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  FTSE 100 slips below 5,200 as slumping prices weaken commodities
Reported by Proactive Investors on Wednesday, 21 October 2009 (on October 21, 2009)
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Overview: stock markets on both sides of the pond failed to gain much of an impetus from the strong quarterly results reported by drugmaker Pfizer (NYSE: PFE), construction and mining equipment manufacturer Caterpillar (NYSE: CAT), defence contractor Lockheed Martin (NYSE: LMT) and Yahoo (NYSE: YHOO), which were released yesterday. However, a disappointing US housing update showing slower than expected rise in housing starts and an unforeseen decline in building permits hit sentiment and weighed the markets down.
The FTSE 100 expectedly started lower as the mining sector was weakened by declines in metal prices with Indian miner Vedanta Resources (LSE: VED) and silver producer Fresnillo (LSE: FRES) emerging as the heaviest fallers among the miners with each shedding more than 2%.
Technology firm Smiths Group (LSE: SMIN) and broadcaster BSkyB (LSE: BSY), which are both trading ex-dividend today, led the fallers with declines of 4.5% and 4% respectively. Asset management company Man Group (LSE: EMG) also was in selling more, shedding 2.5%.
Plumbing and heating materials supplier Wolseley (LSE: WOS) emerged atop the leaderboard with a 2.5% climb following an upgrade from Bank of America Merrill Lynch, which raised it to “buy” from “underperform.” Supermarket chain Tesco (LSE: TSCO) also did well, tacking on 2% after broker Nomura upper its price target to 526 pence from 405 pence. Medical devices manufacturer Smith and Nephew (LSE: SN) and caterer Admiral Group (LSE: ADM) made it to the leaderboard with gains of about 1%.
The corporate reporting season is set to continue in the US with Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC) and Boeing (NYSE: BA) due to release their Q3 results today. Meanwhile, stock index futures in the US pointed to a lower start on Wall Street today with the Dow Jones futures declining 47 points, while S&P 500 futures were down 5.7 points.
Commodities
Oil prices inched lower today with December Brent Crude moving down to US$76.41/barrel and US light, sweet crude for December delivery declining to US$78.15/barrel.
With the exception of Petrofac (LSE: PFC) and Tullow Oil (LSE: TLW), which both remained flat, major oil and gas stocks were in decline this morning.
Supermajors BP (LSE: BP) and Shell (LSE: RDSB) both shed about 1%. Cairn Energy (LSE: CNE) declined 1.9%. BG Group (LSE: BG) was at the bottom of the pile with a 2.6% slide, pushing it down to 1,125 pence per share.
Midcaps fell into the same pattern with Heritage Oil (LSE: HOIL) adding 1.2% to recover from its recent losses, while Dana Petroleum (LSE: DNX) lost 1.3% and Dragon Oil (LSE: DGO) declined marginally.
Iraq and Algeria operating junior Gulf Keystone Petroleum (AIM: GKP) gave back its yesterday’s gains, dipping 7.2%. North American based explorer Nighthawk Energy (AIM: HAWK), Peru, Colombia and Cuba operating oil and gas explorer and producer Gold Oil (LSE: GOO) and Europe focused oil and gas developer Ascent Resources (AIM: AST) followed with all shedding 3%.
US focused junior Empyrean Energy (AIM: EME) and energy investor Xtract Energy PLC (AIM: XTR) went in a different direction, climbing 4%.
Precious metals
Gold and Silver both declined compared to yesterday’s levels, moving down to US$1,053/oz and US$17.41/oz respectively. Platinum held steady at US$1,353/oz.
All major mining stocks were in decline this morning. Platinum producer Lonmin (LSE: LMI) led the way with a 2.3% slide, while silver miner Fresnillo (LSE: FRES) lost almost 2%. Gold producer Randgold Resources (LSE: RRS) slid 1.3%.
Fellow yellow metal miner from the FTSE 250 declined 2.3%, as did fellow midcap Aquarius Platinum (LSE: AQP). Silver producer Hochschild Mining (LSE: HOC) moved down 1%.
Specialty chemicals firm and FTSE 100 constituent Johnson Matthey (LSE: JMAT) managed to keep its losses to a minimum.
Most juniors also were in decline. Uzbekistan focused gold miner Oxus Gold (AIM: OXS) and diamond miner with assets in Sierra Leone and Guinea West African Diamonds (AIM: WAD), which released its full year results this morning, were at the bottom of the pile with losses of 8% and 7% respectively.
London listed Australian gold producer Leyshon Resources (AIM: LRL) also dropped 7%.
Fiji focused gold miner Vatukoula Gold Mines (AIM: VGM) and Brazil focused gold miner Horizonte Minerals (AIM: HZM) followed with losses of almost 5%.
UK-registered China operating copper and gold miner Central China Goldfields (AIM: GGG) and Canada based junior gold developer Rambler Metals and Mining Plc (AIM: RMM) were down 3%.
African focused nickel and gold exploration and development junior Nyota Minerals (AIM & ASX: NYO) went against the tide with a 3.5% climb.
Base metals
Copper and Nickel continued slumping in the morning, declining to US$2.90/pound and US$8.47/pound. Zinc, however, was on the rise, climbing back to US$0.95/pound.
Base metals focused stocks turned red in early trade. Kazakhmys (LSE: KAZ) was the leading faller with a 3.2% decline. Vedanta Resources (LSE: VED) and Anglo American (LSE: AAL) both shed 2%, while Xstrata (LSE: XTA) and BHP Billiton (LSE: BLT) lost more than 1.5%.
Rio Tinto (LS:EE RIO) was down 1%, while Antofagasta (LSE: ANTO) declined marginally.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) moved with the market, shedding 1.8%.
South America focused junior miner Herencia Resources (AIM: HER) led the sector with a 20% hike. Tantalum concentrate supplier with assets in Mozambique Noventa (AIM: NVTA) also was on the rise, adding more than 4%.
Tunisia focused metal miner Maghreb Minerals (AIM: MMS) was among the heaviest fallers with a 10% slide. Diversified miner Finders Resources (AIM, ASX: FND) also switched to selling mode with a 7% loss.
Indonesia operating coal miner Churchill Mining (AIM: CHL), Russia focused nickel and copper miner Amur Minerals (AIM: AMC) and cement operator Prosperity Mineral Holdings (AIM: PMHL) all declined 3%.
Banks, insurance, private equity
Financial stocks also turned negative. Royal Bank of Scotland (LSE: RBS) was the heaviest faller with a 2.7% decline, while fellow bailed out bank Lloyds (LSE: LLOY) shed 1.7%. HSBC (LSE: HSBA) declined marginally and Barclays (LSE: BARC) lost 1.3%, as did Standard Chartered (LSE: STAN).
Prudential (LSE: PRU) was the leading faller among the insurers, declining 2.6%. Friends Provident (LSE: FP) pulled back 2%. Standard Life (LSE: SL) was down 1.3%, while Aviva (LSE: AV) dropped 1.6%. Old Mutual (LSE: OML) and Legal & General (LSE: LGEN) shed about 1%, while RSA Insurance Group (LSE: RSA) declined marginally.
Private equity group 3i (LSE: III) lost 2.6%.
Large and Mid Cap News
A rebound in demand from Chinese steel mills has boosted BHP Billiton (LSE: BLT, ASX: BHP) to a record September quarter in iron ore production. BHP's iron ore production was one per cent higher, at 30 million tonnes on the same time last year. However, the real gain was the 11 per cent jump on June quarter production.
Home Retail Group (LSE: HOME) announced its half year results, the statement reveals that the UK based retail group remained competitive and increased its market share at its primary stores. During period, the trading performance at both Argos and Homebase has exceeded management expectations.
UK airport operator BAA, which is a subsidiary of Grupo Ferrovial (IBEX: FER), has reached an agreement to sell London’s Gatwick airport to Global Infrastructure Partnership for £1.51bn. The transaction is expected to be completed on 3 December 2009.
This morning Asia focused, mid-tier oil & gas producer Salamander Energy plc (LSE: SMDR) and AIM’s Serica Energy (AIM & TSX: SQZ) are preparing to restart production from their Kambuna gas field joint venture offshore North Sumatra. Production at the Kambuna field has been temporarily suspended over the past month.
Small Cap News
Brisbane-based resources company Discovery Metals (ASX: DML, AIM: DME) has requested a trading halt on the Australian Stock Exchange pending the release of an announcement regarding a material capital raising. It is standard practice for ASX listed companies to have trading suspened ahead of a capital raising. In London, shares in Discovery Metals held steady at 30.5 pence.
Cashbox (AIM: CBOX) announced that it has negotiated a two year agreement to advertise China Unionpay, a Chinese Card Scheme with over 1.8bn card holders, on its ATM machines.
Diamond miner with assets in Sierra Leone and Guinea West African Diamonds (WAD, AIM: WAD) has reported an initial diamond production at its Bomboko mine in Guinea and said it was looking to take advantage of growth opportunities in the market by growing business through acquisitions.
StatPro Group PLC (AIM: SOG), provider of portfolio analytics and data software for the asset management industry, said trading for the nine months ended September 30 2009 was in line with the directors' expectations and ahead of the comparable period in 2008.
China based travel services group, Et-china (AIM: ETC) announced record trading performance during China’s Golden Week holiday at its package tour provider, GTL.
Copper and gold miner EMED Mining (AIM: EMED) retained the ‘buy’ recommendation from broker Fox-Davies Capital, which also left its target price for the company unchanged at £0.45 pence following EMED’s statement today summing up the history and potential of its operations in Slovakia, where it plans to initiate permitting submissions for its Biely Vrch project in the next six months and commence development in 2012.
Links: Full news story
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