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  FTSE 100 climbs despite early fall on Wall Street as British Airways rallies on H1 report
Reported by Proactive Investors on Friday, 6 November 2009 (on November 6, 2009)
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Overview: disappointing news came out in the US this afternoon with the non-farm payrolls report showing a higher than expected increase in the unemployment rate, which climbed to 10.2% instead of the forecast 9.9%, hitting its highest level in 26 years.
Wall Street took a dive before before briefly recovering and turning negative again with the Dow Jones industrial average sliding 0.3% to slip below the 10,000 mark just a day after recapturing it. The S&P 500 index was down about 0.2% and the technology focused Nasdaq composite started Friday’s session with small losses.
The FTSE 100 remained in the positive for most of the day, however the losses on Wall Street erased it gains, pushing it down to the opening level in late afternoon. Yet the blue chip index managed to get back its early gains, ending the day about 0.3% above the opening level.
Airline British Airways (LSE: BAY) led the blue chip index with a 6% rally despite posting a record quarterly loss, while saying traffic volumes and yields stabilised.
Banks RBS (LSE: RBS) and Standard Chartered (LSE: STAN) also were in buying mode, adding more than 2.5%. Pharmaceutical company Shire (LSE: SHP), fashion house Burberry (LSE: BRBY), engineering company Invensys (LSE: ISYS) and asset management company Schroders (LSE: SDR) also tacked on more than 2%.
Pest control giant Rentokil (LSE: RTO) was the heaviest faller in the FTSE 100 despite reporting a 3.6% increase in quarterly revenues to £623 million, while pre-tax profits doubled. Insurer Old Mutual (LSE: OML) was a distant second with a 3% loss, while sector peer Admiral Group (LSE: ADM) followed with a 2.5% retreat. Energy company Centrica (LSE: CNA) declined 2%.
Commodities
Oil prices tumbled with December Brent Crude sliding to US$75.91/barrel, while US light, sweet crude for December delivery retreated to US$77.21/barrel.
Most oil stocks in the FTSE 100 were in decline. Supermajors BP (LSE: BP) and Shell (LSE: RDSB) dropped more than 1%, while BG Group (LSE: BG) lost almost 2% and Tullow Oil (LSE: TLW) posted marginal losses.
Cairn Energy (LSE: CNE) and Petrofac (LSE: PFC) did better, tacking on 1.8% and 1% respectively.
Midcaps were on the rise with Dana Petroleum (LSE: DNX) and Heritage Oil (LSE: HOIL) advancing 1.4% and 1% respectively. Dragon Oil (LSE: DGO) rose marginally.
Energy investor Xtract Energy PLC (AIM: XTR) was the leading faller in the sector, shedding 25% after its Turkish JV (joint venture) Extrem Energy suspended testing on its Alasehir-1 well.
Atlantic Canada operating oil and gas group Enegi Oil (AIM: ENEG) and US focused junior Empyrean Energy (AIM: EME) followed with losses of 8% and 5% respectively.
Europe focused oil and gas developer Ascent Resources (AIM: AST) and Western Europe operating oil and gas company Northern Petroleum (AIM: NOP) did better, tacking on more than 4%.
Gold and silver retreat
Gold briefly broke through US$1,100/oz, however slid back to US$1,093/oz later. Silver retreated to US$17.41/oz, while platinum declined to US$1,339/oz.
With the exception of silver producers, all major mining stocks were on the rise today.
FTSE 100 constituent Fresnillo (LSE: FRES) and peer from the FTSE 250 Hochschild Mining (LSE: HOC) both posted small losses.
Gold miners Randgold Resources (LSE: RRS) rose marginally, while platinum miner Lonmin (LSE: LMI) tacked on 1.5%.
Midcaps did better as gold producer Petropavlovsk (LSE: POG) and Aquarius Platinum (LSE: AQP) both advanced 3.8%.
Blue chip specialty chemicals firm Johnson Matthey (LSE: JMAT) added nearly 1%.
Latin American precious metal miner Minera IRL (AIM: MIRL) led the small caps with a 9% rally. Lesotho operating diamond miner Kopane Diamond Developments (AIM: KDD) also did well, tacking on 3.6%.
Uzbekistan focused gold miner Oxus Gold (AIM: OXS) and Fiji focused gold miner Vatukoula Gold Mines (AIM: VGM) declined, shedding 4.5% and 3% respectively.
Copper, nickel and zinc give way, but miners hold on
After making gains early in the day, base metals declined with copper and nickel sliding to US$2.93/lb and US$8.02/lb respectively. Zinc retreated to US$0.97/lb.
Anglo American (LSE: AAL) and Eurasian Natural Resources (LSE: ENRC) were in the lead with gains of almost 2%. Antofagasta (LSE: ANTO) followed with a 1.5% advance.
Rio Tinto (LSE: RIO) and Vedanta Resources (LSE: VED) both tacked on almost 1%.
BHP Billiton (LSE: BLT) was flat, while Xstrata (LSE: XTA) and Kazakhmys (LSE: KAZ) rose marginally.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) outperformed the sector, adding 2.5%.
Copper and nickel explorer Regency Mines (AIM: RGM), which launched a joint venture with Direct Nickel today, rallied 17% to emerge among the leading risers in the market. Zinc mining and recycling specialist ZincOX (AIM: ZOX) advanced 10%.
Laterite nickel specialist European Nickel (AIM: ENK) also did well, tacking on 6%.
Iron ore focused investor Red Rock Resources (AIM: RRR) and Tunisia focused metal miner Maghreb Minerals (AIM: MMS) were in selling mode, shedding almost 6%. South American focused junior miner Herencia Resources (AIM: HER) followed with a 4.5% decline.
Banks, insurance, private equity
Royal Bank of Scotland (LSE: RBS) was among the top performers in the FTSE 100 with a 5.2%. Another bailed out bank Lloyds (LSE: LLOY) lost 2%, as did HSBC (LSE: HSBA). Standard Chatrered (LSE: STAN) was down 2.5%, while Barclays (LSE: BARC) retreated 1.5%.
Prudential was the top performer in the insurance sector with a 1% climb. Legal & General (LSE: LGEN) and RSA Insurance Group (LSE: RSA) followed with small gains.
Aviva (LSE: AV) declined marginally, while Standard Life (LSE: SL) shed 1% and car insurer Admiral Group (LSE: ADM) was down 2%.
Old Mutual (LSE: OML) was at the bottom of the pile with a 2.7% drop.
Private equity group 3i (LSE: III) slid 1.5%.
Small Cap Movers
Other notable movers among the small caps included specialty pharmaceutical company Alliance Pharma (AIM: APH), which rose 7.5% and African Diamonds (AIM: AFD) with a 16% rally.
Large and Mid Cap News
Commercial real estate firm, SEGRO (LSE: SGRO) announced the sale of its Great Western Industrial Park in Southall, London for a total consideration of £110.4m. The deal with the Universities Superannuation Scheme Ltd (USS) represents a net initial yield of approximately 7% and also values the property at a 10% discount from the most recent book valuation which was calculated in June.
This morning’s interim results from British Airways (LSE: BAY)(‘BA’) made pretty grim reading. The FTSE 100 constituent reported operating losses of £292 million following a 13.7% reduction in group revenues during the first six months to September 30, 2009.
Medical technology company Smith & Nephew (LSE: SN, NYSE: SNN) announced their third quarter results for the current financial year. The results for the period showed a ‘strong performance’, with a 22% increase in underlying profit and improving trading margins. According to Smith and Nephew, market conditions remain challenging but they are seeing early signs of stabilisation.
Tate & Lyle (LSE: TATE) released their latest half-yearly report this morning in which it revealed it had increased sales by 7% during the period and reduced its net debt by 20% since March. The results are ‘slightly ahead of expectations’ and the group is said to be encouraged by the progress in the six months to 30th September.
Pest control and cleaning specialist Rentokil Initial (LSE: RTO) said its Q3 pre-tax profits more than doubled to £49.7 million as operations improved and the euro strengthened against the pound, helping the group to a 3.6% increase in revenues, which would be a 3.2% slide at constant exchange rates.
The Royal Bank of Scotland Group (LSE: RBS) reported a third quarter operating loss of £1.52 billion this morning, thanks to yet more impairments and write-downs, which totalled £3.2bn in the quarter. The loss represents an improvement from the second quarter of 2009 in which RBS lost £3.5bn.
FTSE 250 Oil and Gas company Melrose Resources plc (LSE: MRS) provided investors with an operational update on its activities in Bulgaria, Romania and Egypt. The update highlights a series of government approvals in Eastern Europe and the progression of development work in Egypt. Investors appear to have welcomed the update – shares in the mid-tier oil and gas company rose almost 3% this morning on the London Stock Exchange (‘LSE’).
Small Cap News
Seeing Machines Ltd (AIM: SEE), a developer of non-contact head and eye tracking systems, announced that James Fulton Muir has stepped down as chairman and will continue to serve as a non-executive director. Non-executive director William Mobbs, has been elected as Muir’s successor with immediate effect.
Iron ore and coal developer and miner London Mining (AIM: LOND) has been admitted to the Alternative Investment Market (‘AIM’) of the London Stock Exchange (‘LSE’) today and will start trading today.
Queensland gold miner Allied Gold (ASX:ALD; AIM:AGLD) has received conditional approval from the Toronto Stock Exchange (“TSX”) for the listing of its ordinary shares on the TSX.
Fox-Davies Capital has increased its price target for Ascent Resources PLC (AIM: AST) to 20 pence the previous 11p, after “having carried out a critical review of the assets and a revised valuation”. It is maintaining its ‘buy’ stance on the Europe-focused Oil and gas exploration and production company.
Stockbroker WH Ireland (AIM: WHI) has halved its stake in its Australian subsidiary, which lost more than A$0.5 million in the first half.
Ceres Power (LSE: CWR) announced that it has signed an agreement with Bord Gáis Éireann for residential combined heat and power products operating on natural gas for the Irish market. The deal marks the first international contract for Ceres Power outside mainland UK and forms part of the Group's expansion plans into Europe, initially targeting highly adjacent growth markets.
Xtract Energy PLC (AIM: XTR) said its Turkish joint venture group Extrem Energy AS, in which it holds 34 percent, yesterday suspended testing work on the Alasehir-1 well which was re-entered in September, as conditions encountered were worse than expected and several attempts to repair the cement bonds were unsuccessful.
Shares in AIM listed Oil & Gas junior Leed Petroleum PLC (AIM: LDP) plunged today following the announcement of a conditionally placed equity-based fund raising which is set to dilute existing shareholding considerably. The company has raised £20 million through the issuance of 400 million new shares priced at 5p each.
Westminster Group PLC (AIM: WSG) said it won a contract extension valued at US$2.72 million from the Government of Southern Sudan (GOSS) for additional security at Juba International Airport, Southern Sudan.
Copper and nickel explorer Regency Mines (AIM: RGM) has launched a joint venture (JV) with Sydney based Direct Nickel (DNi) to pilot and apply DNi’s advanced nickel/cobalt leaching technology at Regency’s Mambare lateritic nickel deposit in Papua New Guinea.
Shares in Gladstone PLC (LSE: GLD) rose more than 18 percent to 29.5 pence by midday in London trade after the software group announced has received approaches from third parties regarding a possible offer for the company.
Links: Full news story
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