FTSE 100 expectedly opened Tuesday in the red after the Dow Jones slipped in late trading yesterday, wiping out the progress made at the start of Monday’s session and another weak performance from the Asian markets.
Metal prices tumbled on Monday after gaining strongly in the end of the last week, weakening the mining sector, which was extensively represented on the leaderboard yesterday. Today, however, most major miners showed up on the top fallers list, preventing the FTSE 100 from clearing the 4,900 barrier it tested yesterday.
Financials also weighed on the Footsie after Lloyds announced more jobs cuts and was reported to be in exploratory talks to sell its Clerical Medical Division to Resolution, slipping 2%.
Key movers: in the black
Royal Bank of Scotland (LSE: RBS), which has reportedly been in talks with Standard Chartered (LSE: STAN) regarding the sale of its Chinese assets, emerged atop of the leaderboard with a 2.7% gain.
Mobile telecoms group Vodafone (LSE: VOD) got close with a 2.5% climb after JPMorgan upgraded the telecoms sector to “overweight.”
Asset manager Man Group (LSE: EMG) also made it in the top three with a 1.7% gain.
Utilities were predictably strong in the morning amid the overall downward trend in the market with all major players upping their value.
Severn Trent (LSE: SVT) and United Utilities (LSE: UU) both rose, improving 1.2% to 972p per share and 1% to 457p per share respectively.
Key movers: in the red
The top fallers list was crowded with miners and some financial stocks, along with advertising group WPP (LSE: WPP), which was correcting after making strong gains on Monday, and detection and medical devices firm Smiths Group (LSE: SMIN). Both companies shed 2%.
Cairn Energy (LSE: CNE) also disappointed with a 1.7% decline after saying its export pipeline from the Mangala field in India could face delay and likely would not be completed by the end of the year.
Oil prices held steady above US$73 per barrel on Tuesday. US light crude improved by US$0.5, almost reaching US$74/barrel. Brent crude was at US$73/barrel.
Most oil stocks were impacted by the slow start in the market and retreated, yet not by much.
Supermajors BP (LSE: BP) and Shell (LSE: RDSB) dropped less than 1%. BG Group (LSE: BG), which reported a dry well in Brazil yesterday, opened flat.
Mid tier energy companies mostly followed, but some were able to post good gains. Heritage Oil (LSE: HOIL) went against the tide and managed to balance above the opening level, while Dragon Oil (LSE: DGO) outperformed the sector, rallying almost 4%.
Cairn Energy (LSE: CNE) and Petrofac (LSE: PFC) both moved down over 1%, while Tullow Oil (LSE: TLW) and Dana Petroleum (LSE: DNX) were roughly flat.
Juniors did a much better job, producing a number of notable risers this morning.
Gulf Keystone was the runaway winner with a 72% hike after reporting another oil discovery in its Shaikhan-1 exploration well in Kurdistan. Atlantic Canada focused oil and gas group Enegi Oil (AIM: ENEG) and Eastern Europe focused junior Aurelian Oil & Gas (AIM: AUL) followed, advancing 18% and 16% respectively. Latin American focused Gold Oil (LSE: GOO) surged 9% by midday.
Iraq operating Irish oil company Petrel Resources (AIM: PET) and Chinese coal bed methane developer Green Dragon Gas (AIM: GGG) also performed well, adding 8.5% and 6% respectively.
Africa and FSU operating oil and gas junior Victoria Oil & Gas (AIM: VOG) slipped on profit taking.
Gold slipped about US$7 below US$950/ounce yesterday, but was able to climb back to US$947/ounce today. Other precious metals also got off to a good start in the morning. Silver advanced 5 cents to US$14.19/ounce, while Platinum reached US$1,240/ounce.
Platinum companies were among the leading fallers today after accounting for good gains late last week.
Aquarius Platinum (LSE: AQP) dropped over 3%, while fellow platinum miner Lonmin (LSE: LMI) retreated less than 1%, as did specialty chemicals company Johnson Matthey (LSE: JMAT).
Silver producers didn’t fare much better as FTSE 100 constituent Fresnillo (LSE: FRES) also started just below yesterday’s closing level and mid tier silver miner Hochschild Mining (LSE: HOC) slipped 3.3%.
Gold miners Randgold Resources (LSE: RRS) and Peter Hambro Miner (LSE: POG) both retreated 1.5-2%.
Most juniors also slipped into the negative in early trade.
Uzbekistan focused gold miner Oxus Gold (AIM: OXS), Kazakhstan operating gold miner Frontier Mining (AIM: FML) and Fiji focused gold miner Vatukoula Gold Mines (LSE: VGM), which was correcting after making impressive gains on Monday following a production update from its gold mine, led the group with declines of 7.7%, 6.2% and 6% respectively.
Copper and gold miner EMED Mining (AIM: EMED), Philippines focused gold producer Medusa Mining (AIM&ASX: MML) and Turkey focused gold miner Ariana Resources (AIM: AAU) also pulled back, all slipping over 3% in early trade.
However, African focused gold deposit developer Cluff Gold (AIM: CLF) went against the tide, rising 3.5%.
Prices declined steeply, sending major mining stocks down.
Copper and Nickel retreated to US$2.84/pound and US$8.71/pound respectively. Zinc remained around US$0.81/pound.
Xstrata (LSE: XTA) and Antofagasta (LSE: ANTO), which is set to release its interim results tomorrow, emerged as the sector’s leading fallers, declining 2.7% each.
Kazakhmys (LSE: KAZ) and Rio Tinto (LSE: RIO) almost caught up, both slipping almost 2%.
World’s largest miner BHP Billiton (BLT), Anglo American (LSE: AAL) and Vedanta Resources (LSE: VED) all slipped around 1%.
Juniors fell into roughly the same pattern, but showed more volatility.
Tunisia focused metal miner Maghreb Minerals (AIM: MMS) declined 10%, while Russian operating Amur Minerals (AIM: AMC) was still correcting from last week’s huge gains in the back of a reserve estimate update for its nickel-copper project in eastern Russia, shedding a further 13.4% to arrive at 8.9p per share.
Exploration and mineral investment company Regency Mines (AIM: RGM) walso opened in the red, slipping 5.7%.
South Africa operating chrome miner Chromex Mining (AIM: CHX) and Zinc mining and recycling specialist ZincOX (AIM: ZOX) took a different path, rising 4.6% and 3.7% respectively.
Banks, insurance, private equity
Financial stocks were largely mixed this morning. Royal Bank of Scotland (LSE: RBS), which is reportedly trying to sell its Chinese assets to another banking group Standard Chartered (LSE: STAN), led the majors with a 2.4% gain, while Standard Chartered was down 2%.
HSBC (LSE: HSBA) and Barclays (LSE: BARC) both retreated less than 1%. Lloyds (LSE: LLOY) disappointed with a 2% loss.
Insurers were predominantly flat. Aviva (LSE: AV), Standard Life (LSE: SL) and managed to stay in the black, while Legal & General (LSE: LGEN) and Old Mutual (LSE: OML) opened in the negative.
Friends Provident (LSE: FP) and Prudential (LSE: PRU) were unmoved.
Car insurer Admiral Group (LSE: ADM), whose interim results released today turned out to be about in line with expectations, was among the FTSE 100’s leading fallers with a 3% decline.
Junior home credit and motor finance specialist was an honourable mention S & U (LSE: SUS) is an honourable mention after outperforming the sector with a 3% rise in early trade.
Small Cap Movers
Other notables among the small caps included Computer-Aided Detection (CAD) and image analysis software specialist, Medicsight (AIM: MDST), which continued climbing with a 13% surge on top of yesterday’s 5% advance and Rubicon Software Group plc (LSE: RUBI), which surged 15% after adding 8% yesterday.
Large and Mid Cap News
Cardiff-based car insurer and FTSE 100 constituent Admiral Group Plc (LSE: ADM) said it raked in record profits in the first half on the back of stronger international business, expanded customer base and higher insurance rates, prompting it to raise the interim dividend and award every employee with shares.
Small Cap News
Rurelec (LSE: RUR) said its Bolivian subsidiary Empresa Guaracachi has struck a deal with the government to install a 1.4 mega watt (MW) gas fired power plant at San Matias in the Department of Santa Cruz in proximity with the Brazilian border.
Robotic Technology Systems (AIM: RTS) firmed 7.5% after the company said it would pay a special 1 pence dividend to return excess cash to shareholders. The special dividend announcement was accompanied by improved first half results, and confirmation that the company was still in offer talks that may or may not lead to an offer.
Iraq and Algeria operating Gulf Keystone Petroleum (AIM: GKP) said it had hit an extension of the discovery announced earlier this month and upped its oil-in-place estimate to up to 3.0 billion barrels, causing its stock to skyrocket.
Scheduled bus, coach and car services provider, Rotala PLC (AIM: ROL) released interim results in line with expectations this morning. Group turnover climbed 16% to £18.3 million, while basic earnings per share (EPS) climbed to 3 pence (H1 2008: 2.8 pence).
Russian focused oil and gas producer Volga Gas plc (AIM: VGAS) released a positive production update on its drilling and development activities in the Karpenskiy license area today, sending its shares up 8% in early trade.
Fusion IP (AIM: FIP), the university intellectual property (IP) commercialisation company reported positive progress at one of its investments, Magnomatics Limited. Today Magnomatics secured a “six-figure contract” with the UK Ministry of Defence (MoD) to complete a detailed study of a magnetically geared propulsion motor based on the company’s patented Pseudo Direct Drive.