%.

Fresnillo (LON:FRES) climbed 1.5% and fellow silver producer from the FTSE 250 Hochschild Mining (LON:HOC) posted a small gain.

Lonmin (LON:LMI) slipped 3.2%. Peer Aquarius Platinum (LON:AQP) was sitting just below the opening level.

Specialty chemicals firm Johnson Matthey (LON:JMAT) added less than 1%.

Junior diamond producer Stellar Diamonds (LON:STEL) lost 10%. UK-registered China operating copper and gold miner Central China Goldfields (LON:GGG) followed, slipping 6%.

Uzbekistan focused gold miner Oxus Gold (LON:OXS) did better, climbing 5%.

Miners gain as base metals rise

Base metals were on the rise today. Copper and nickel improved to US$3.34/lb and US$9.94/lb respectively, while zinc climbed to US$0.94/lb.

Major mining stocks did well today. Antofagasta (LON:ANTO), Eurasian Natural Resources (LON:ENRC) and Xstrata (LON:XTA) added 1.3%, while Kazakhmys (LON:KAZ) climbed 1.7%.

BHP Billiton (LON:BLT), Rio Tinto (LON:RIO) and Vedanta Resources (LON:VED) posted small gains.

Anglo American (LON:AAL) went against the tide, shedding 1.4%.

London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LON:FXPO) outperformed the sector, climbing 2%.

Copper and nickel explorer Regency Mines (LON:RGM) led the juniors with a 12% surge. Finders Resources (LON:FND) tacked on 5%.

Banks, insurance private equity

Financial stocks were mixed. Standard Chartered (LON:STAN) led the banking sector, rising 1.3%. Barclays (LON:BARC) added less than 1%.

Lloyds (LON:LLOY) declined 1.6%, while Royal Bank of Scotland (LON:RBS) and HSBC (LON:HSBA) were sitting just below the opening level.

Old Mutual (LON:OML) and RSA Insurance Group (LON:RSA) were the top performing insurers with gains of 1.6%.
Aviva (LON:AV) and Legal & General (LON:LGEN) declined 2.4% and 1% respectively.

Prudential (LON:PRU) and Standard Life (LON:SL) posted small losses.

Admiral Group (LON:ADM) was flat.

Private equity group 3i (LON:III) rose marginally.

Small Cap Movers

Other notable movers among the small caps included Zimbabwe focused investor LonZim (LON:LZM) with a 9% rally and mobile email and data synchronisation group Synchronica PLC (LON:SYNC), which added 5.5%. Environmental science and technology company Accsys Technologies (LON:AXS) declined 7%.

Small Cap News

Nyota Minerals (LON:NYO, ASX:NYO) has made a number of managerial appointments, with current COO Terry Tucker being promoted to the board of directors, and the company having hired a new in-country manager for Ethiopia.

Synchronica (LON:SYNC) told investors that its MessagePhone product - a low-cost messaging-oriented handset - has been launched in Latin America by a major operator with a large subscriber base of 20 million users.

Broker Merchant Securities has initiated covarage of building maintenance group Managed Support Services (LON:MSS), seeing a substantial upside to the current share price of around 6.6p.

Turkey and Ethiopia operating gold miner Stratex International (LON:STI) reported on its progress during the six months to 30 June, which put the company closer to production with all of its projects undergoing extensive development.

Vectura Group (LON:VEC) has announced a contract with GlaxoSmithKline (LON:GSK) to license some of its dry powder drug formulation patents in relation to two late stage development compounds in GSK's respiratory product pipeline.

London-headquartered broker Alexander David Securities Group (LON:ADS) has confirmed that it is indeed in takeover discussions with Hoodless Brennan, the parent company of HB Markets, after it was reported by the media.

Shanta Gold (LON:SHG) announced its decision to begin mine construction at the Chunya gold project in southern Tanzania, subject to the receipt of a mining licence. The decision follows the results of July’s positive feasibility study, which justified the construction of an open-pit mine producing 28,400oz of gold annually over an 11-year mine life.

Coventry-based specialist chemicals group, Norman Hay (LON:HNN) intends to delist from London’s AIM market, as it believes it would no longer benefit from its continued admission and it is confident that the £90,000pa costs associated with its listing “could be better used in running the business”.

Medusa Mining (ASX:MML, LON:MML, TSX:MLL) has said that the new estimate for its Co-O gold mine in the Philippines put the probable reserve at 505,000 oz (ounces) contained in 1.46 Mt (million tonnes) grading 10.7 g/t gold.

Stanley Gibbons’ (LON:SGI) specialist collectables business continues to go from strength to strength, as the company reported another half of sustained growth. In the first half ended 30 June 2010, Stanley Gibbons increased sales by 24% to £11.9m, pre-tax profits rose 10% to £1.6m and earnings (EBITDA) grew 12% to £1.7m. Also during the period the company entered the Chinese collectables market and secured new orders worth £1m from collectors there, to be realised in the current period.

Large and Mid Cap News

Infrastructure investment group International Public Partnerships Limited (LON:INPP) said Transmission Capital Partners, the consortium comprising Amber Infrastructure, Transmission Capital and INPP has been appointed as preferred bidder for three of the seven projects awarded under Ofgem's first round of tenders for the long-term licence and operation of offshore transmission assets in the UK.

State-owned Royal Bank of Scotland (LON:RBS) returned to the black in spectacular fashion in the first half of the year. It booked an operating profit of £1.58 billion in the six months to June 30, reversing a loss of  £3.35 billion in the same period last year.

The London-listed South African insurer Old Mutual (LON:OML) said it was selling its US life arm as it reported a strong surge in first half earnings. The deal with private investment firm Harbinger will rake in US$350 million.

Through a deal with The Boeing Company (NYSE:BA), Inmarsat (LSE: ISAT) plans to deliver three state-of-the-art 702HP Ka-band satellites - collectively known as the Inmarsat-5 constellation - to provide a global high speed mobile broadband service.

Engineering and manufacturing company Tomkins (LON:TOMK) reported strong revenue growth that helped it get back in the black in the first half, but cautioned about the outlook for the rest of the year, forecasting contraction in its end-markets in the second half.

Connaught’s (LON:CNT) shares tested new lows as the recently appointed chairman Sir Roy Gardner appealed for investor support, saying that the business is “worth fighting for”. This afternoon the company gave further details of its stricken financial performance. Connaught said it intends to make further provisions against future losses from current contracts, and it will have to make “significant write-downs” on its assets.

More good news for the Royal Bank of Scotland (LON:RBS) and its restructuring plan, as the company looks set to receive just over £2bn from the sale of an 80.01% stake in its Global Merchant Services (GMS) business. Consequently the, government backed banking group will realise an £850m gain from the disposal, and it will retain a minority 19.99% stake in the business unit.

Ariana Resources updates resource and reserve; realises long-term strategy

Joining Jonathan Jackson in the Proactive studio is Ariana Resources PLC (AIM:AAU) managing director Kerim Sener, who sits down to discuss the latest resource and reserve update for the Zenit Mining Operations in Western Türkiye. The update encompasses the Kiziltepe and Tavsan sectors, operated...

5 hours, 30 minutes ago