Overview: Just as was predicted, the market switched to bullish mode on Thursday following yesterday’s weak performance of UK’s key indices.
The positive sentiment was delivered by a strong session from the US stock market, where the Dow Jones industrial average jumped over 60 points, fuelled by a recovery in oil prices as data released by the Energy Information Administration (EIA) revealed an unexpected 8.4 million barrel drop in US crude stockpiles, while imports were at their lowest since September last year.
The markets were further lifted by the UK retail sales data update released by the Office for National Statistics. It said sales were up 0.4%, bringing the total annual increase to 3.3%.
The Dow continued gaining in early deals on Thursday, further lifting the sentiment and keeping the Footsie well in the black.
Key oil benchmarks got a big boost from the oil inventory news, reversing recent losses and climbing over the US$70 barrier level, bolstering the oil and gas stocks, while miners benefitted from a recovery in metal prices. Even though both precious and base metals gave up some of their early gains over the course of the day, the mining sector ended the day as one of the market’s top performer.
The FTSE 100 rose over 50 points on Thursday, sitting well above the 4,700 mark.
Key movers: in the black
While the oil and gas sector predictably jumped up shortly after trading opened, none of the majors showed up on the leaderboard, which was crowded by miners accompanied by financial stocks. Insurer Legal & General (LSE: LGEN) and Royal Bank of Scotland (LSE: RBS) led the group.
Legal & General was fuelled by the continued speculation of a possible takeover by Resolution, which has recently acquired Friends Provident (LSE: FP).
Indian miner Vedanta Resources (LSE: VED) was up 3% after its subsidiary Sterlite Industries upped its bid for US copper miner Asarco LLC by US$500 million in hopes to beat out competitor Grupo Mexico SAB.
Building company Redrow (LSE: RDW) also emerged among the leaders with a 4.5% advance after making changes to its Board, and was further buoyed by a report from the Council of Mortgage Lenders stating that mortgage lending hit a 9 month high in July.
Software firm Autonomy Corporation (LSE: AU) rose 5.6% after announcing it integrated its Intelligent Data Operating Layer (IDOL) into its flagship product Autonomy Scrittura. Sage Group (LSE: SGE) added 4.8% in sympathy.
The troubled tour operator Thomas Cook Group (LSE: TCG) which kicked off a long cold streak with its interim report last week, improved 5%.
Key movers: in the red
Scottish whisky producer Diageo (LSE: DGE) emerged as the heaviest faller after ING downgraded its stock to “hold” from “buy.” The beverages company shed 0.8% on the update.
Aerospace and Defence group BAE Systems (LSE: BA) said it landed a contract from the Seattle transit agency for propulsion systems for up to 500 hybrid-electric buses. This came after the company said on Monday it laid off 100 employees in Phoenix after a small military contract expired. BAE was down 0.4% today, trailing only Diageo and telecommunications company Inmarsat (ISAT), which pulled back 0.5%.
Oil and gas sector climbs on prices
US light crude approached US$72.5/barrel and Brent Crude rose to US$73.2/barrel.
Supermajors BP (LSE: BP) and Shell (LSE: RDSB) posted gains of 1.4% and 1.7%. BG Group (LSE: BG) added 2%.
With the exception of Dragon Oil (LSE: DGO), which retreated a little over 1%, midcaps followed the majors and basked in the sun. Cairn Energy (LSE: CNE) and Heritage Oil (LSE: HOIL) both tacked on 2.8%, while Tullow Oil (LSE: TLW) rose marginally.
Dana Petroleum (LSE: DNX) outperformed the sector, climbing over 4%.
Junior energy companies also traded well, with some eclipsing the gains made by the majors and midcaps.
Iraq and Algeria operating Gulf Keystone Petroleum (AIM: GKP) was in the lead with a 28% gain.
US focused junior Empyrean Energy (AIM: EME) followed with a 13% gain. Other US focused oil and gas juniors also rose; Caza Oil & Gas (AIM: CAZA) climbed 5.7%, while Nighthawk Energy rose 1.3%.
Kazakh-focused Max Petroleum (LSE: MXP) also had a good day, gaining 7.5%.
Latin American focused Gold Oil (LSE: GOO) and diversified energy investment company, Xtract Energy (AIM: XTR) also moved with the market, adding about 5% each.
Gulfsands Petroleum (AIM: GPX) continued its recent form, climbing nearly 4%, as did Northern Petroleum (AIM: NOP) which climbed 2%. Cameroon, Kazakhstan and Russia focused junior, Victoria Oil & Gas (AIM: VOG) gave up some of its early gains, retreating below the 6p level.
Precious metal miners gain as prices pick up
Metal prices started well, but slipped later in the day. Gold retreated back to US$940/ounce. Silver slipped below US$14.00/ounce again, arriving at US$13.87/ounce, while Platinum slid to US$1,236/ounce.
Platinum companies were the leading risers in the group. Aquarius Platinum (LSE: AQP) and Lonmin (LSE: LMI) climbed 6.6% and 4% respectively. Specialty platinum catalyst firm Johnson Matthey (LSE: JMAT) added 1.7%.
Silver miners were weaker as the prices slipped. FTSE 100 constituent Fresnillo (LSE: FRES) failed to catch the momentum from the overall market surge and fell 1%, while mid tier silver producer Hochschild Mining (LSE: HOC) did slightly better, rising marginally.
Gold producers Randgold Resources (LSE: RAND) and Peter Hambro Mining (LSE: POG) fell into the same pattern as the rest of the sector with both improving 2%.
Gold juniors did better with a few companies outperforming the market with solid gains.
Turkey focused Ariana Resources (AIM: AAU) spiked 8%.
Africa operating gold miner GMA Resources (AIM: GMA) leaped almost 9%, while Uzbekistan focused gold miner Oxus Gold (AIM: OXS) rose 8%. Metals Exploration (AIM: MTL), which is developing a large gold-molybdenum project in the Philippines rose 6.8%. South Africa gold producer, Pan African Resources (AIM: PAF) climbed 2.5%.
Kryso Resources (LSE: KYS) said today it has raised £495,250 in the final tranche of an equity placing agreement to bring the total to £1.2 million to fund the feasibility study and drilling at its Pakrut gold project. The news helped it to an 11% hike.
Fiji focused gold miner Vatukoula Gold Mines (LSE: VGM) gave some of yesterday’s gains away, retreating 5.9%. Africa-focused gold deposit developer Cluff Gold (AIM: CLF) also was in decline, slipping 4%.
Base metal miners follow
Base metal prices made some progress early, but headed south in the afternoon. Copper pulled back to US$2.73/pound, while Nickel shed 14 cents, dropping to US$8.64/pound. Zinc was just below US$0.80/pound.
All major mining groups basked in the sun today, lifted by the recovery in metal prices.
Antofagasta (LSE: ANTO) led the group with a 5% improvement.
Xstrata (LSE: XTA) climbed 4.3%, while Anglo American (LSE: AAL) and Kazakhmys (LSE: KAZ) rose 3.3% and 2.5% respectively. Indian miner Vedanta Resources (LSE: VED) also added 2.5%.
The world’s largest miner BHP Billiton (LSE: BLT) climbed about 1.2%, while FTSE 250 iron ore miner, Ferrexpo, (LSE: FXPO) tacked on 3%.
Juniors didn’t show much movement, but there still were some notable risers.
Russian focused Amur Minerals (AIM: AMC)’s stock quadrupled after the company updated its reserves estimate for its Kun-Manie nickel-copper project in Russia, putting the overall value at US$6.9 billion. Tunisia focused metal miner Maghreb Minerals (AIM: MMS), which did not release any news today, perked up 38%. Copper and gold junior, EMED Mining (AIM: EMED) climbed 3.7%. Zinc recycling and mining group, ZincOX (AIM: ZOX) added 3%.
Banks, insurance, private equity
Financial stocks also were high in demand.
Partly nationalised banking groups Lloyds (LSE: LLOY) and Royal Bank of Scotland (LSE: RBS) tacked on 2.4% and 3.4% respectively.
Barclays followed with a 2.1% advance.
HSBC (LSE: HSBA) and Standard Chartered (LSE: STAN) failed to catch up with the market as HSBC ended the day in the red and Standard Chartered posted a marginal gain.
Insurer also rose, led by Legal & General (LSE: LGEN), one of the market’s leading risers today with a 4% gain, fuelled by takeover speculation. Prudential (LSE: PRU) matched with a 4% surge.
Old Mutual (LSE: OML) and Standard Life (LSE: SL) performed well with gains of 2.8% and 3.3% respectively. Aviva (LSE: AV) also got off to a good start in the morning, but finished flat after its gains got wiped out.
Other Small Cap Movers
Other notable movers among small caps included Software producer smartFOCUS (AIM: ATF), which rose 15% after releasing multi-channel marketing software in Japan. Environmental science and technology company Accsys Technologies (AIM: ACS), jumped 10% in the morning after landing an order for another wooden road bridge in the Netherlands, also saying Accoya wood sales were growing. Yet it ended the day with a 4% gain. Interim results also lifted Amphion Innovations (AIM: AMP) 10% higher, which reported a significantly improved first half result and no change in its Net Asset Value (NAV).Imaging software specialist, Medicsight (AIM: MDST) rose 7.6%, continuing an upward trend from lows posted earlier this year.
Large and Mid Cap News
Shares in Wellstream Holdings Plc (LSE: WSM) came under pressure after the oil and gas services group reported weak interim results and lowered guidance for the second half, though stating the business is well positioned to benefit once the oil and gas market recovers sometime in 2010.
Cheltenham-based steam valve and pump maker Spirax-Sarco Engineering PLC (LSE: SPX) said benefits from currency movements lifted H1 sales 5%, yet profits and earnings per share were down, missing some forecasts. However, the group still raised the interim dividend expressing confidence in its future prospects and expecting benefits from its cost reduction campaign to fully come into effect in the second half.
Insulation and roofing firm and FTSE 250 constituent SIG PLC (LSE: SHI) reported a drop in sales and revenues for the first half and said it will proceed with its cost saving and restructuring programme anticipating market conditions to remain tough.
Small Cap News
Microcap dental lab products supplier 1st Dental Laboratories Plc (AIM: FDT) said pre-tax losses more than doubled, but sales were well ahead of the target for the six month period ended 31 May 2009.
Microcap dental lab products supplier 1st Dental Laboratories Plc (AIM: FDT) said pre-tax losses more than doubled, but sales were well ahead of the target for the six month period ended 31 May 2009. The company posted revenues of £5.1 million in H1 2009, up from £4.9 million in H1 2008. Gross profit increased slightly to £1.65 million from £1.63million a year ago, while pre-tax losse more than doubled to £326,000 from £141,000 last year.
Speciality pharmaceutical company ProStrakan (LSE: PSK) reported strong sales of its key products in H1, saying the company is on track to break even in 2009 and achieve its first year of operating profit next year. Product sales were up 36% to £34.6 million in the six moths to 30 June 2009, delivering total revenues of £37 million, a 40% year on year hike. Pre-tax loss was cut to £9.4 million from £11.8 million for the corresponding period.
Accsys Technologies PLC (AIM: AXS) reported a 51 percent year-on-year rise in sales revenue from its proprietary Accoya wood in the three months to end-June 2009 and said it has won the order to supply Accoya for the second heavy traffic road bridge in Sneek, the Netherlands.
Shares in Amphion Innovations (LSE: AMP) perked up this morning after the company reported no change in its Net Asset Value (NAV) per share (in US$ terms) and also said that in the first half of 2009 it came “very close to breakeven”.
Investment holding group Silanis International Ltd (AIM: SNS) reported rising revenues and narrowing losses in the first half for Silanis Technology Inc, specialised in electronic and digital signature software. Silanis’ sole investment at present is a 25 percent stake in Silanis Technology.
Australian regional carrier Skywest Airlines Ltd (AIM: SKYW) is expecting to benefit from a significant increase in capacity following news that the A$50 billion Gorgon project to develop gas reserves offshore Western Australia has received ministerial approval.
Polo Resources Ltd (AIM: PRL) said it sold a 6.66 percent stake in Berkeley Resources (ASX: BKY), or 8,221,893 shares, for A$8.49 million. It still holds 10,388,181 Berkeley shares and has options over a further 5,670,037 ordinary shares.
Silver Swan Group (ASX: SWN) has advised that it has agreed to release 2,000,000 shares held by Mercator Gold (AIM: MCR) from voluntary escrow. In accordance with Listing Rule 3.10A these shares will be released from escrow in 10 business days. Mercator Gold Plc was issued 10,000,000 ordinary shares and 4,000,000 performance shares in April 2008 upon the acquisition of the Meekatharra tenements by Silver Swan Group Limited to be escrowed for 2 years.
Finders Resources (ASX/AIM: FND) has advised that the recently announced sale by Straits Resources (ASX: SRL) of its subsidiary, Straits (Whim Creek) Pty Ltd to Venturex Resources (ASX: VXR), will have no effect on the agreement between Straits and Finders for the option to purchase the solvent extraction/electrowinning plant from Straits (Whim Creek) Pty Ltd.
Russian operating mineral miner Amur Minerals Corporation (AIM: AMC) just got closer to securing mining licenses for the three Kun-Manie deposits in eastern Russia, having submitted its reserve estimate for the Maly Krumkon deposit, valuing its reserves at US$1.8 billion.
Shares in Philippines-focused Toledo Mining Corp (AIM: TMC) were hit by news BHP Billiton had lodged a claim for demurrage after bad weather delayed a shipment of ore from the Berong nickel mine to the Yabulu refinery in Queensland, Australia. However, Toledo said that the demurrage amount was being contested by its majority-held unit Berong Nickel Corp, which had declared a force majeure during the ship loading.