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  FTSE 100 turns negative as TUI Travel and Thomas Cook decline on Morgan Stanley downgrades
Reported by Proactive Investors on Friday, 20 November 2009 (on November 20, 2009)
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Overview: the FTSE 100 turned negative in early afternoon after advancing in the morning, weighed down by losses in the travel & leisure and commercial property sectors.
Tour operators Thomas Cook (LSE: TCG) and TUI Travel (LSE: TT) emerged as the biggest fallers among the blue chips with losses of 5.6% and 4.1% after Morgan Stanley downgraded the companies to “underweight” and “equal weight” respectively. Commercial property companies also fell with Hammerson (LSE: HMSO), Segro (LSE: SGRO) and British Land (LSE: BLND) showing up on the top fallers list with losses of about 2%.
Quality and safety services company Intertek (LSE: ITRK) also shed 2% after saying it was in acquisition talks over the business assurance division of Det Norske Veritas.
Insurer Old Mutual (LSE: OML) led the index with a gain of nearly 3%. Telecom company Cable & Wireless (LSE: CW), specialty chemicals firm Johnson Matthey (LSE: JMAT), silver miner Fresnillo (LSE: FRES) and food manufacturer Unilever (LSE: ULVR) followed, advancing 2%. Airline British Airways (LSE: BAY), cruise ship operator Carnival Group (LSE: CCL) and specialist distribution group Bunzl (LSE: BNZL).
US stock index futures declined, pointing to a lower opening on Wall Street to further weaken the Footsie.
Commodities
Oil prices declined with January Brent Crude sliding to US$77.44/barrel, while US light, sweet crude for January delivery slid to US$77.77/barrel.
Most major oil and gas stocks rose. BG Group (LSE: BG) and Cairn Energy (LSE: CNE) advanced 1.2%, while Petrofac (LSE: PFC) and Tullow Oil (LSE: TLW) posted marginal gains. Supermajors BP (LSE: BP) and Shell (LSE: RDSB) were flat.
Midcaps were mixed. Dragon Oil (LSE: DGO) posted losses of less than 1%, Dana Petroleum (LSE: DNX) rose marginally, while Heritage Oil (LSE: HOIL) emerged as the leading riser among the midcaps, tacking on nearly 4%.
Junior energy companies didn’t show much movement in the morning. Europe focused oil and gas developer Ascent Resources (AIM: AST) was among the strongest perfromancers with a gain of 3%, while US focused oil and gas junior Caza Oil & Gas (AIM: CAZA) lost 4.5%.
Miners gain as gold and silver recover
Precious metals slightly improved from yesterday’s levels overnight, but started the day with declines. Gold and silver retreated to US$1,141/oz and US$18.33/oz respectively, while platinum moved down to US$1,427/oz.
Mining stocks were on the rise on Friday. Silver producer Fresnillo (LSE: FRES) was in the lead with a 2% gain. Platinum miner Lonmin (LSE: LMI) and gold miner Randgold Resources (LSE: RRS) followed, advancing 1.5% and 1% respectively.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) was up 2.3%.
Midcaps were mixed as while silver producer Hochschild Mining (LSE: HOC) posted a small gain, gold producer Petropavlovsk (LSE: POG) declined marginally and Aquarius Platinum (LSE: AQP) added 3%, emerging as the top performer in the sector in the FTSE 250.
Tajikistan operating gold miner Kryso Resources (AIM: KYS) led the juniors, climbing 6.5%, while Kyrgyzstan focused gold explorer and developer Chaarat Gold Holdings (AIM: CGH) advanced 3%.
Philippines focused Metals Exploration (AIM: MML) went in the opposite direction, sliding 3%.
Copper and nickel slide
After rising early, base metals retreated in the afternoon with copper and nickel moving down to US$3.06/lb and US$7.63/lb. Zinc was just short of US$1/lb.
Base metals focused miners posted gains in the morning with the exception of Rio Tinto (LSE: RIO), which declined marginally, and Anglo American (LSE: AAL), which was flat.
Xstrata (LSE: XTA) and Antofagasta (LSE: ANTO) were in the lead with gains of over 1%. Kazakhmys (LSE: KAZ) added 1%, while BHP Billiton (LSE: BLT), Eurasian Natural Resources (LSE: ENRC) and Vedanta Resources (LSE: VED) rose marginally.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) moved with the market, adding 1%.
Specialty minerals exploration and development company Thor Mining (AIM: THR) was the biggest faller among the junior stocks in the sector, slipping 15%. South Africa based coal exploration and production company Strategic Natural Resources (AIM: SNR) followed with a 5% drop.
Banks, insurance, private equity
Financial stocks were in selling mode today. Barclays (LSE: BARC) was the biggest faller in the banking sector with a 2% decline. Royal Bank of Scotland (LSE: RBS) followed with a 1.7% loss, while fellow part-nationalised bank Lloyds (LSE: LLOY) declined marginally, as did Standard Chartered (LSE: STAN) and HSBC (LSE: HSBA).
Insurance stocks were mixed. Old Mutual (LSE: OML) led the insurers with a 2.5% climb, while Aviva (LSE: AV) and Prudential (LSE: PRU) gained nearly 1.5%. Car insurer Admiral Group (LSE: ADM) rose marginally, while Legal & General (LSE: LGEN), RSA Insurance Group (LSE: RSA) and Standard Life (LSE: SL) posted small gains.Private equity group 3i (LSE: III) lost 1.5%.
Large and Mid Cap News
This morning, Intertek Group plc (LSE: ITRK) announced that it is in discussions with Det Norske Veritas (DNV) to acquire the vast majority of its Business Assurance division. According to Intertek, an ‘all-share’ deal is envisaged resulting in DNV becoming a substantial shareholder in the company.
In an interim management statement, Rotork plc (LSE: ROR) said ‘group revenues and margins remained strong’.
This morning PV Crystalox Solar Plc (LSE: PVCS) said it has appointed Michael Parker as Non-Executive Director, with effect from 1 January 2010. Mr Parker is currently the Senior Independent Director at Invensys plc and has extensive experience in the technology and energy industries.
It wasn’t long ago that the oil majors were public enemy number one posting bumper profits whilst consumers were forced to pay record prices at the petrol pumps. Not so anymore. Lower oil and gas prices have meant the ‘big oils’ across the board posted profit falls with some faring better than others. Whereas BP (LSE: BP.) and Conoco Phillips (NYSE: COP) came in significantly ahead of expectations, results at Royal Dutch Shell (LSE: RDSB) were not so robust.
Broker Fox-Davies Capital has retained its “buy” stance on Hochschild Mining (LSE: HOC) and upped its target price to £3.45 per share after the silver producer and FTSE 250 constituent increased its holding in Lake Shore Gold (TSX: LSG) to 36% from 32%.
Randgold Resources (LSE: RRS) announced the completion of the sale of its Kiaka project to Volta Resources (TSX: VTR) for C$4 million in cash and 20 million common shares in Volta. In October Volta successfully raised over C$8 million to fund the cash element of the transaction and an aggressive drilling program.
Missile defence company and FTSE 250 constituent Chemring Group (LSE: CHG) has placed fixed interest loan notes with a number of institutional investors to raise US$280 million to fund the acquisition of Hi-Shear Technology Corporation (NYSE Amex: HSR), repay existing short and medium term debt and boost its working capital.
Small Cap News
Dual-listed Thor Mining (AIM, ASX: THR) has advised it will scale back activities on the company’s flagship Molyhil project due to the continued weakness in international markets for molybdenum.
University commercialisation company Fusion IP (AIM: FIP) has licensed orthopaedic planning software developed by the medical physics team at the University of Sheffield to a global orthopaedic company in a £0.8 million deal.
Marketing research and consulting group Noble Insight called ImmuPharma (AIM: IMM) a steal after the pharmaceutical company released the results from a Phase II-b trial of its drug Lupuzor, which Noble said would no doubt be taken forward to longer, larger late-stage studies early next year after showing “the strongest data seen in lupus” apart from Genome’s Benlysta.
Epistem Holdings PLC (AIM: EHP), a UK biotechnology company with adult epithelial stem cell expertise in oncology, gastrointestinal and dermatological diseases, said it has raised £2.9 million before expenses though a placing with investors of 720,000 new ordinary shares at the market price of 400 pence each.
Enegi Oil (AIM: ENEG) announced that it has agreed a ‘project swap’ deal with Canadian Imperial Venture Corp (TSX-V: CQV, Frankfurt: DFM) and privately owned Shoal Point Energy. Under the terms of the deal, Enegi will gain 100% interest in the deeper formation on Exploration Licence 1070, the St George’s Group play. In return Enegi will transfer its interest in the licenses shallower, unconventional shale project the Green Point Formation.
Bus and coach manufacturer Optare (AIM: OPE) has won its first contract to utilise the Dual-Fuel System after gaining exclusive rights to Hardstaff Group’s dual-fuel conversion system for use in both new and existing passenger service vehicles.
Marketing research and consulting group Noble Insight called ImmuPharma (AIM: IMM) a steal after the pharmaceutical company released the results from a Phase II-b trial of its drug Lupuzor, which Noble said would no doubt be taken forward to longer, larger late-stage studies early next year after showing “the strongest data seen in lupus” apart from Genome’s Benlysta.
Links: Full news story
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