Overview: following three days of declines, the FTSE 100 finally seemed to be on track to post gains after the UK markets got off to a fast start, sending key indices up on Friday morning. The blue chip index climbed 45 points shortly after trading began on another round of big gains from miners, major banking groups and insurers, which were responding to higher metal prices and improved recovery sentiment following a strong trading session in the US, where the Dow Jones industrial average closed 63 points higher on Thursday.
The markets further built on the momentum from manufacturing and home sales updates released earlier in the week when the August retail sales data came out of the US, producing a lower than expected rate of decline, accounting for the Dow’s late climb. Asian markets also responded positively as Chinese stocks posted the third consecutive day of gains.
At the same time, gold continued its climb, reaching almost US$1,000, reflecting the persisting uncertainty among the investors, which are still trying to avert risks and see investments in precious metals as a safe haven.
Key movers: in the black
Precious metals miners were still reaping gains from higher prices, but less so than before as profit taking weighed in, keeping blue chip miners to smaller gains. However, Lonmin (LSE: LMI) and Kazkahmys (LSE: KAZ) emerged as the market’s leading risers early in the day, advancing 7.8% and 5% respectively.
Unlike yesterday, financial stocks outnumbered the miners on the leaderboard. Lloyds (LSE LLOY), which fell heavily on £10 billion cash call rumours a couple of days ago, led the banks with a 4.1% gain, while another partly nationalised bank Royal Bank of Scotland (LSE: RBS) followed with an almost 3% climb.
Mobile network operator Vodafone (LSE: VOD), which is reportedly in talks over a possible sale of Deutsche Telekom’s T-Mobile UK unit, also gained.
Insurer Legal & General (LSE: LGEN) led the financials with a 4.6% surge, while sector peers Aviva (LSE: AV) and Old Mutual (LSE: OML) rallied 4% and 3% respectively. Commercial property companies also were represented in the top risers group with Hammerson (LSE: HMSO), British Land (LSE: BLND) and Land Securities Group (LSE: LAND) climbing about 3%.
Key movers: in the red
A few companies moved after broker updates, including publishing company Reed Elsevier (LSE: REL), which gained almost 2% after making it to Goldman Sachs’ conviction buy list. However, sector peer Pearson (LSE: PSON) declined after Goldman downgraded it to “sell” from “neutral.”
No FTSE 100 constituent was down more than 1% in the morning. BP (LSE: BP) came closer than anyone else, correcting about 0.8% on profit taking after the announcement of a major discovery in the Gulf of Mexico made earlier in the week. Consumer goods company and maker of the Dove soap Unilever (LSE: ULVR) seemed to be on its way to post a third consecutive day of declines, shedding a further 0.6%.
FTSE 250
Midcaps also got off to a good start, sending the mid tier index up 100 points by mid morning. Housebuilder Barratt Developments (LSE: BDEV) and yellow pages phone directory publisher Yell Group (LSE: YELL) were in the lead, with gains of 6% and 7% respectively. The mid tier index also had a precious metals miner among the leaders with platinum producer Aquarius Platinum (LSE: AQP) making it to the top three with a 6.6% advance. Materials technology company Cookson Group (LSE: CKSN) followed with a 5.3% gain.
Just like in the blue chip index, there haven’t been many prominent fallers in the FTSE 250. Kitchen cabinet business Galiform (LSE: GFRM) was at the bottom of the pile with a 1.6% loss. Transport operator FirstGroup (LSE: FGP) and online gaming specialist 888 Holdings (LSE: 888) followed, also losing a little over 1%. Other notable fallers included investment companies Absolute Return Trust (LSE: ABR) and JP Morgan European Fledgling (LSE: JFF).
Commodities
This week’s better than expected supply data and mixed recovery outlook factored in commodity trading, as oil fluctuated within a narrow range, with key benchmarks ending up around the US$68/barrel mark, just about the level they were at yesterday.
US light crude fell just a few cents below US$68/barrel, while Brent Crude slightly improved to US$67.2/barrel.
British Petroleum (LSE: BP) was still correcting after announcing a major discovery in the Gulf of Mexico on Wednesday, while fellow supermajor Shell (LSE: RDSB) started the day in the black, but made little headway.
Other FTSE 100 constituents BG Group (LSE: BG) and Tullow Oil (LSE: TLW) both added over 1%, as did Petrofac (LSE: PFC). Cairn Energy (LSE: CNE) outperformed other energy stocks with a 3% climb.
Sector peers from FTSE 250 also did well with Dana Petroleum (LSE: DNX) adding 2.5%, while Dragon Oil (LSE: DGO) climbed almost 2%. Heritage Oil (LSE: HOIL) was sitting just above the opening level.
Save for a few companies, juniors didn’t move by much in early trade.
After adding over 20% yesterday, Latin American focused Gold Oil (AIM: GOO) climbed a further 10%, but was beaten for the lead by US focused junior Empyrean Energy (AIM: EME), which surged over 12%.
Iraq and Algeria operating Gulf Keystone Petroleum (AIM: GKP) extended yesterday’s gains with a 3.5% advance.
Western Europe operating oil and gas company Northern Petroleum (AIM: NOP) went against the tide, falling 4%.
Precious metals miners rally
Recovery worries still lingered, helping Gold to yet more gains this morning to continue its climb which many analysts tie to the increased buying from investment funds. After reaching 6 month highs yesterday, the yellow metal retreated to US$988/ounce.
There is, however, potential for Gold to eclipse the US$1,000 mark as soon as today with non-farm payroll data due to be out in the US later this afternoon.
Other precious metals fell into the same pattern as Silver finally climbed over US$16, but ended up at US$15.90. Platinum was at US$1,249/ounce.
Platinum miners were in the lead with Lonmin (LSE: LMI) rallying 7.5%. Midcap Aquarius Platinum (LSE: AQP) climbed 4%.
Gold miners lost some steam, but still posted gains as Randgold Resources (LSE: RRS) added less than 1%, but midcap Peter Hambro Mining (LSE: POG) added 3%. Yamana Gold (LSE: YAU) was flat after making a 10% advance yesterday.
FTSE 100 silver producer Fresnillo (LSE: FRES) tacked on a further 3% after a strong session on Thursday. Midcap Hochschild Mining (LSE: HOC) improved 1.8%.
Specialty platinum firm Johnson Matthey (LSE: JMAT) climbed 2%.
A handful of juniors made good progress in early trade.
Uzbekistan focused gold miner Oxus Gold (AIM: OXS) recovered from yesterday’s losses, hiking 21%. UK and Canadian copper-gold producer Rambler Metals and Mining (TSXV: RAB, AIM: RMM) and Brazil focused gold miner Horizonte Minerals (AIM: HZM) followed, surging 13% and 10% respectively.
Western Australia operating Norseman Gold (AIM: NGL) also got off to a good start, climbing 6.2%.
Africa focused gold deposit developer Cluff Gold (AIM: CLF), Fiji focused gold miner Vatukoula Gold Mines (LSE: VGM) and old and copper developer and producer, Frontier Mining (AIM: FML) also started the day in the black, adding about 4% each.
Base metal miners off to good start
Base metals prices slightly improved over yesterday’s levels. Copper rose to US$2.86/pound, while Nickel’s value increased to US$8.35/pound, but Zinc improved further, reaching US$0.88/pound.
Copper miner Kazakhmys (LSE: KAZ) was the leading gainer in the group, climbing over 4%. Another copper miner Antofagasta (LSE: ANTO) rose 1.7%.
Anglo-Swiss miner Xstrata (LSE: XTA), Rio Tinto (LSE: RIO) and Vedanta Resources (LSE: VED) all improved over 2%. World’s largest miner BHP Billiton also was on the rise, adding 2%.
Anglo American (LSE: AAL) lagged behind with a 1.8% gain.
Juniors also did well.
Irish zinc producer Connemara Mining (AIM: CON) spiked 29% after saying the first drill hole of the 2009 programme in Limerick produced the best results on the project to date and may indicate a new mineralized zone with higher zinc-lead grades than the discovery it made earlier.
Coking and thermal coal producer New World Resources (LSE: NWR), Tunisia focused metal miner Maghreb Minerals (AIM: MMS) and Swiss-based Ukraine operating iron ore producer Ferrexpo (AIM: FXPO) also basked in the sun, rising over 3% each. Australia focused coking coal producer Caledon Resources (AIM: CDN) joined in with a 4% gain.
Banks, insurance, private equity
Banking stocks were lead by partly nationalised Lloyds (LSE: LLOY) and Royal Bank of Scotland (LSE: RBS), which added 3.5% and 2.7% respectively. Other major banking groups HSBC (LSE: HSBA) and Barclays (LSE: BARC) both rose over 1%, as did Standard Chartered (LSE: STAN).
Insurers did slightly better.
Legal & General (LSE: LGEN) climbed 4%, while Aviva (LSE: AV) upped its value by 4.5%. Prudential (LSE: PRU) tacked on 2% and Old Mutual (LSE: OML) was up 1.8%.
Standard Life (LSE: SL) added a little over 1% and Friends Provident (LSE: FP) rose marginally.
Private Equity group 3i (LSE: III) improved 1.5%.
Other Small Cap Movers
Notable movers among the small caps included environmental science and technology company Accsys Technologies (AIM: AXS) with a 6% climb and African investment company Lonrho PLC (AIM: LONR), which rose 3.3%.
Large and Mid Cap News
Aberdeen-based oil services group and FTSE 250 constituent Wellstream Holdings (LSE: WSM) announced today it had disposed of its non-core FlexsteelTM business, selling it to Prime Natural Resources in a US$30 million cash-only deal.
Small Cap News
Specialist asset management and advisory firm Sigma Capital Group PLC (AIM: SGM) said it expects first-half results to be significantly ahead of current market expectations, with pretax profit in excess of £1.4 million, up from £0.5 million previously.
Precious and base metals group Landore Resources Ltd (AIM: LND) reported interim results that were in line with company expectations and said it will need to raise additional funds in the fourth quarter of the current year to continue further exploration activities.
Irish zinc explorer Connemara Mining Company PLC (AIM: CON) said the first drill hole of the 2009 programme at the Stonepark project in County Limerick has shown the best results on the project to date and may indicate a new mineralised zone with potentially higher zinc-lead grades than the earlier discovery 1.5 kilometres southeast of it.