Overview: After a couple of initial attempts fell through the cracks, the FTSE 100 finally cleared the 4,900 barrier yesterday, receiving a boost from US consumer confidence data and increased business confidence in the UK which further added to the recovery sentiment.
However, despite a strong upward push from heavyweight risers like banking groups RBS and Lloyds, the FTSE 100 slipped into the negative in early trading on Tuesday, feeling the pressure from a string of disappointing interim results released by a number profile companies this morning.
Key movers: in the red
Chilean copper miner Antofagasta (LSE: ANTO) led the top fallers list with a 4.1% retreat despite revisiting its 2009 production guidance, with any positive impact offset by the 70% drop in earnings as H1 revenues halved. Mid tier oil and gas producer Melrose Energy (LSE: MRS) suffered the same fate, shedding over 3% on lower revenues and profits despite higher FY output targets.
Mid tier oil and gas producer Tullow Oil (LSE: TLW) and advertiser WPP Group (LSE: WPP) followed with their own interim reports in the morning, sending their stocks down almost 4%.
Another commodity focused company Cairn Energy (LSE: CNE) kept sliding after reporting a first half pre-tax loss of US$20 million yesterday, and saying it would be challenging to meet targets for the next stage of development. The company was down almost 4% in midmorning trade.
Key movers: in the black
On top of that, miners were still recovering after JP Morgan downgraded European mining stocks yesterday, while upgrading European telecoms and recommending exposure to a few companies including Vodafone (LSE: VOD), which was atop of the leaderboard yesterday along with another telecom Cable and Wireless (LSE: CW). Both cooled off today, but tour operator TUI Travel (LSE: TT) was still on the rise on the back of yesterday’s upgrade from Morgan Stanley, which upped its rating to “buy.”
Not all companies that released their interim reports today tumbled, as London’s Docklands Light Rail operator Serco Group (LSE: SRP) led the market’s leading index after posting a 33.8% hike in H1 profits as revenues improved 30.9% to £1.9 billion.
Commodities
Shortly after hitting 10 month highs, oil prices corrected on profit taking this morning as US light crude shed over US$2, moving down to US$71.55. Brent crude slumped to US$71.6.
Key oil stocks were in decline on slumping prices.
Supermajors BP (LSE: BP) and Shell (LSE: RDSB) declined about 1%, as did BG Group (LSE: BG), sliding to 1,057p per share.
Mid tier energy companies followed with the sole exception of Heritage Oil (LSE: HOIL), which tacked on 1%. Dragon Oil (LSE: DGO) also posted a 1% decline, while Dana Petroleum (LSE: DNX) lost 1.5%.
Cairn Energy (LSE: CNE) lost about 4%, while Petrofac (LSE: PFC) and Tullow Oil (LSE: TLW) both dipped 3%.
Juniors were likewise headed south with just a few notable risers.
Eastern Europe focused junior Aurelian Oil & Gas (AIM: AUL) continued its surge, adding a further 14% after rallying more than 20% yesterday. Another one of Tuesday’s high risers, Latin American focused Gold Oil (LSE: GOO), cooled off, adding a little over 1%.
Iraq operating Irish oil company Petrel Resources (AIM: PET) and European focused oil and gas developer Ascent Resources (AIM: AST) also rose, climbing over 3%.
The fallers were led by Atlantic Canada operating oil and gas group Enegi Oil (AIM: ENEG), which shed 8% after yesterday’s flat finish following a volatile session. Victoria Oil & Gas (AIM: VOG) dipped about 6% on further profit taking after recently surging more than 100%.
Precious metal miners slide
Gold failed to hold the US$950/ounce level, and retreated to US$948/ounce overnight. But Silver continued advancing, arriving at US$14.37/ounce today. Platinum fluctuated around US$1,240/ounce.
Majors and midcaps mostly declined.
Aquarius Platinum (LSE: AQP) dropped over 3% for another day, while fellow platinum miner Lonmin (LSE: LMI) declined marginally. Specialty chemicals company Johnson Matthey (LSE: JMAT) made small gains, as did mid-tier gold producer Peter Hambro Mining (LSE: POG).
Silver producers didn’t fare much better as FTSE 100 constituent Fresnillo (LSE: FRES) again got off to a weak start, slumping 3%, while mid tier silver miner Hochschild Mining (LSE: HOC) shed 1%, as did gold miner Randgold Resources (LSE: RRS).
Juniors didn’t show much movement.
Copper and gold miner EMED Mining (AIM: EMED) tacked on about 6% to wipe out yesterday’s losses, but Africa operating gold miner GMA Resources (AIM: GMA) and nickel and platinum focused Australia and South Africa operating miner Braemore Resources (AIM: BRR) declined about 5% each.
And so do base metal miners
Base metal prices also picked up to make for recent losses.
Copper improved slightly, rising to US$2.88/pound, while Nickel climbed to US$8.92/pound. Zinc added 1 cent to reach US$0.83/pound.
Majors were all in decline.
Copper miner Kazakhmys (LSE: KAZ) dropped 1%, while peer Antofagasta (LSE: ANTO), tumbled 4% after disappointing investors with weak interim results and following an almost 2% decline yesterday prior to the release of the report.
World’s largest miner BHP Billiton (LSE: BLT) was sitting just below the opening level, while Rio Tinto (LSE: RIO) and Xstrata (LSE: XTA) retreated 1.6% and 2.5% respectively.
Anglo American (LSE: AAL) and Vedanta Resources (LSE VED) also posted marginal declines.
As usual, juniors were mixed.
The sector was once again led by Russian focused nickel and copper producer Amur Minerals (AIM: AMC), which rallied 28.3% following a few days of corrections after stock quadrupled last week on a reserve estimate update.
Tunisia focused metal miner Maghreb Minerals (AIM: MMS) followed with a 6% increase.
Iron ore focused investor Red Rock Resources (AIM: RRR), South American focused miner Herencia Resources (AIM: HER) and mineral investment company Regency Mines (AIM: RGM) were in decline, dipping 9-10%.
Banks, insurance, private equity
Banks were on the rise today, while insurers mostly opened flat.
Royal Bank of Scotland (LSE: RBS) and Lloyds (LSE: LLOY) got off to a good start, climbing 4% and 3.5% respectively.
Standard Chartered (LSE: STAN) also gains, adding 1.5%, but HSBC (LSE: HSBA) and Barclays (LSE: BARC) slipped into the negative in midmorning trade.
Insurers were headed in different directions today, but did not move by much.
Legal & General (LSE: LGEN) led the group with a 1.2% climb, while Old Mutual (LSE: OML) and Prudential (LSE: PRU) followed with insignificant gains.
Aviva (LSE: AV), Friends Provident (LSE: FP) and Standard Life (LSE: SL) all fell less than 1%.
Small Cap Movers
Other notables among the small caps included Computer-Aided Detection (CAD) and image analysis software specialist, Medicsight (AIM: MDST), which corrected after making strong gains this week, shedding 10%.
Large and Mid Cap News
In its Zambian Joint Venture with BHP Billiton exploring for Iron Oxide Copper Gold (IOCG) systems, Blackthorn Resources (ASX: BTR) has regularly reported over the past year, intersections of mineralised copper and gold. The Phase 3B drilling program at Mumbwa JV Project is being managed and funded by BHP Billiton, who have completed drilling additional holes over the mineralised Kitumba Anomaly.
FTSE 100 constituent, Serco (LSE: SRP) reported solid first half results and confirmed that it was making “excellent progress” integrating SI International which it acquired earlier this year to build its presence in the United States. First half revenues rose 30.8% to £1.95 billion, or by 10.8% excluding currency movements and the SI International acquisition.
Shares in Melrose Resources (LSE: MRS), the FTSE 2500 oil and gas producer with assets in Europe, the US and Africa, were under pressure this morning despite the positive outlook for the full year offered in the company’s interim statement released today.
Chilean copper miner and FTSE 100 constituent Antofagasta plc (LSE: ANTO) released a disappointing set of interim results today, sending its shares down despite an improved production guidance for the full year.
Small Cap News
Plastic and paperboard packaging company, Robinson plc (AIM: RBN) fell 15% in early deals after the company reported that it had swung to a first half loss and would by cutting the interim dividend by a third.
Indonesian focused coal miner Churchill Mining (AIM: CHL) said today its East Kutai Coal Project (EKCP) now had 1.333 million tonnes (Mt) of JORC Measured and Indicated Resource, which could increase in the course of further exploration.
South American focused gold producer Minera IRL (AIM: MIRL) said today it has agreed to acquire a 942 hectare (ha) property adjacent to its Corihuarmi Gold Mine. The Bethania property El Alcatraz 12 is about 10 kilometres removed from the Corihuarmi project.
Product and services supplier to the broadcast, entertainment and photographic industries, Vitec Group (LSE: VTC) reported a slight increase in revenues, thanks largely to positive currency movements, but said it continued to face “extremely difficult market conditions”.
Extract Resources (ASX & TSX: EXT) certainly doesn’t have any issue raising money. The uranium explorer and developer, who already has an impressive shareholder register, announced today that it would raise A$91 million at A$7.75 per share through eligible shareholders and institutional investors. Extract’s three largest shareholders, Kalahari Minerals (AIM: KAH), Rio Tinto (LSE & ASX: RIO) and Polo Resources (AIM: PRE), who hold 40%, 15% and 10% respectively, confirmed that they would be taking up their rights.
Middle East focused oil & gas engineering services provider, Lamprell Plc (LSE: LAM) came under pressure this morning after the company reported that its order book sank nearly 50% and said it would not pay an interim dividend.