Overview: the FTSE 100 shed a further 1.3% today after the non-farm payrolls update form the US Labor Department showed 20,000 jobs lost in the month of January, while an increase was expected. The national unemployment rate, however, declined to 9.7% from 10%. Global stock markets fell considerably yesterday when a weekly US jobless claims update showed a surprising increase of 8,000 in initial claims for benefits.
Interdealer broker ICAP (LSE: IAP), which today cut its pre-tax profit guidance, plummeted 17% to emerge as the heaviest faller among the blue chips. Engineering firm Invensys (LSE: ISYS) and private equity group 3i (LSE: III) followed with losses of 4.5% and 3.5% respectively. Other notable fallers included commercial property company Segro (LSE: SGRO), generator rental company Aggreko (LSE: AGK) and asset management firm Schroders (LSE: SDR), which all dropped nearly 3%.
Just one FTSE 100 constituent added more than 1%. Caterer Compass Group (LSE: CPG) rose 5.6% on better than expected Q1 results to outperform the blue chips.
US stocks expectedly started lower following the disappointing job data, while getting some support from the decline in the unemployment rate. The Dow Jones Industrial Average slid 0.45% to start the day, while the broader S&P 500 index and the technology heavy NASDAQ composite were down 0.5%.
Commodities
Crude futures were slightly up today following yesterday’s sharp falls in response to declines in global stock markets and a stronger US Dollar.
Stocks in the US, Asia and Europe plummeted yesterday and today after Thursday's weekly US jobless claims update showed a surprising increase of 8,000 to 480,000 last week, while a decline was expected. The data sent a shudder through the market ahead of today’s non-farm payrolls update.
In other news, China’s state owned oil major CNPC (China National Petroleum Corporation) said that China’s oil imports would go up 9.1% to 212 million tonnes this year, making for a daily average of 4.24 million barrels.
Crude prices showed weakness yesterday after the Energy Information Administration (EIA) reported that US crude stocks rose by 2.3 million barrels last week, while a marginal increase was expected. Back on Tuesday, the American Petroleum Institute (API) said that US crude stockpiles were up 4.7 million barrels.
Today, March Brent Crude inched higher to US$71.82/barrel, while US light, sweet crude stood at US$71.07/barrel on the New York Mercantile Exchange (NYMEX).
Blue chip oil and gas producers were in decline today. BG Group (LSE: BG) was the heaviest faller in the sector in the FTSE 100 with a 4.5% slide. Cairn Energy (LSE: CNE) followed with a loss of over 4% and Tullow Oil (LSE: TLW) 2.6%.
Supermajors BP (LSE: BP) and Shell (LSE: RDSB) both shed 1.4%.
Oil and gas engineering companies Amec (LSE: AMEC) and Petrofac (LSE: PFC) moved with the sector, pulling back 3.3% and 2.3% respectively.
Midcaps moved in the same direction with Dana Petroleum (LSE: DNX) leading the retreat with a 4.2% drop. Premier Oil (LSE: PMO), Salamander Energy (LSE: SMDR) and JKX Oil and Gas (LSE: JKX) shed nearly 4%, while Dragon Oil (LSE: DGO), Heritage Oil (LSE: HOIL) and Soco International (LSE: SIA) were down 3%, 2.5% and 1.5% respectively.
Melrose Resources (LSE: MRS) bucked the trend, rallying 5% after reporting a gas find in Egypt.
Services companies Wellstream Holdings (LSE: WSM) and Wood Group (LSE: WG) were down 3.5% and 2.8% respectively.
Most junior companies followed. Irish oil and gas exploration company Petroceltic International (AIM: PCI) and North Sea explorers Xcite Energy (AIM: XEL) were down 10%. Peru, Colombia and Cuba operating oil and gas explorer and producer Gold Oil (LSE: GOO) declined 7%, Ukraine focused gas producer Regal Petroleum (AIM: RPT) and Iraq and Algeria operating Gulf Keystone Petroleum (AIM: GKP) lost more than 5%, Europe focused oil and gas developer Ascent Resources (AIM: AST), Africa focused energy company Dominion Petroleum (AIM: DPL), oil and gas company with assets in Iraq, Syria and Gulf of Mexico Gulfsands Petroleum (AIM: GPX) and North American based explorer Nighthawk Energy (AIM: HAWK) all lost 4.5%.
Gold, silver and platinum slide as US Dollar climbs
Gold declined sharply yesterday and extended losses today as the US Dollar gained speed on concerns surrounding the debt situation in eurozone countries Greece, Portugal and Spain, which have pushed down Europe’s single currency to help the US Dollar Index, which measures the greenback’s strength against a basket of six currencies, to six month highs.
The yellow metal, which is seen as an alternative investment and moves inversely to the US Dollar, slipped to US$1,054/oz not long after recapturing the US$1,100/oz mark.
Other precious metals followed with silver and platinum spot prices declining to US$15.11/oz and US$1,478/oz respectively.
Holdings in the world’s largest traded gold-backed exchange fund SPDR fell by a further 5.79 metric tonnes to 1,104 tonnes after showing continuing declines in January.
All major mining stocks slipped into the red today. Platinum miner Lonmin (LSE: LMI) led the decline with a 4.5% loss. Fellow FTSE 100 constituents gold miner Randgold Resources (LSE: RRS) and silver and gold producer Fresnillo (LSE: FRES) followed, sliding 3.2% and 2.6% respectively.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) was down 1.7%.
Midcaps fell into the same pattern with silver producer Hochschild Mining (LSE: HOC) sliding to the bottom of the pile with a 5.7% decline. Aquarius Platinum (LSE: AQP) was close, shedding 5.3% and gold producer Petropavlovsk (LSE: POG) was down 3.3%.
Small caps also were in decline. Turkey focused gold miner Ariana Resources (AIM: AAU) slipped 19% on no news. African focused nickel and gold exploration and development junior Nyota Minerals (ASX&AIM: NYO) was down 10%, while Uzbekistan focused gold miner Oxus Gold (AIM: OXS) followed with an 8% slide.
Kazakhstan operating gold producer and copper developer Frontier Mining (AIM: FML) dropped 5% and Kyrgyzstan focused gold explorer and developer Chaarat Gold Holdings (AIM: CGH), South Africa and Botswana operating diamond miner Firestone Diamonds (AIM: FDI), Philippines focused gold producer Medusa Mining (AIM&ASX: MML), Western Australia operating Norseman Gold (AIM: NGL) and Fiji focused gold miner Vatukoula Gold Mines (AIM: VGM) all were down 4%.
Africa focused gold miner Pan African Resources (AIM: PAF) and Africa operating gold and platinum miner Goldplat (AIM: GDP) lost 3.5%.
Base metals fall to weaken miners
Base metals also were in decline with copper and nickel sliding to US$2.83/lb and US$7.86/lb, while zinc retreated to US$0.90/lb.
Base metal focused stocks were in decline. Xstrata (LSE: XTA) and Vedanta Resources (LSE: VED) lost 4.7% and 3.8% respectively. Rio Tinto (LSE: RIO) lost 2%, Antofagasta (LSE: ANTO) and BHP Billiton (LSE: BLT) retreated 1.5%, while Anglo American (LSE: AAL) and Kazakhmys (LSE: KAZ) shed nearly 1%.
Eurasian Natural Resources (LSE: ENRC) went against the tide with a marginal gain.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) moved with the sector, sliding 2.5%.
Most juniors followed the trend. Specialty minerals exploration and development company Thor Mining (AIM: THR) slipped 12%. Laterite nickel specialist European Nickel (AIM: ENK) lost nearly 10%, while Australia focused coking coal producer Caledon Resources (AIM: CDN) was down 8.5% and tantalum concentrate supplier with assets in Mozambique Noventa (AIM: NVTA) and Tunisia focused metal miner Maghreb Minerals (AIM: MMS) retreated 7%.
South American focused junior miner Herencia Resources (AIM: HER) declined 6%, while Indonesia operating coal miner Churchill Mining (AIM: CHL) and Forte Energy (AIM: FTE) were down 4.5% and 3.5% respectively.
Banks, insurance, private equity
Most financial stocks were in the red today. Lloyds (LSE: LLOY) lost 3.8%, while fellow part-nationalised bank Royal Bank of Scotland (LSE: RBS) retreated 1%, as did Standard Chartered (LSE: STAN). HSBC (LSE: HSBA) was flat and Barclays (LSE: BARC) managed to post a small gain.
Insurers also were in selling mode. Prudential (LSE: PRU) retreated 2.1%, while Aviva (LSE: AV) and Old Mutual (LSE: OML) lost 1.5%. Standard Life (LSE: SL) pulled back 1%, while Admiral Group (LSE: ADM) and RSA Insurance Group (LSE: RSA) posted small losses and Legal & General (LSE: LGEN) remained flat.
Private equity group 3i (LSE: III) slipped 4%.
Small Cap Movers
Other notable movers among the small caps included bio-pharmaceutical company specialising in the development of high-value differentiated biological Lipoxen (AIM: LPX), which slid 21% as well as IP commercialisation company Amphion Innovations (AIM: AMP) and mobile email and data synchronisation group Synchronica PLC (AIM: SYNC) with declines of 12% and 8% respectively. SeaEnergy (AIM: SEA) was down 5%.
Large and Mid Cap News
Melrose Resources plc (LSE: MRS) announced a new exploration discovery at its 100 percent controlled South East Mansoura concession in Egypt and commencement of seismic data acquisition in the country
BG Group (LSE: BG) said its full year results were impacted by lower gas and oil prices in 2009, despite a solid operational performance. In the twelve months ended 31 December 2009, the group's production volumes increased 4% from the previous year and BG's liquefied natural gas business contributed with a £1.55 billion profit. However lower prices led to an overall group profit of £4.2 billion, down 21% from 2008.
Housebuilder and FTSE 250 constituent Bellway (LSE: BWY) warned that trading conditions in the historically strong spring selling season would be tough due to the high level of deposits required by mortgage providers, while reporting an improved order book of £390 million representing 2,506 homes, of which 706 are for the following financial year.
Food services specialist Compass Group PLC (LSE: CPG) said it has had a good start to the current year. The decline in organic revenue has improved from approximately 3% quarter-on quarter in the fourth quarter of 2009 to a decline of 1.7 percent in the first, and the pipeline of new business remains strong.
FTSE 100 constituent British Airways (LSE: BAY) reported an operating loss of £86 million and pre-tax loss of £342 million for the nine months to the end of December 2009 as revenues declined 12.9%, which was partly offset by a decrease of 10.5% in total operating costs and a 6.7% reduction in unit costs as the airline “quickly adapted to the new business realities created by the global recession,” and it is expecting to post record losses for the full year.
Electrocomponents (LSE: ECM) now expects its headline profits for the full year to be at the upper end of market expectations after experiencing what it called a sharp improvement in sales over the four months to the end of January 2010 as all regions returned to year-on-year sales growth by December.
Small Cap News
Pan-African investors Lonrho (AIM: LONR) said it hit performance targets and delivered on its growth expectations in the first quarter. In the three months ended 31 December 2009 overall turnover reached 22.7m, reflecting a 21.7% increase in constant currencies (CC) and 3.1% on a reported basis. Lonrho said it has focused on increasing its operating margins during the quarter, with the Agribusiness and Infrastructure divisions achieving significant improvements.
Bio-pharma junior Lipoxen (AIM: LPX) said that its revenues in the second half of 2009 missed expectations due to delays in the Phase II clinical trials for long acting EPO and Insulin, though it promised to deliver a “value enhancing newsflow” over the next few months after shifting focus to near-term commercial opportunities.
China Real Estate Opportunities (AIM: CREO) said the aggregate gross value of its portfolio amounted to £837 million as at December 31 2009, which marks an increase of 4% in local currency terms and 7.35% in sterling terms from £780 million at the end of June.
TEG Group (AIM: TEG) said its overall trading position in 2009 was good despite operational difficulties and waste shortages due to the unusually adverse weather conditions in the latter part of the year, expecting it to meet guidance and become the most successful in company history.
Ithaca Energy (AIM, TSX-V: IAE) announced that it has increased the potential production from its Beatrice Bravo facility in the North Sea, following the completion of well interventions. The work-over resulted in an increase of 1,500 barrels of oil per day (bopd), significantly above management’s 500 bopd target.
Hertfordshire headquartered natural healthcare company William Ransom (AIM: RNSM) agreed the disposal of its honey-based Manuka Gold health supplements to Honey New Zealand International for £560,000. Ransom said it intends to use the proceeds to reduce debt.