Overview: it was a quiet day of trading in London as US markets were shut down for the Labor Day holiday and no significant macroeconomic data was released. Telecom company Cable & Wireless Worldwide (LON:CW) did well on speculation that it could be taken over by Singapore Telecommunications.
Home Retail Group (LON:HOME) was atop the leaderboard with a gain of nearly 3%. Cable & Wireless Worldwide (LON:CW) followed, climbing 2.5%. Another telecom group BT (LON:BT.A) and Capital Shopping Centres Group (LON:CSCG) added just over 2%. Biopharmaceutical company Shire (LON:SHP) and outsourcing group Capita (LON:CPI) rose 1.5%.
Interdealer broker ICAP (LON:IAP) was the heaviest faller with a nearly 2% loss. Distribution and outsourcing business Bunzl (LON:BNZL), pharmaceutical company GlaxoSmithKline (LON:GSK) and software developer Autonomy Corp (LON:AU) declined 1.5%. medical devices manufacturer Smith & Nephew (LON:SN) and plumbing and heating equipment manufacturer Wolseley (LON:WOS) shed just over 1%.
Commodities
While equities are still on the rise, oil prices keep sliding with traders expecting a decline in demand following the end of the summer driving season marked by today’s Labor Day holiday in the US.
Meanwhile, oil demand in the world’s largest energy consumer has been falling steady with yet more gains in crude oil inventories reported last week by both the American Petroleum Institute (API) and the US Energy Department.
Stock markets were resilient last week, which saw the FTSE 100 surge 4.3% and the Dow Jones Index add nearly 3%. The key US jobs data that came out on Friday beat projections, showing a reduction of 54,000 in non-farm payrolls, while analysts were expecting to see a loss of over 100,000 jobs.
The unemployment rate expectedly rose from 9.5% to 9.6%.
The FTSE 100 continued advancing today, tacking on a further 0.4%.
However, crude oil futures, which normally track movements in equity markets, retreated after making gains early in the day.
October Brent Crude slid to US$76.95/barrel, while US light, sweet crude for October delivery declined to US$74.25/barrel.
Blue chip oil and gas producers were mixed. Supermajors BP (LON:BP) and Shell (LON:RDSB) advanced 1.5% and 1% respectively, while Tullow Oil (LON:TLW) added 1.1%.
Peers BG Group (LON:BG) and Cairn Energy (LON:CNE) posted marginal losses, as did oil and gas engineering firms Amec (LON:AMEC) and Petrofac (LON:PFC).
Midcaps fell into the same pattern. Soco International (LON:SIA) was in the lead with a 1.7% gain. Dragon Oil (LON:DGO) and Heritage Oil (LON:HOIL) followed, tacking on just over 1%. Salamander Energy (LON:SMDR) rose marginally.
Melrose Resources (LON:MRS) and Premier Oil (LON:PMO) were in the red with losses of 1%, while JKX Oil & Gas (LON:JKX) posted a small decline.
Dana Petroleum (LON:DNX) was unchanged.
Services company Wood Group (LON:WG) climbed 1.7%.
US focused oil and gas junior Caza Oil & Gas (LON:CAZA) was among the top performers in the sector with a 10% surge. Energy sector focused investor Xtract Energy (LON:XTR) also did well, rising 5%.
Gold remains near $1,250
Gold remained strong today amid lack of movement in equity markets with US trading halted until Tuesday due to the Labor Day holiday.
The safe haven gold normally moves inversely to equities, however, it got enough support from an expected rise in physical demand from jewellers and weakness in the US dollar, which is seen as an alternative asset to gold, to stay very close to the US$1,250/oz level.
The US dollar declined against the euro and other major currencies following the jobs update, which spurred demand for riskier assets.
Gold climbed to US$1,249/oz, while silver and platinum reached US$19.87/oz and US$1,562/oz respectively.
Major mining stocks were mixed. Platinum miner Lonmin (LON:LMI) and gold producer Randgold Resources (LON:RRS) each added 1%, while another gold miner African Barrick Gold (LON:ABG) declined 1.3% and silver miner Fresnillo (LON:FRES) posted a small loss.
Specialty chemicals firm Johnson Matthey (LON:JMAT) added 1.8%.
Midcaps turned negative with gold miner Petropavlovsk (LON:POG) shedding 1.8%, while silver producer Hochschild Mining (LON:HOC) dropped 1.5% and Aquarius Platinum (LON:AQP) declined marginally.
Kazakhstan focused gold and copper explorer and developer Frontier Mining (LON:FML) led the juniors with a 10% gain. Brazil and Peru operating mineral resources exploration group Horizonte Minerals (LON:HZM) followed, climbing 7%. Tajikistan focused exploration and development company Kryso Resources (LON:KYS) and South Africa and Mozambique operating gold miner Pan African Resources (LON:PAF) advanced 6.5%.
Copper holds steady while nickel and zinc rise
Copper was unchanged, while nickel and zinc climbed to US$9.94/lb and US$0.974/lb.
Most base metal miners were in decline. Eurasian Natural Resources (LON:ENRC) and Kazakhmys (LON:KAZ) retreated 1%, while Anglo American (LON:AAL), Vedanta Resources (LON:VED) and Xstrata (LON:XTA) posted small losses.
Antofagasta (LON:ANTO) stood just above the opening level, while BHP Billiton (LON:BLT) and Rio Tinto (LON:RIO) were flat.
London’s only listed pure iron ore producer Ferrexpo (LON:FXPO) declined 2.5%.
South Africa operating coal developer Strategic Natural Resources (LON:SNRP) surged 25% to take the lead among the juniors. Western Australia, Queensland, and Papua New Guinea focused nickel and copper explorer and investor Regency Mines (LON:RGM) followed, rallying 15%.
Owner of the Moma titanium mine in Mozambique Kenmare Resources (LON:KMR) and gold and base metals focused exploration and development company Thor Mining (LON:THR) added 6.5% and 6% respectively.
Banks, insurance, private equity
Banking stocks didn’t move by much today. Part-nationalised banks Lloyds (LON:LLOY) and Royal Bank of Scotland (LON:RBS) posted small gains, while Standard Chartered (LON:STAN) was flat and Barclays (LON:BARC) declined marginally.
HSBC (LON:HSBA) was in the lead with a 1.3% advance.
Aviva (LON:AV) and RSA Insurance Group (LON:RSA) were the top performers in the insurance sector with gains of 1%. Admiral Group (LON:ADM) and Standard Life (LON:SL) rose marginally.
Legal & General (LON:LGEN) and Old Mutual (LON:OML) shed less than 1%.
Prudential (LON:PRU) was flat.
Private equity group 3i (LON:III) added 1.35%.
Small Cap Movers
Other notable movers among the small caps included owner, manager and developer of power generation plants in Southern Africa IPSA Group (LON:IPSA) with a 5% gain and machine-to-machine (m2m) communications specialist Telit Communications (LON:TCM), which rallied 9%.
Small Cap News
African Eagle Resources’ (LON:AFE) has revealed ‘very favourable’ drilling results from the Zanzui project, which potentially offer economies of scale for the development of the nearby Dutwa nickel project, in Tanzania.
Costa Rican mobile phone firm Instituto Costarricense de Electricidad (ICE) is launching a push email service using the Synchronica (LON:SYNC) Mobile Gateway platform. The service will be provided free of charge to subscribers using ICE’s Accelera webmail service and GPRS data subscribers.
Drilling is now underway to Mariana Resources’ (LON:MARL) Las Calandrias gold-silver project in Argentina, putting the company closer to producing a maiden resource estimate for the Calandria Sur prospect.
Avia Health Informatics (LON:AVIA) told investors that it is reorganising its group structure to reflect its international growth strategy. The reorganisation is designed to strengthen Avia’s operational management and to facilitate its international growth plans – which focuses on the Odyssey software suite.
Telit Communications’ (LON:TCM) announced that it will report first half results on September 8, an thet they are expected to be ahead of market expectations. In a note published in the wake of Telits short statement today, Astaire Securities will revise its forecasts for the group following the release of their interims.
Solomon Capital has today announced that the acceptance condition to its mandatory cash offer for Metals Exploration (LON:MTL) has been satisfied and the offer was now fully unconditional. The offer, which was made on 23 July, valued the company at £35.76 million, or 13 pence per share.
Rockhopper Exploration (LON:RKH) has announced that a flow test on the Sea Lion 14/10-2 offshore discovery well in the Falkland Islands is now underway. The operations are expected to take 30 days. Rockhopper noted that testing operations could be more sensitive to weather conditions than standard drilling operations.
Oilex (LON:EOX) shares more than doubled in value this morning, after the company reported a significant upgrade to its reserves and contingent resources in India.
Greenko (LON:GKO) is gearing up its entry into the Indian wind-energy industry, with a near-term 200MW capacity target. The clean-power specialists has spent two years reviewing the wind energy market in India, and it already has a 65MW project under construction in the state of Maharashtra.
A drilling programme executed by Bellzone Mining (LON:BZM) at its Kalia mine in Guinea, West Africa, has resulted in a 56.5% increase in total magnetite JORC resource to 3.74 Bt (billion tonnes) for the central zone of the Kalia I deposit.
Whilst acknowledging the significant rise in its share price, Strategic Natural Resources (LON:SNRP) (‘SNR’) emphasised that the information in an article in yesterday’s Sunday Express was already in the public domain.
Condor Resources PLC (LON:CNR) said it has entered into a legally binding agreement to swap exploration and exploitation concessions in Nicaragua with B2Gold Corp (OTCQX: BGLPF, TSX: BTO).
The combination of Firestone Diamonds (LON:FDI) and Kopane Diamond Development (LON:KDD) is set to go ahead after Kopane shareholders voted in favour of the deal earlier today. The news follows Friday’s approval by Firestone shareholders at their general meeting.
Equatorial Palm Oil (LON:PAL) (EPO) is in the process of setting up a US$60m joint venture with an Indian conglomerate, the Siva Group. EPO and Biopalm Energy - a wholly-owned subsidiary of Siva Ventures - will establish a new 50:50 joint venture company, which will own EPO’s entire 169,000 hectare land position.