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Xstrata, Kazakhmys, Fresnillo, Cable & Wireless, Antofagasta and Land Securities lead FTSE 100 rally

Published: 14:44 01 Sep 2010 BST

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Overview: the FTSE 100 rose 1.4% today to reach 5,300 on positive news from China, whose PMI (purchasing managers index) showed expansion of the manufacturing sector for the first time in four months. On top of that, Australia’s Q2 GDP grew at the fastest pace in three years, rising 1.2%.

Tour company TUI Travel (LON:TT) emerged atop the leaderboard with a 6% climb. Telecom company Cable & Wireless (LON:CW) added 5.5%. Base metal miners Kazakhmys (LON:KAZ) and Xstrata (LON:XTA) followed, tacking on 3.8% and 3.3% respectively. Hospitality company Whitbread (LON:WTB), silver miner Fresnillo (LON:FRES), base metal miner Antofagasta (LON:ANTO) and commercial property company Land Securities (LON:LAND) added just over 3%.

No FTSE 100 constituent lost 1% or more today.

US stocks rallied in early trade. The Dow Jones Industrial Average advanced 1.15%, the broader S&P 500 index rose 1.35% and the technology heavy NASDAQ composite surged 1.65%.

Commodities

Oil prices were on the comeback trail today after an update on Chinese manufacturing from the Federation of Logistics and Purchasing came in better than expected, showing an increase from 51.2 to 51.7 in the country’s PMI (purchasing managers index) in August.

The manufacturing data calmed fears that the economic growth in China is stalling in view of the government’s monetary policy tightening moves, which would lead to lower fuel demand from the world’s second largest energy consumer.

October Brent Crude rose to US$75.32/barrel, while US light, sweet crude for October delivery climbed to US$72.63/barrel.

Blue chip oil and gas producers were on the rise today. Supermajors BP (LON:BP) and Shell (LON:RDSB) advanced 1.1% and 1.7% respectively. BG Group (LON:BG) climbed 1.6%, while other FTSE 100 constituents Tullow Oil (LON:TLW) and Cairn Energy (LON:CNE) gained less than 1%.

Amec (LON:AMEC) rose 1.3%, while fellow engineering firm Petrofac (LON:PFC) stood just above the opening level.

Most midcaps followed. Salamander Energy (LON:SMDR) rallied 6.5%. Soco International (LON:SIA) and Dragon Oil (LON:DGO) followed, climbing 2.8% and 2.1% respectively. JKX Oil & Gas (LON:JKX) added 1.3% and Premier Oil (LON:PMO) posted a small gain.

Dana Petroleum (LON:DNX) was flat.

Melrose Resources (LON:MRS) bucked the trend, sliding 1.7%. Heritage Oil (LON:HOIL) followed with a small loss.

Services company Wood Group (LON:WG) and engineering firm Wellstream Holdings (LON:WSM) advanced 1% and 1.4% respectively.

European focussed oil and gas exploration and production company Ascent Resources (LON:AST) and North Sea explorers Xcite Energy (LON:XEL) led the juniors with gains of 13% and 7.5%.

Gold reaches $1,255

Gold prices extended gains today following a late August rally that took its monthly advance to nearly 6%. US employment and manufacturing data released in August hinted at a slowing recovery to boost the demand for safe haven assets, which was the main driver behind gold’s rally.

Concerns are mounting ahead of Friday’s key US employment data, which will include a monthly update on non-farm payrolls and US unemployment rate. Expectations aren’t very high with further declines in payrolls envisioned and the current 9.5% unemployment rate projected to go up, causing investors to pour more money into safety assets such as gold to protect their wealth ahead of Friday’s figures.

Gold reached US$1,254/oz today, while silver and platinum rallied to US$19.45/oz and US$1,530/oz respectively.

Major mining stocks were in demand today. Silver miner Fresnillo (LON:FRES) added more than 3% to take the lead. Platinum miner Lonmin (LON:LMI) and gold producer Randgold Resources (LON:RRS) climbed 2.5% and 1% respectively. African Barrick Gold (LON:ABG) posted a small gain.

Specialty chemicals firm Johnson Matthey (LON:JMAT) followed the trend, rising 2%.

Midcaps did slightly better with Aquarius Platinum (LON:AQP) surging 4.5%, while silver producer Hochschild Mining (LON:HOC) and gold miner Petropavlovsk (LON:POG) tacked on 3%.

Zambia focused coloured gemstone company Gemfields Resources (LON:GEM) and Philippines focused gold producer Medusa Mining (LON:MML) were among the leading performers in the sector with gains of 8.5% and 7.5% respectively.

The only publicly listed gold mining company with primary operations inside the Republic of Uzbekistan, Oxus Gold (LON:OXS), added 5.5%.

Base metals rise to bolster miners

Copper and nickel climbed to US$3.38/lb and US$9.41/lb, while zinc rose to US$0.933/lb.

Major base metal miners did well today. Kazakhmys (LON:KAZ) and Xstrata (LON:XTA) led the sector with gains of 3.8% and 3.3%. Antofagasta (LON:ANTO) and Rio Tinto (LON:RIO) added 3%, while Anglo American (LON:AAL) and Vedanta Resources (LON:VED) advanced 2.5%. Eurasian Natural Resources (LON:ENRC) and BHP Billiton (LON:BLT) followed with gains of 2% and 1.7% respectively.

Swiss-headquartered resources company with assets in Ukraine Ferrexpo (LON:FXPO) made little headway.

Mozambique operating tantalum miner Noventa (LON:NVTA) and minerals exploration and development company focused on gold and base metals Thor Mining (LON:THR) were among the top performers in the sector with gains of 7% and 6% respectively.

Australia and Indonesia operating copper and gold explorer and developer Finders Resources (LON:FND) went against the tide, sliding 6%.

Banks, insurance, private equity

Financial stocks generally moved with the markets. Standard Chartered (LON:STAN) led the banks, rising 2.3%. Barclays (LON:BARC) and Royal Bank of Scotland (LON:RBS) added 1.9% and 1.5%, while Lloyds (LON:LLOY) posted a small gain. HSBC (LON:HSBA) bucked the trend, sliding just below the opening level.

Standard Life (LON:SL) was the top riser in the insurance sector with a 2.1% advance. and Admiral Group (LON:ADM)Old Mutual (LON:OML) added 1.8% and 1.6% respectively. Aviva (LON:AV) and Prudential (LON:PRU) tacked on just over 1%.

RSA Insurance Group (LON:RSA) moved up 1%.

Private equity group 3i (LON:III) tacked on 1.8%.

Small Cap Movers

Other notable movers among the small caps included manager and developer of power generation plants in Southern Africa IPSA Group (LON:IPSA) and drug discovery and development company ImmuPharma (LON:IMM), which gained just over 5%.

Small Cap News

Orosur Mining (LON:OMI, TSX-V:OMI) has reported a 1.04 million ounce (Moz) maiden NI43-101 gold resource for the Pantanillo Norte deposit in Chile.

The positive news-flow from Noventa’s (LON:NVTA) Marropino mine continued today with the confirmation of last week’s tantalum discovery, which the company said had the potential to extend the life of mine and resource.

Daniel Stewart & Company (DS&C) said that Mastercard’s acquisition of Datacash has made payment and card services business Planet Payment (LON:PPT) look cheap relative to its peers.

China-focused iron ore trading business and real estate investor Prosperity Minerals Holdings (LON:PMHL) has received all the necessary approvals for the acquisition of a 25% interest in Liaoning Changqing Cement and the deal was completed today.

Shanta Gold (LON:SHG) said today it had been granted a mining licence for its Chunya Gold Project in southern Tanzania. The company said that the licence allows for construction to start as soon as the detailed planning has been completed - currently scheduled for the last quarter of this year.

Victoria Oil & Gas (LON:VOG) has raised £9.2m through an equity placing, priced at 2.5p per share, to help deliver its first production from its onshore wells in Cameroon by December 2010.

Researchers will now have free online access to AIM listed Cyprotex PLC's (LON:CRX) database of the ADME and pharmacokinetic properties of marketed drugs, the company announced today. Cyprotex provides data about potential new drugs and specialises in the preclinical ADME assessment of drug candidates.

Xcite Energy (LON:XEL) is wrongly perceived to be an exploration play, whereas in reality it is a development story, according to Arbuthnot Securities oil and gas analyst Dougie Youngson. In a note entitled “Ready for Action”, Youngson looked ahead to Xcite’s upcoming work programme at the Bentley field, after the North Sea oil development company finalised a £5.8m financing last week.

Large and Mid Cap News

China’s thirst for energy resources has continued with an increased focus on domestic supplies of gas, Green Dragon Gas chairman Randeep Grewal said today. In the company’s interim results, Green Dragon told investors that it remains on-track to meet its ‘aggressive targets’ in 2010, after it increased gross profit by 44% in the first six months. The Chinese CBM (Coal Bed Methane) gas producer increased revenues by 15% to US$21.5m.

BP (LON:BP) has agreed a US$363m deal to sell its interests in two Malaysian petrochemical businesses to Malaysia’s state-owned oil company PETRONAS.

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