Overview: the FTSE 100 retreated 0.35% today, dragged down by declined in the mining and energy sectors after oil and metal prices pulled back.
Bank Standard Chartered (LON:STAN) and India operating energy business Essar Energy (LON:ESSR) were atop the leaderboard in late afternoon with gains of 2.5%. Caterer Compass Group (LON:CPG) rose 1.3%. Beverage group Diageo (LON:DGE) and software developer Sage Group (LON:SGE) each climbed 1.1%. British American Tobacco (LON:BATS) and utility company Severn Trent (LON:SVT) were up 1%.
Mining major Xstrata (LON:XTA) was the heaviest faller in the FTSE 100 with a 3% loss. Software company Autonomy Corp (LON:AU) and telecom group BT (LON:BT.A) declined 2.7%. Platinum miner Lonmin (LON:LMI) and oil and gas producer Cairn Energy (LON:CNE) retreated 2.5%.
As was projected in pre-trade, US stocks were off to a negative start. The Dow Jones Industrial Average declined 0.3% and the broader S&P 500 index shed 0.2%. The technology heavy NASDAQ composite was unmoved in early trade.
Commodities
Movements in currency markets have not been favourable for crude today as the recovery in the US dollar continued.
The American currency quickly bounced back from last week’s sharp fall that put it at eight month lows against the euro and 15 year lows against the Japanese yen, rising ahead of today’s release of the minutes from the latest policy meeting of the Federal Open Market Committee (FOMC).
The minutes will be scrutinized for signs of whether and how soon the Federal Reserve is planning to implement further quantitative easing (QE).
The Organization of Petroleum Exporting Countries (OPEC) today cut its demand forecasts for its crude oil from 28.7 million barrels per day to 28.6 million barrels per day, citing the slowing recovery in the world and particularly the US.
Neither the revision of demand forecasts nor the rising oil prices are likely to have any impact on the cartel’s output quotas, which are expected to be left unchanged at the upcoming meeting.
The OPEC controls about 40% of the total global oil output.
November Brent Crude declined to US$82.90/barrel, while US light, sweet crude for November delivery fell to US$81.38/barrel.
Supermajors BP (LON:BP) and Shell (LON:RDSB) posted small losses, while BG Group (LON:BG) and Tullow Oil (LON:TLW) dipped 1% and 1.5% respectively. Cairn Energy (LON:CNE) declined 2.5%.
Oil and gas engineering firms also were in decline with Petrofac (LON:PFC) dropping 1.7% and Amec (LON:AMEC) posting a small loss.
Most midcaps followed the trend. Soco International (LON:SIA) was at the bottom of the pile, diving 18% after plugging and abandoning an oil well in Vietnam.
Heritage Oil (LON:HOIL) and Premier Oil (LON:PMO) declined 3% and 2.5% respectively.
Salamander Energy (LON:SMDR) lost nearly 2%.
Dragon Oil (LON:DGO) and Dana Petroleum (LON:DNX) declined marginally.
Melrose Resources (LON:MRS) and JKX Oil & Gas (LON:JKX) went against the tide, tacking on 1% and 0.5% respectively.
Energy sector focused investor Xtract Energy (LON:XTR) was among the top performing small caps with a 16% surge. US focused producer Caza Oil & Gas (LON:CAZA) also did well, rising 5%.
Gold pulls back, but remains above $1,350
Gold retreated after the US dollar made further gains, but still managed to hold on to the US$1,350/oz level it recaptured earlier today.
Goldman Sachs (NYSE:GS) has upped its price targets for gold to US$1,400/oz, US$1,525/oz for three and six months respectively.
The investment bank’s 12 month forecast was raised to an ultra-bullish US$1,650/oz.
Earlier this year, Goldman Sachs set its six month target at US$1,300/oz, which was quickly eclipsed by the yellow metal.
Gold pulled back to US$1,351/oz after nearly touching US$1,354/oz. Silver and platinum improved to US$23.25/oz and US$1,687/oz respectively.
Major mining stocks were in decline today. Platinum producer Lonmin (LON:LMI) declined 3%, while gold miners African Barrick Gold (LON:ABG) and Randgold Resources (LON:RRS) dropped 1.5% and 1% respectively. Silver miner Fresnillo (LON:FRES) also shed 1%.
Midcaps followed. Aquarius Platinum (LON:AQP) slipped 4%. Silver producer Hochschild Mining (LON:HOC) and Petropavlovsk (LON:POG) shed 1%.
Turkey and Saudi Arabia operating gold and copper explorer KEFI Minerals (LON:KEFI) was among the top performers in the sector, rallying 18.5%. Gold and high value base metals focused explorer and developer Stratex International (LON:STI) followed, advancing 13%.
Latin America focused gold explorer and producer Orosur Mining (LON:OMI) surged 12%.
Gold, zinc and silver miner focused on the Zheng Guang project in China Leyshon Resources (LON:LRL) and the only publicly listed gold mining company with primary operations inside the Republic of Uzbekistan, Oxus Gold (LON:OXS), each added 5.5%.
Coloured gemstone company with a focus on Zambian emeralds Gemfields Resources (LON:GEM) and gold mining company focused on projects in South Africa and Mozambique Pan African Resources (LON:PAF) rose 5%.
Base metals decline
Copper and nickel declined to US$3.75/lb and US$10.88/lb respectively, while zinc dropped to US$1.05/lb.
Base metal miners were in decline. Xstrata (LON:XTA) was at the bottom of the pile with a 3.3% loss. Kazakhmys (LON:KAZ) and Antofagasta (LON:ANTO) followed, shedding 2.7% and 2% respectively. BHP Billiton (LON:BLT) and Eurasian Natural Resources (LON:ENRC) each lost just over 1.5%.
Rio Tinto (LON:RIO) was down 1.2% and Anglo American (LON:AAL) declined marginally, as did Vedanta Resources (LON:VED).
London’s only listed pure iron ore producer and FTSE 250 constituent Ferrexpo (LON:FXPO) outperformed the sector, rising 1%.
Western Australia, Queensland, and Papua New Guinea focused copper and nickel explorer Regency Mines (LON:RGM) was among the top performing small caps with a 5.5% gain.
Banks, insurance, private equity
Banks were mixed today. Standard Chartered (LON:STAN) was in the lead with a 2.5% advance. HSBC (LON:HSBA) and Royal Bank of Scotland (LON:RBS) followed with gains of less than 1%.
Part-nationalised bank Lloyds (LON:LLOY) moved in the opposite direction, shedding 1.6%. Barclays (LON:BARC) also was in the red with a 1% loss.
Most insurance companies were in decline. Prudential (LON:PRU) dropped 1.7%, while Admiral Group (LON:ADM), Aviva (LON:AV) and RSA Insurance Group (LON:RSA) lost about 1%.
Legal & General (LON:LGEN) and Standard Life (LON:SL) declined marginally.
Old Mutual (LON:SL) went against the tide, posting a small gain.
Private equity group 3i (LON:III) was little moved.
Small Cap Movers
Other notable movers among the small caps included payment and data processor Planet Payment (LON:PPT), which rallied 17%.
Small Cap News
Helius Energy (LON:HEGY) believes there are no valid grounds for the appeal against its proposed Avonmouth biomass project on the Bristol Channel. The Coedbach Action Team (CAT) initially lodged its appeal last week, after a failed legal challenge in September, when the High Court in Cardiff refused to grant CAT permission to apply for a judicial review of the project. The company this morning confirmed that the CAT has applied to the Court of Appeal for permission to appeal both the judicial review judgment and the refusal to grant a Protective Cost Order.
Nighthawk Energy (LON: HAWK, OTCQX: NHEGY) has hired Bank of New York Mellon to act as its Principal American Liaison (PAL) for its OTCQX listing. The dual-listed oil shale developer’s primary asset is the Jolly Ranch project in Texas.
Stellar Diamonds (LON:STEL) announced that Richmond Capital now holds a 15.4% interest in the group after participating in its £1.9 million placing and its purchase of Stellar shares from Altima Partners LLP.
Focus Solutions Group’s (LON:FSG) first half performance was ahead of expectations with revenues and profitability increasing more than projected.
Dual-listed Thor Mining PLC (AIM, ASX: THR) has requested a trading halt pending release of an announcement about a share placement. The halt will last until an announcement is made or commencement of trading on Thursday 14th October 2010.
Petroceltic International (LON:PCI) told investors that it is on schedule to start the 2010/2011 appraisal campaign at the Ain Tsila gas field in Algeria in the first week of November.
Daniel Stewart & Co said yesterday’s announcement from Geron Corp that it has begun testing an embryonic stem-cell treatment augurs well for peer ReNeuron Group’s (LON:RENE) own disability treatment that targets a huge market.
Coastal Energy Corp (LON:CEO, TSX-V:CEN) reported that the results of the A-11 well in Thailand were encouraging and that production at another key project, Songkhla A, has been ahead or expectations.
Numis Securities analyst Andy Davidson initiated coverage on Pan African Resources (LON:PAF) in a note entitled: “Platinum-tipped gold...with a yield”. The analyst rates the stock as a ‘Buy’ with a 16p target.
South America focused gold miner Orosur Mining (LON:OMI, TSX-V:OMI) moved decisively into profit during the first quarter of the financial year thanks to a sharp rise in the value of the precious metal. The company, which has operations in Uruguay and Chile, posted net income of US$3.5 million for the three months to August 31 compared with a loss of US$2.16 million a year earlier.
Stratex International (LON:STI) is set to fast-track the development of its prospective assets in Ethiopia and the Republic of Djibouti, after it agreed a farm-out deal with AngloGold Ashanti (NYSE:AU).
Bottom-line profitability is a key aim for Fusion IP (LON:FIP) in 2011, chief financial officer Tony Gardiner told Proactive Investors. Gardiner believes the company can achieve a maiden profit in the current financial year with future funding rounds providing the triggers for Fusion to re-value its equity in each portfolio company.
Large and Mid Cap News
Shares in Soco International (LON:SIA) were down 19% in reaction to news that the company decided to plug and abandon an appraisal well at one of its main oil and gas projects in Vietnam.
Xstrata (LON:XTA) said Xstrata Nickel's Falconbridge Dominicana ferronickel complex, a nickel mining and processing operation in the Dominican Republic, is restarting operations to a planned 50 percent of installed capacity by March 2011.