FTSE 100 rallies on UK retail sales data, US stocks surge in early trade
Overview: the FTSE 100 rallied 1.8% today to reach 5,300 after UK retail sales were reported to have risen 0.7% in June, while EU services and manufacturing PMI updates showed growth in these sectors, helping the markets shake off yesterday’s downbeat assessment of the economy by Fed Chairman Ben Bernanke.
Mining stocks led the blue chips today with Randgold Resources (LON:RRS) and Kazakhmys (LON:KAZ) emerging atop the leaderboard with gains of over 5%. Engineering group Invensys (LON:ISYS) climbed 5%, while cruise operator Carnival Corp (LON:CCL), banking group Barclays (LON:BARC) and outsourcing group Serco (LON:SRP) tacked on more than 4%. Telecom company Cable & Wireless Worldwide (LON:CW) added 4%.
Software developer Autonomy Corp (LON:AU) was the heaviest faller, shedding nearly 9%. Imperial Tobacco Group (LON:IMT) was a distant second with a 3.7% loss. African Barrick Gold (LON:ABG) declined 2% and Royal Bank of Scotland (LON:RBS) retreated 1.1%.
No other FTSE 100 constituent lost more than 1%.
US stocks rallied in early trade. The Dow Jones Industrial Average advanced 2.2%, while the broader S&P 500 index was up 2.35%. The technology heavy NASDAQ composite surged 2.6%.
Commodities
Oil prices recovered after European stock markets and US stock index futures rebounded on positive EU services and manufacturing data. However, this was not enough to put crude back to yesterday’s levels of above US$78/barrel. The prices got hit by yesterday’s inventories report from Energy Information Administration (EIA), which showed an unexpected increase of 400,000 barrels in US crude stockpiles.
The markets recovered later in the day after it was reported that the EU's services PMI (purchasing managers index) improved from 56.0 to 56.7 in July, while manufacturing PMI rose from 55.6 to 56.5. Industrial orders in the euro zone climbed 3.8% in May. This data helped equities overcome yesterday‘s downbeat comments from Fed Chairman Ben Bernanke, who said that the economic outlook was “unusually uncertain.”
September Brent Crude rose to US$75.65/barrel, while US light, sweet crude for September delivery improved to US$77.03/barrel.
Most blue chip oil and gas producers were on the rise today.
Cairn Energy (LON:CNE) was in the lead with a 3.5% gain. Tullow Oil (LON:TLW) and BG Group (LON:BG) climbed 1.85% and 1.2% respectively.
Shell (LON:RDSB) advanced 2.2%, while fellow supermajor BP (LON:BP) was sitting just below the opening level.
Oil and gas engineering firms Amec (LON:AMEC) and Petrofac (LON:PFC) advanced 3% and 2.6% respectively.
Iraq operating Irish oil company Petrel Resources (LON:PET) and North Sea explorers Xcite Energy (LON:XEL) led the juniors with gains of 9% and 8.5% respectively. EU operating Rome-based oil junior Mediterranean Oil & Gas (LON:MOG) headed in the opposite direction with a 5.5% loss.
Gold holds on to $1,185
Gold remained below US$1,190/oz today as yesterday’s comments by Fed Chairman Ben Bernanke about an “unusually uncertain” economic outlook failed to spur safe haven buying, while the markets were quick to recover after getting a boost from today’s EU data.
Gold settled at US$1,185/oz in late afternoon, while silver and platinum advanced to US$17.80/oz and US$1,517/oz respectively.
Platinum miners did very well today with Lonmin (LON:LMI) and FTSE 250 peer Aquarius Platinum advancing 4%. Silver miner Fresnillo (LON:FRES) posted a small gain, while midcap Hochschild Mining (LON:HOC) was sitting just below the opening level.
Gold miners were mixed. FTSE 250 constituent Petropavlovsk (LON:POG) added 1.1%, while blue chip Randgold Resources (LON:RRS) posted a small gain. African Barrick Gold (LON:ABG) declined 2%.
Specialty chemicals firm Johnson Matthey (LON:JMAT) moved up 1.2%.
Africa operating gold and platinum miner Goldplat (LON:GDP) was one of the top performers in the sector with a 12% rally. UK-registered China operating copper and gold miner Central China Goldfields (LON:GGG), Africa focused gold deposit developer Cluff Gold (LON:CLF) and Uzbekistan focused gold miner Oxus Gold (LON:OXS) followed, climbing 9%, 8% and 7% respectively.
Junior diamond miner Stellar Diamonds (LON:STEL) and Turkey and Ethiopia operating gold miner Stratex International (LON:STI) were in the red with losses of 7% and 6.5% respectively. Turkey and Saudi Arabia operating gold explorer KEFI Minerals (LON:KEFI) dropped 6%.
Base metals rise to boost miners
Copper and nickel rose to US$3.17/lb and US$9.02/lb, while zinc improved to US$0.87/lb.
Base metal miners were in demand today. Kazakhmys (LON:KAZ) advanced 4.6% to take the lead in the sector. Anglo American (LON:AAL) and Eurasian Natural Resources (LON:ENRC) rose 3.6% and Antofagasta (LON:ANTO) added 3%, as did Xstrata (LON:XTA). BHP Billiton (LON:BLT) and Rio Tinto (LON:RIO) both added just over 2%. Vedanta Resources (LON:VED) moved up 1.8%.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LON:FXPO) climbed 2%.
Indonesia focused small cap miner Finders Resources (LON:FIND) and copper and nickel explorer Regency Mines (LON:RGM) led the juniors, surging 14% and 11% respectively. South American focused junior miner Herencia Resources (LON:HER) followed with a 7.5% gain. Russia focused copper and nickel miner Amur Minerals (LON:AMC) and Botswana operating nickel and copper miner Discovery Metals (AIM: DME) tacked on more than 6%.
South Africa based coal exploration and production company Strategic Natural Resources (LON:SNR) was in the red with a 7% loss.
Banks, insurance, private equity
Financial stocks were mixed today. Barclays (LON:BARC) led the banking sector with a 4.5% advance. Standard Chartered (LON:STAN) and Lloyds (LON:LLOY) tacked on more than 3.5%. HSBC (LON:HSBA) added 2%, while Royal Bank of Scotland (LON:RBS) went against the tide, shedding 1%.
Aviva (LON:AV) and Old Mutual (LON:OML) led the insurers with gains of 3%. Legal & General (LON:LGEN) and Standard Life (LON:SL) added just over 2%. Admiral Group (LON:ADM) and Prudential (LON:PRU) moved up 1.5% and RSA Insurance Group (LON:RSA) tacked on 1%.
Private equity group 3i (LON:III) added nearly 3%.
Small Cap Movers
Other notable movers among the small caps included environmental science and technology company Accsys Technologies (LON:AXS) and African Medical Investments (LON:AMEI), which rallied 9% and 10.5% respectively. Bio-pharmaceutical group Lipoxen (LON:LPX) also did well, posting a 6% gain.
Small Cap News
Finders Resources (LON, ASX: FND) has reported encouraging drilling results from the Ojolali gold‐silver project in Sumatra, Indonesia, following a recent program of infill reverse circulation drilling at the Jambi oxide gold prospect.
Medusa Mining (ASX, LON: MML; TSX: MLL), through its Philippines operating company, Philsaga Mining Corporation, has increased the Indicated Resource by 4% to 603,000 ounces and increased the Inferred Resource by 36% to 898,000 ounces (excluding production since 9 December 2009) at its Co-O gold mine.
Goldplat (LON:GDP) is set to receive a mining lease for the Kilimapesa Hill gold mining project in Kenya. The commissioner of Kenya’s Mines and Geology said that the project is the “start of a new era for the gold mining industry in Kenya".
UK-based financial software specialist, StatPro Group (LON:SOG) has launched the public beta and free trial for its latest web-based SaaS (software as a service) investment portfolio analytics software, StatPro Revolution. According to StatPro, the Revolution SaaS product is designed for money managers of all sizes, to provide secure, online access to client reporting and portfolio analysis from a single web platform.
Africa and FSU operating oil and gas junior Victoria Oil & Gas (LON:VOG) has reduced the capex (capital expenditure) estimate for achieving first gas from its Logbaba project on Cameroon from US$30 million to US$7 million, while confirming it was on schedule for December 2010.
Broker Fairfax responded to the recent resource upgrade from Medusa Mining (ASX: MML, LON: MML, TSX: MLL) by stating there was further upside to its flagship Co-O gold project in the Philippines and that the production base could surpass its own model.
Prosperity Minerals Holdings Ltd (LON:PMHL) has been engaged in on-market share buy-backs, purchasing over £1m of its own equity over the past two days. On Tuesday July 20th, the company bought 171,000 shares at 150p each, and then yesterday it bought 500,000 shares at 160p.
Ariana Resources (LON:AAU) has appointed its chief financial officer, William Payne, as a non-executive director with immediate effect. "We are delighted that William is able to join the board during this eventful period in the development of the company,” Ariana MD Dr Kerim Sener said.
Faroe Petroleum (LON:FPM) has intersected a 64 metre gross oil column in a better-than-expected reservoir at its 30% owned Maria prospect in the Faroe islands, proving oil in the main target Garn formation in Jurassic sandstones and causing its shares to soar 26% by early afternoon trade.
London Mining’s (LON:LOND) has updated the bankable feasibility study (BFS) for the Wadi Sawawin project in Saudi Arabia, foreseeing reduced capex (capital expenditure) and improved long-term price forecasts, resulting in a material increase in the project’s IRR (internal rate of return) to over 13%. The updated BFS considers a 5Mtpa (million tonnes per annum) mining operation with an extended 20 year life.
Large and Mid Cap News
Financial Times owner Pearson (LON:PSON) is bolstering its fast growing education arm with a £326 million acquisition in Brazil. The group is buying the learning systems business of Sistema Educacional Brasileiro (SEB), one of the country’s leading education companies.
Tate & Lyle warned that demand for starches would remain at low levels, though its turnaround continues to gain traction. The group, which is in the process of selling off its traditional sugar operations, did give a more optimistic assessment of outlook for its other operations.
In an update ahead of its H1 results, Turkmenistan-operating Dragon Oil (LON:DGO) told investors that it increased average daily production by 8% in the first six months of the financial year, to reach a production rate of 46,420bopd (barrels of oil per day). In the remainder of the year, the company expects to boost production further with its ongoing development programme, and for the full-year Dragon oil is targeting up to 10% production growth.
Shares in Karelian Diamond Resources (LON) shot up after the Dublin based miner revealed it has struck an information sharing deal with industry super-major Rio Tinto (LON:RIO, ASX:RIO, NYSE: RTP).
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LON:FXPO) has decided not to proceed with a bond transaction at this time given its current robust liquidity position and other available sources of finance, folowing a roadshow.
