Overview: the US stock market took a dive this morning following a string of disappointing economic updates from around the world on top of yesterday’s cautious comments on the strength of the ongoing economic recovery by Fed Chairman Ben Bernanke. Today's update on German industrial production revealed an unexpected 1.8% decline, which a marginal gain was expected after a 3.1% increase in September, while concerns over Dubai’s debt situation were revived after the emirate’s finance minister said six months would likely not be sufficient to restructure state-owned conglomerate Dubai World. Rating agency Moody’s later downgraded six Dubai-linked issuers.
The Dow Jones Industrial Average tumbled 1.1% early in the session, while the broader Standard&Poor's 500 index slid 0.9% and the technology heavy Nasdaq composite declined 0.8%.
The FTSE 100 stood 1.7% down before trading was halted with Royal Bank of Scotland (LSE: RBS) leading the retreat with a 6.7% loss. Peers Standard Chartered (LSE: STAN) and Barclays (LSE: BARC) were close, sliding 3%.
Commercial property companies also were in selling mode today with Segro (LSE: SGRO), Hammerson (LSE: HMSO), Land Securities (LSE: LAND) and British Land (LSE: BLND) shedding more than 3.5%.
Just one FTSE 100 constituent, publisher Pearson (LSE: PSON), managed to tack on more than 1%. Tour company Thomas Cook (LSE: TCG) came close with a gain of nearly 1%.
Commodities
Oil prices slid today as January Brent Crude retreated to US$75.45/barrel and US light, sweet crude for January delivery declined to US$72.81/barrel.
Most major oil stocks declined today. Cairn Energy (LSE: CNE) was at the bottom of the pile with a 2.5% loss, while BG Group (LSE: BG) followed with a loss of nearly 2%.
Petrofac (LSE: PFC) was down 1.2% and Tullow Oil (LSE: TLW) declined marginally.
Shell (LSE: RDSB) pulled back 1.7%, while fellow supermajor BP (LSE: BP) retreated 1%.
Midcaps were mixed as while Heritage Oil (LSE: HOIL) tacked on nearly 1%, Dragon Oil (LSE: DGO) posted a small loss and Dana Petroleum (LSE: DNX) retreated 3%.
Africa focused energy company Dominion Petroleum (AIM: DPL) performed well, tacking on 5%, while most other small caps were in decline.
US focused junior Empyrean Energy (AIM: EME) and Peru, Colombia and Cuba operating oil and gas explorer and producer Gold Oil (LSE: GOO) were among the biggest fallers in the sector with each shedding 7%.
Ukraine focused gas producer, Regal Petroleum (AIM: RPT), Europe focused oil and gas developer Ascent Resources (AIM: AST) and Atlantic Canada operating oil and gas group Enegi Oil (AIM: ENEG) retreated 6%, 5% and 4%, respectively.
Miners tumble as gold and silver drop
Precious metals turned early gains into losses. Gold dropped to US$1,147/oz, while silver and platinum retreated to US$17.92/oz and US$1,439/oz respectively.
All major miners switched to selling mode today. In the FTSE 100, gold miner Randgold Resources (LSE: RRS) retreated 1%, while silver producer Fresnillo (LSE: FRES) and Lonmin (LSE: LMI) lost more than 3%.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) was down 2.5%.
Midcaps Aquarius Platinum (LSE: AQP), gold miner Petropavlovsk (LSE: POG) and silver producer Hochschild Mining (LSE: HOC) all shed more than 2% today.
Most small caps followed and moved in the same direction as the blue chips.
Africa operating gold and platinum miner Goldplat (AIM: GDP) tumbled 8.5% to sink to the bottom of the pile, while Philippines focused Metals Exploration (AIM: MML) moved down 8%. Lesotho operating diamond miner Kopane Diamond Developments (AIM: KDD) and South American based explorer Mariana Resources (AIM: MARL) were down 6% and Africa operating gold miner GMA Resources (AIM: GMA) slipped 5%.
Copper and gold miner EMED Mining (AIM: EMED), South Africa and Botswana operating diamond miner Firestone Diamonds (AIM: FDI) and Canada based junior gold developer Rambler Metals and Mining Plc (AIM: RMM) declined 4%, while Australian gold and copper prospector Solomon Gold (AIM: SOLG) lost 4.5%.
Turkey and Ethiopia operating gold miner Stratex International (AIM: STI) slipped 7%.
Copper and nickel retreat
Base metals gave up some of their early gains as copper returned to US$3.17/lb, while nickel and zinc retreated to US$7.12/lb and US$1.03/lb respectively.
Base metals focused stocks also fell today. Xstrata (LSE: XTA) sank to the bottom of the pile with a 3.3% loss.
Anglo American (LSE: AAL) shed nearly 3%, while Eurasian Natural Resources (LSE: ENRC), Kazakhmys (LSE: KAZ) and Rio Tinto (LSE: RIO) were down 2% and BHP Billiton (LSE: BLT) lost 2.5%. Vedanta Resources (LSE: VED) and Antofagasta (LSE: ANTO) both shed more than 1.5%.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) did slightly better, posting a small loss.
Australia focused coking coal producer Caledon Resources (AIM: CDN) was the biggest faller in the sector with a 30% plunge after deciding against the sale of the company, citing the positive outlook for coal and the “opportunities at hand” as the rationales for retaining the status of an independent coal producer.
Zinc miner Connemara Mining (AIM: CON) and cement operator Prosperity Mineral Holdings (AIM: PMHL) followed with losses of 11%, while Botswana operating nickel and copper miner Discovery Metals (AIM: DME) slid 6.5%.
Zinc mining and recycling specialist ZincOX (AIM: ZOX) outperformed the sector with a 7% climb.
Banks, insurance, private equity
Royal Bank of Scotland (LSE: RBS) was the heaviest faller in the banking sector with a 6.7% loss. Standard Chartered (LSE: STAN) and Barclays (LSE: BARC) both slid 3%, while HSBC (LSE: HSBA) was down 2.3%. Part-nationalised bank Lloyds (LSE: LLOY) was the top performer among the banks with a marginal gain.
Admiral Group (LSE: ADM) was the top performer in the insurance sector with a 1% gain. Prudential (LSE: PRU) and Standard Life (LSE: SL) were the biggest fallers with losses of 3%. Legal & General (LSE: LGEN) lost 2.5%, while Aviva (LSE: AV), Old Mutual (LSE: OML) and RSA Insurance Group (LSE: RSA) retreated 1.5%.
Private equity group 3i (LSE: III) lost less than 1%.
Small Cap Movers
Other notable movers among the small caps included African Aura Mining (AIM: AAAM) and African Medical Investments (AIM: AMEI), which gained 7.3% and 6% respectively. Novel eco-technology company for human, animal and environmental health TyraTech (AIM: TYR) tumbled 14%.
Large and Mid Cap News
This morning mid-tier oil producer, Tullow Oil (LSE: TLW) reported a number of developments among its exploration projects.
FTSE100 constituent Xstrata (LSE: XTA) announced total write-downs of approximately US$2.45 billion relating to its nickel businesses and its copper-zinc custom smelting operations in Canada. In its nickel businesses the international miner expects to incur US$1.9bn in impairments. In Canada the FTSE100 miner will permanently close it copper and zinc metallurgical plants at the Kidd mine incurring total charges of $545.
In its third quarter management statement for the period ended 28 November 2009, FTSE100 retailer Tesco (LSE: TSCO) revealed an improving performance with an 8.8% increase in group sales (excluding fuel). The supermarket giant said it has seen strong growth in its UK operations and the overall group continues to perform in-line with expectations.
Small Cap News
African Medical Investments (AIM: AMEI) has entered into an agreement with African insurer Interhealth Technologies Limited, whose members will now be directed towards African Medical’s portfolio of private boutique hospitals, trauma centres and Well Woman clinics, should they require medical attention.
GMA Resources (AIM: GMA) said that its Amesmessa gold mine in Algeria produced 2,252 oz (ounces) of gold and 447 oz of silver in November, bringing the total production for the first 11 months of the year up to 30,987 oz of gold compared to 18,619 for the equivalent period of the precious year.
AIM listed life science group, Verona Pharma plc (AIM: VRP.L) announced its intention to raise £3 million, through a private placing arranged by Evolution Securities. The AIM listed drug developer expects to issue approximately 23.2 million shares at 13p. Proceeds will be applied to further develop company's lead drug, RPL554 and its two other drug development projects Cough and NAIPs.
Chinese coal bed methane developer Green Dragon Gas (AIM: GGG) is now debtless after raising US$75 million via an equity issue to repay US$55 million to redeem in full the only remaining outstanding convertible bond.
Uranium and copper explorer Kalahari Minerals (AIM: KAH) today reported a drilling update from its 40.44% owned Extract Resources Ltd (TSX, ASX: EXT) for the Rossing South uranium deposit at the Husab project in Namibia, where exploration efforts are currently being accelerated with new rigs set to be sourced to the site.
European computer game retailer, The GAME Group (LSE: GMG) disappointed investors with its interim trading statement, in the pre-Christmas update the FTSE250 retailer said it was cautious ahead of the critical period. In the year to date groups sales have been in decline. Investors haven’t taken kindly to the news - the company’s shares dropped over 14% this morning.
Stratex International PLC (AIM: STI) said chief executive Robert Foster bought 59,523 shares in the company at 3.36 pence each and finance director Perry Ashwood bought 27,321 shares at 3.60p.
Wind farm owner and operator Indian Energy Ltd (AIM: IEL) said it has entered into an agreement with ReGen Powertech Private Ltd for the construction of a 49.5 MegaWatt wind farm at Theni in the Southern Indian state of Tamil Nadu, the second farm in its portfolio.
Britain’s largest care home provider, Southern Cross Healthcare (LSE: SCHE) announced its preliminary results for the year ended 27th September 2009. Over the course of the year revenues increased by 5.4% to £937.1m and net debt was reduced by £64.4m to £33.1m. The FTSE250 healthcare company said that it plans to re-instate its dividend in the coming year.
European Nickel PLC (AIM, PLUS: ENK) said Endeavour Financial Corp has agreed to increase the US$4 million bridge loan facility currently in place by US$1 million and to extend its maturity date to March 1 2010.
Australia focused coking coal producer, Caledon Resources (AIM: CDN, ASX: CCD) confirmed this morning that after approximately ten months of negotiations with possible suitors, that it had decided to end takeover discussions.
AFC Energy (AIM: AFC) has entered into a binding heads of agreement with Linc Energy (ASX: LNC) to integrate the AFC Fuel Cell System for use in Linc Energy’s Underground Coal Gasification projects, to tap into what AFC called a “rapidly emerging” and the largest potential market for power generation from underground coal.
Oil and gas exploration and production company Ascent Resources PLC (AIM: AST) announced the termination of the asset management joint venture with Switzerland-based San Severina Holdings SA entered in October 2008.
Tajikistan operating gold miner Kryso Resources (AIM: KYS) has announced the appointment of founding director and Chief Executive of ALTUS Resource Capital Limited (LSE: ARCL) Steven Poulton as a non-executive director pursuant to the subscription for shares in Kryso by ALTUS from three months ago.
Zimbabwe focused investment company LonZim PLC (AIM: LZM) said its 60 percent-held and Zimbabwe Stock Exchange-listed business Celsys Ltd has reported improvements in its trading performance for the first quarter of the 2009/2010 financial year.
Environmental science and technology company Accsys Technologies (AIM: AXS) has proposed an equity issue to raise €17 million for working capital purposes and to support the Accoya wood production at its plant in Arnhem.