Overview: the FTSE 100 dipped 0.2%, moving in unison with the main stock market indexes in the US. The markets switched to selling mode after the Chicago Fed national activity index‘s three month moving average was shown to have dropped from -0.27 to -0.42, indicating that growth of economic activity was below its historical levels in August.
Software developers Sage Group (LON:SGE) and Autonomy Corp (LON:AU), engineering firm Weir Group (LON:WEIR) and copper miner Kazakhmys (LON:KAZ) led the blue chips with gains of nearly 2%. Consumer goods company Unilever (LON:ULVR) and copper miner Antofagasta (LON:ANTO) climbed 1.5%. Insurance focused investor Resolution (LON:RSL) followed with a 1.2% gain.
Engineering company Smiths Group (LON:SMIN) and security services company G4S (LON:GFS) were at the bottom of the pile, declining 2.5%. Satellite telecommunications company Inmarsat (LON:ISAT) and oil and gas engineering firm Petrofac (LON:PFC) lost nearly 2%. Pharmaceutical company AstraZeneca (LON:AZN) and telecom group BT (LON:BT.A) dropped 1.5%.
US stocks were off to a negative start. The Dow Jones Industrial Average and the broader S&P 500 index slid 0.2%, while the technology heavy NASDAQ composite lost 0.25%.
Commodities
Oil prices held on to the gains made at the end of last week amid a quiet day in stock markets.
Crude oil futures usually track movements in share prices, which serve as an indicator of the strength of the economy, impacting the outlook for energy demand.
US light, sweet crude for November delivery rose to US$76.80/barrel, while November Brent Crude improved to US$79.04/barrel.
Blue chip oil and gas producers didn’t show much movement today. Supermajors BP (LON:BP) and Shell (LON:RDSB) posted small gains, as did BG Group (LON:BG) and Tullow Oil (LON:TLW).
Another FTSE 100 constituent, Cairn Energy (LON:CNE), advanced 1%.
Petrofac (LON:PFC) declined 1.7%. Fellow oil and gas engineering firm Amec (LON:AMEC) was sitting just below the opening level.
Midcaps were mixed. Melrose Resources (LON:MRS) led the sector with a 2.5% advance. Dana Petroleum (LON:DNX) rose marginally, while JKX Oil & Gas (LON:JKX) and Dragon Oil (LON:DGO) added 1% each.
Heritage Oil (LON:HOIL), Salamander Energy (LON:SMDR) and Soco International (LON:SIA) moved in the opposite direction, sliding 1%.
Premier Oil (LON:PMO) was little changed.
Wood Group (LON:WG) tacked on 1%. Another services company Wellstream Holdings (LON:WSM) declined marginally.
Iraq focused exploration company Petrel Resources (LON:PET) was among the top performing small caps with a 6.5% gain. Central and South America focused company Gold Oil (LON:GOO) also did well, rising 4.5%.
Gold touches $1,300
Demand for gold remained buoyant, but not strong enough to put the yellow metal above the US$1,300/oz level it touched again earlier in today’s session.
Concerns over the pace of the economic recovery were fuelled by last week’s comments from the Federal Reserve, which left the door open for more quantitative easing to bolster the slowing US recovery.
Gold is seen as one of the main safe haven assets and usually goes up when investor confidence wanes and equities head south.
Gold was steady at US$1,298/oz. Silver advanced to US$21.56/oz, while platinum slid to US$1,636/oz.
Gold miner Randgold Resources (LON:RRS) and peer African Barrick Gold (LON:ABG) posted small gains, while platinum producer Lonmin (LON:LMI) and silver miner Fresnillo (LON:FRES) declined marginally.
Specialty chemicals firm Johnson Matthey (LON:JMAT) was unmoved.
Midcaps did slightly better. Aquarius Platinum (LON:AQP) climbed 1.1%, while silver producer Hochschild Mining (LON:HOC) and gold miner Petropavlovsk (LON:POG) added less than 1%.
Africa operating gold producer Goldplat (LON:GDP) led the juniors, rallying 23%. Diversified mining investment company Mercator Gold (LON:MCR) also did very well, surging 11.5%. Australia operating mining exploration company GGG Resources (LON:GGG) and the only publicly listed gold mining company with primary operations inside the Republic of Uzbekistan, Oxus Gold (LON:OXS), followed, advancing 10.5%.
Copper and gold focused explorer and developer EMED Mining (LON:EMED) moved up 7%. Mineral exploration and development company focussed on gold and copper deposits in Kazakhstan Frontier Mining (LON:FML) and Fiji operating gold miner Vatukoula Gold Mines (LON:VGM) joined the party with gains of 5%.
Miners advance
Copper and zinc held steady at US$3.58/lb and US$0.994/lb, while nickel climbed to US$10.46/lb.
Base metal miners were on the rise today with the sole exception of Xstrata (LON:XTA), which posted a small loss. Anglo American (LON:AAL), BHP Billiton (LON:BLT), Eurasian Natural Resources (LON:ENRC), Rio Tinto (LON:RIO) and Vedanta Resources (LON:VED) rose marginally.
Antofagasta (LON:ANTO) and Kazakhmys (LON:KAZ) advanced 1.5% and 2% respectively.
Swiss-headquartered resources company with assets in Ukraine Ferrexpo (LON:FXPO) moved with the sector, posting a small gain.
Mineral exploration company Red Rock Resources (LON:RRR) led the sector, soaring 50%. Zinc, lead, barite and fluorite explorer Maghreb Minerals (LON:MMS) and nickel and copper focused mining investment and exploration company Regency Mines (LON:RGM) followed, rallying 25% and 17% respectively. Russia operating copper and nickel miner Amur Minerals (LON:AMC) surged 11%.
Africa focused gold and iron ore miner African Aura Mining (LON:AAAM) climbed 5.5%.
Banks, insurance, private equity
HSBC (LON:HSBA), Royal Bank of Scotland (LON:RBS) and Standard Chartered (LON:STAN) declined 1%. Barclays (LON:BARC) was sitting just below the opening level.
Lloyds (LON:LLOY) did better, posting a small gain.
It’s been a quiet day in the insurance sector. Prudential (LON:PRU) and RSA Insurance Group (LON:RSA) were unmoved, while Legal & General (LON:LGEN) posted a small gain and Standard Life (LON:SL) shed less than 1%, as did Admiral Group (LON:ADM) and Aviva (LON:AV).
Old Mutual (LON:OML) declined 1%.
Private equity group 3i (LON:III) posted a small loss.
Small Cap Movers
Other notable movers among the small caps included crop nutrition specialist Plant Impact (LON:PIM) and Mozambique focused resources company Baobab Resources (LON:BAO), which advanced 5% and 13% respectively.
Small Cap News
Leni Gas & Oil (LON:LGO) told investors that oil flowed to the surface during drilling of the Hontomin-2 well in Northern Spain. The well encountered oil at a depth of 1,350m. Shares in the group rose nearly 30 percent in opening deals. "This is an extremely important development for the company ... oil flowing to surface is an encouraging sign for this well," chairman David Lenigas commented.
SmartFOCUS (LON:STF) announced a new contract from a major travel company. Its marketing and database software will be deployed by escorted tour operator Page & Moy Travel Group, which it said would “increase customer insight and targeting for enhanced marketing performance focused on delivering stronger campaigns”.
Atlantic Coal (LON:ATC) managing director Steve Best has ‘great confidence’ in the company’s future performance, after enhanced production and sales in the first six months of 2010.
Noventa (LON:NVTA) has appointed mining and engineering expert, Leslie Heymann as a new director of the company. Heymann has acted as a consultant to Noventa for the past year. “With his experience as a professional engineer and a history of improving technical performance, we are confident that Leslie will bring valuable expertise and insight to the board," Noventa chairman Eric Kohn commented.
Mariana Resources (LON:MARL) promised more "exciting" news in the months ahead after its exploration efforts undertaken in the first half significantly increased the value of its property portfolio.
Desire Petroleum (LON:DES) is preparing to carry out further investigation of its acreage in the Falklands, raising £22.8 million to fund a 3D seismic acquisition campaign. The company announced late Friday that is was placing 16.3 million new shares to raise £22.8 million.
Equatorial Palm Oil (LON:PAL) has appointed Shankar Varadharajan, a representative of its strategic partner the Siva Group as non-executive director. Siva, a major Indian conglomerate, is supporting the company’s expansion in Liberia.
Oracle Coalfields’ (PLUS:ORCP) recent deals have the potential to unlock the value from its Pakistan coal assets, according to Edison Investment Research. Edison analyst Warren Johnstone highlighted the two deals signed at the turn of the year, December’s memorandum of understanding with the Karachi Electric Supply Company (KESC) and January’s MoU with Lucky Cement.
Norseman Gold (ASX: NGX, LON: NGL)has requested a trading halt on the Australian Securities Exchange, pending the release of an announcement about a capital raising. ASX trading is expected to resume once an announcement is made, or on Thursday 30th September 2010.
Developer of emission reductions and clean energy projects Camco International (LON:CAO) has formed a joint venture with the Malaysian government’s investment arm Khazanah Nasional. The companies aim to develop the JV into the leading player in the emissions to energy market in the region.
Northern Petroleum (AIM:NOP) announced this morning it has begun commercial production from the Brakel field, the third of six onshore oil and gas fields in the Netherlands. Gross sales volumes are expected to be 200,000 cubic metres per day, the equivalent of 1,280 barrels of oil.
Large and Mid Cap News
Private equity group 3i Group PLC (LON:III) is buying Mizuho Corporate Bank Ltd’s (MHCB) debt management business arm Mizuho Investment Management (UK) Ltd for an enterprise value of £18.3 million. MIM was established by MHCB in 2005 as its 100% owned asset management subsidiary. MIM specialises in the management of funds raised to invest in senior and subordinated corporate debt, providing investment advisory services in return for fees.
Consumer goods company and FTSE 100 constituent Unilever (LON:ULVR) has entered into a definitive agreement to acquire the Alberto Culver Company for US$3.7 billion in cash.
London Stock Exchange Group (LON:LSE) has replaced its non-executive deputy chairman Angelo Tantazzi with chief executive of Eni (NYSE:ENI) Paolo Scaroni. Scaroni has been a non-executive director of LSE since 2007. Tantazzi will continue to chair the board of Borsa Italiana until next year.
Builders merchant Wolseley (LON:WOS) announced plans to create a new holdings company which will have a Swiss tax residency and will be incorporated in Jersey, saying the change will "help provide more certainty in its taxation position".