Overview: the FTSE 100 started the day in the red, shedding 0.3% in early trading and then sinking 1.4% as commodities slid to weaken the mining sector and the US stock market fell sharply right after the open on disappointing results from banking giants Bank of America (NYSE: BAC) and Morgan Stanley (NYSE: MS).
Bank of America posted a US$2.2 billion quarterly loss and its first full year deficit in more than 20 years after repaying bailout funds. Morgan Stanley also missed expectations, reporting earnings of US$0.29 per share compared to the projected US$0.36 per share.
The Dow Jones Industrial Average plummeted 1.7%, while the broader S&P 500 index fell 1.6% and the technology heavy NASDAQ composite was down 1.8%.
Base metal focused miners led the retreat in the UK with Antofagasta (LSE: ANTO), ENRC (LSE: ENRC) and Xstrata (LSE: XTA) sinking to the bottom of the pile with losses of over 6%. Other notable fallers included hedge fund manager Man Group (LSE: EMG), which shed about 4%.
Not much was happening on the leaderboard with just four FTSE 100 constituents tacking on more than 1%.
Pharmaceutical company Shire (LSE: SHP) and communications group Cable & Wireless (LSE: CW) were in the lead, advancing 2.5% and 2% respectively. Airline British Airways (LSE: BAY) and communications services group WPP (LSE: WPP) gains about 1.5%. Scottish and Southern Energy (LSE: SSE) and utility companies Severn Trent (LSE: SVT) and United Utilities (LSE: UU) came close, adding nearly 1%.
The negative news form the US erased any positive impact from today’s UK jobless update, which showed the greatest decline in two and a half year as benefit claims decreased by 15,200 to keep the rate at 5%.
Oil prices declined today to push down most oil and gas stocks in London.
Oil got hit by a stronger US Dollar, which reached its five month highs against the euro, making oil more expensive for holders of other currencies to curb the demand. Demand for heating fuel keeps falling as the weather gets better in the world’s key energy consumers including Europe, the US and China, which saw abnormally cold temperatures this part winter, while the European markets declined today to further weaken commodities.
March Brent Crude slid below US$77 to settle at US$76.55/barrel, while US light, sweet crude moved down to US$78.08/barrel.
Most major oil and gas companies were in decline today. Tullow Oil (LSE: TLW) was at the bottom of the pile with a 2.2% drop, while Cairn Energy (LSE: CNE) lost nearly 2% and BG Group (LSE: BG) posted a small loss, as did supermajors BP (LSE: BP) and Shell (LSE: RDSB).
Services companies Amec (LSE: AMEC) and Petrofac (LSE: PFC) were flat.
Midcaps followed the trend with Salamander Energy (LSE: SMDR) leading the retreat with a 4% loss, while Heritage Oil (LSE: HOIL) lost 3% and Melrose Resources (LSE: MRS) and Soco International (LSE: SIA) were down 2%. Dana Petroleum (LSE: DNX) was 1.5% lower. Dragon Oil (LSE: DGO), JKX Oil & Gas (LSE: JKX) and Premier Oil (LSE: PMO) all shed 1%.
Wellstream Holdings (LSE: WSM) was 1% lower, while fellow services company Wood Group (LSE: WG) went against the tide with a 1.6% climb.
Eastern Europe focused junior Aurelian Oil & Gas (AIM: AUL) and energy investor Xtract Energy PLC (AIM: XTR), which updated the market on the progress made by its Turkish associate company Extrem Energy, were the top performers among the small caps with gains of 6% and 5.5% respectively.
Africa focused energy company Dominion Petroleum (AIM: DPL) and North Sea explorers Xcite Energy (AIM: XEL) moved with the sector with losses of over 3%.
Gold, silver and platinum slide
Precious metals also got hit by a stronger US Dollar as gold slipped to US$1,123/oz, while silver and platinum declined to US$18.43/oz and US$1,625/oz respectively.
The US Dollar Index, which measures the greenback’s strength against a basket of six other currencies, rose 1% today, curbing demand for gold, which is seen as an investment alternative to the dollar.
Meanwhile, the yellow metal continues to be in selling mode as holdings in the largest gold backed exchange fund SPDR fell by a further 0.91 metric ton to 1,112 tonnes.
Mining stocks were in correction today with platinum miner Lonmin (LSE: LMI) emerging as the heaviest faller in the sector in the FTSE 100 with a 4.7% loss, while gold miner Randgold Resources (LSE: RRS) and silver producer Fresnillo (LSE: FRES) lost 2.3% and 2.7% respectively.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) declined 3.3%.
Midcap miners suffered steeper losses. Aquarius Platinum (LSE: AQP) and silver producer Hochschild Mining (LSE: HOC) lost more than 5%, while fellow FTSE 250 constituent gold miner Petropavlovsk (LSE: POG) did relatively well, shedding just 1.5%.
Fiji focused gold miner Vatukoula Gold Mines (AIM: VGM) was one of the top performers among the juniors with a 3.5% climb.
Kazakhstan operating gold producer and copper developer Frontier Mining (AIM: FML), South Africa and Botswana operating diamond miner Firestone Diamonds (AIM: FDI) and Commodity asset development company Mercator Gold (AIM: MCR) moved with the sector, shedding 8%, 6% and 4.5% respectively. Tajikistan operating gold miner Kryso Resources (AIM: KYS) and Africa operating gold miner GMA Resources (AIM: GMA) were down 3.7%, while Western Australia operating Norseman Gold (AIM: NGL) slid 3%.
Miners tumble as copper and nickel decline
Base metals also eased today with copper and nickel moving down to US$3.36/lb and US$8.55/lb, while zinc retreated to US$1.11/lb.
Base metal focused miners were the heaviest fallers among the blue chips today. Antofagasta (LSE: ANTO), Eurasian Natural Resources (LSE: ENRC) and Xstrata (LSE: XTA) were at the bottom of the pile with losses of 6%.
Anglo American (LSE: AAL) and Kazakhmys (LSE: KAZ) dropped 5%, while Vedanta Resources (LSE: VED) was down 4.5%, Rio Tinto (LSE: RIO) declined 4% and BHP Billiton (LSE: BLT) lost 3.5%.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) moved with the sector, shedding 4.5%.
Zinc miner Connemara Mining (AIM: CON) led the juniors with an 11% rally after releasing an update from its Stonepark project. Copper and nickel explorer Regency Mines (AIM: RGM) followed with a 9.5% surge.
South American focused junior miner Herencia Resources (AIM: HER) and iron ore focused investor Red Rock Resources (AIM: RRR) climbed 5% and 4.5% respectively. Indonesia operating coal miner Churchill Mining (AIM: CHL) also did well, tacking on 3%.
Laterite nickel specialist European Nickel (AIM: ENK) and London Mining (AIM: LOND) headed in the opposite direction, shedding 4% and 3.5% respectively.
Banks, insurance, private equity
Financial stocks also were in selling mode today. Barclays (LSE: BARC) was at the bottom of the banking sector with a 2.6% decline, while Standard Chartered (LSE: STAN) followed with a 2.3% slide. Lloyds (LSE: LLOY) dropped 1%, while fellow bailed out bank Royal Bank of Scotland (LSE: RBS) declined marginally. HSBC (LSE: HSBA) also lost 1%.
Legal & General (LSE: LGEN) slid to the bottom of the insurance sector with a 1.6% loss, while Standard Life (LSE: SL) was down 1% and Prudential (LSE: PRU) and RSA Insurance Group (LSE: RSA) declined marginally.
Admiral Group (LSE: ADM), Aviva (LSE: AV) and Old Mutual (LSE: OML) were unmoved.
Private equity group 3i (LSE: III) lost nearly 1%.
Small Cap Movers
Other notable movers among the small caps included UK based electrical components producer and supplier Cinpart (AIM: CINP) with a 15% rally. Forte Energy (AIM: FTE) also was in demand, tacking on 6.5%. Machine to machine (M2M) communications specialist Telit Communications (AIM: TCM) was down 6%.
Large and Mid Cap News
UK Pubs group JD Wetherspoon PLC (LSE: JDW) said that, with continuing sales growth and an increased opening programme, it remains confident of the company's prospects for the financial year ending 25 July 2010.
BHP Billiton (ASX: BHP; LSE: BLT) reported record half-yearly production in its iron ore and petroleum businesses for the period to December 31 2009, producing approximately 62.5 million tonnes of iron ore and 79.57 million barrels of oil equivalent (boe).
During the three months ended 31 December 2009, Hochschild Mining (LSE: HOC) produced 6.8 million silver equivalent ounces, taking full year production through its targeted 28 million attributable silver equivalent ounces. At 28.2 million ounces, silver production in 2009 increased by 8% on the previous year. Hochschild has once again delivered on its production targets and proven the operational strength of the business, chief executive Miguel Aramburú said.
FTSE250 oil company Soco international (LSE: SIA) announced plans to place up to 7,234,347 new ordinary shares. Soco plans to use the proceeds to help bring 50,000 barrels of oil per day (bopd) on-stream in Vietnam by mid-2011 and fund a new high-impact exploration project in the Democratic Republic of Congo (Kinshasa) and Republic of Congo (Brazzaville), targeting 700 million barrels of potential recoverable reserves.
FTSE250 oil company Soco international (LSE: SIA) has raised £102 million through the issue of 7,234,347 new ordinary shares to institutional investors, at a price of 1410p per new share. The placing shares represent’s an increase of approximately 9.6% in SOCO's existing share capital.
Small Cap News
UK and Europe focused online publishing business Play LA Inc (OTCBB: PLLAF) said it acquired poker news portal www.pokernewsheadlines.com, in effect adding six new websites to its portfolio. It did not provide financial details.
Dual listed Range Resources' (ASX: RRS; AIM: RRL) executive director Peter Landau has advised that the company's one (1) for four (4) non-renounceable entitlement issue at an issue price of $0.05 per share will be fully underwritten by Max Capital Pty Ltd (AFSL: 264772).
Connemara Mining (AIM: CON) reported more results from the ongoing step-out drilling programme at the Stonepark project in County Limerick, Ireland, saying that two holes intersected more high grade zinc-lead ore, indicating the presence of a continuous zone of zinc-lead mineralisation. Shares were up more than 8 percent in morning trade, albeit off earlier highs.
Oxford BioMedica’s (LSE: OXB) UshStat gene therapy for Usher syndrome 1B has received orphan drug designation from the European Medicines Agency (EMEA). European ‘orphan drugs’ benefit from incentives, including ten years of marketing exclusivity and reduced regulatory fees. Clinical development of UshStat is expected to start in 2011, in collaboration with Sanofi-Aventis (NYSE: SNY).
Regal Petroleum (AIM: RPT) said its current total daily field production rates went up to 2,166 boepd (barrels of oil per day) as production from the SV-58 well at the Svyrydivske gas and condensate field in Ukraine improved after a successful abrasive perforation trial.
Serica Energy plc (TSX-V & AIM: SQZ) agreed a farm-out deal for the UK East Irish Sea Blocks 113/26b and 113/27c, containing the Conan and Doyle prospects. Agora Oil & Gas will earn a 35% interest in the blocks through the 70% financing of a 5,000ft exploration well on the Conan prospect. The proposed drilling is planned to be conducted in the second quarter of 2010.
Xtract Energy (AIM: XTR) said that the average daily natural flow rate from the Sarikiz-2 well in Turkey operated by the Extrem Energy joint venture has been approximately 60 barrels per day net oil following the start of production on 13 January, which was consistent with management expectations and with the previously projected pumped flow-rate.
African Aura Mining (AIM: AAAM, TSX-V: AUR) has announced the appointment of head of strategy and corporate development at Russian steel and mining giant Severstal, Boris Granovsky, as a non-executive director of the company.
In a note to investors, London based independent stockbroker Ocean Equities Ltd said that exploration results from Ethiopian operating gold junior Nyota Minerals (ASX, AIM: NYO) made good reading. Furthermore the broker claimed the report contained two headline grabbing results, consequently they believe that the Tulu Kapi gold resource may dwarf Ocean’s initial 1 million ounce (Moz) estimate.
China Wonder (AIM: CWO) has announced an agreement with Wonder Employees Capital Limited (WECL) to borrow £200,000 for three years at a 5% annual interest.
Circle Oil (AIM: COP) said that the Geyad-2X ST1 appraisal well has been successfully drilled and tested in the onshore North West Gemsa Concession in Egypt, flowing oil at sustained average rates of 3,850 bopd (barrels of oil per day) and gas at 4.62 mmscfd (million standard square feet per day).
Industrial support service group Cape (AIM: CUI) has been awarded a five year service contract worth £150 million from BP (LSE: BP). The company will provide maintenance support and deck operations on all of BP's nine UK North Sea assets. Cape will also provide onshore maintenance services at BP's Dimlington Gas Terminal, Yorkshire.
Irish headquartered mineral exploration and development company Minco Plc (AIM: MIO) said that its 60% owned Canadian subsidiary Xtierra Inc (TSX-V: XAG) has agreed a non brokered private placement of up to C$5 million. Proceeds of the placing will be used to fund further metallurgical testing and feasibility work on Xtierra's Bilbao silver‐zinc‐copper project in Zacatecas, Mexico.
Cinpart (AIM: CINP) confirmed speculation that its 72.2% owned power optimisation system manufacturing business, Active Energy, is in advanced discussions with a blue chip energy supplier regarding a memorandum of understanding relating to the development of new markets for the VoltageMaster product, a voltage reduction and/or optimisation device.
Nyota Minerals Ltd (ASX, AIM: NYO) said further exploration at its Tulu Kapi gold project in Ethiopia has increased the known extent of the ore body and, in addition, identified a new zone of mineralisation below the previously discovered Zones 1 and 2.