Overview: the FTSE 100 added 0.5%, which was consistent with pre-market expectations, after an update from China showed that the country’s GDP (gross domestic product) rose 10.7% in the fourth quarter.
United Utilities led the blue chips, climbing 5% after accepting regulator Ofwat’s price ruling and cutting next year’s dividend by less than expected. Airline British Airways (LSE: BAY) and power generation company International Power (LSE: IPR) also made it to the top three with gains of 4% and 3%. Another utility company Severn Trent (LSE: SVT) and publisher Reed Elsevier (LSE: REL) both added more than 2.5%, while pharmaceutical company AstraZeneca (LSE: AZN) was up 2.5%. Communication services group WPP (LSE: WPP) climbed 2%.
Miners showed weakness with Anglo American (LSE: AAL), Fresnillo (LSE: FRES) and Kazakhmys (LSE: KAZ) sliding to the bottom of the index with losses of over 2.5%. Other notable fallers included fashion house Burberry with a 2.4% decline and hedge fund manager Man Group (LSE: EMG), which slid 1.5%.
US stocks are set to extend gains as futures for the main stock market indexed declined this morning with futures for the Dow Jones Industrial Average, the broader S&P 500 index and the technology heavy NASDAQ composite shedding about 0.4%.
American Express (NYSE: AXP), Goldman Sachs (LSE: GS), Google (NASDAQ: GOOG) and Xerox (NYSE: XRX) are set to release their quarterly reports today. Investors are also looking to the weekly jobless claims update and the Philly Fed index for January.
Oil prices were slightly lower ahead of today’s key oil inventories update from the US Department of Energy (DoE), which is expected to set the direction for crude prices for the rest of the week. The American Petroleum Institute (NYSEMKT:API) said on Tuesday that cruse oil stocks declined 1.8 million barrels in the previous week and distillate inventories decreased by 3.4 million barrels, which, however, made little impact on the commodity market.
March Brent Crude inched lower to US$76.19/barrel, while US light, sweet crude was at US$77.70/barrel.
Major oil and gas stocks rose today, recovering from Wednesday’s falls. Tullow Oil (LSE: TLW) was in the lead with a 1% gain, while fellow FTSE 100 constituent BG Group (LSE: BG) rose marginally, as did supermajors BP (LSE: BP) and Shell (LSE: RDSB).
Cairn Energy (LSE: CNE) went against the tide, sliding 1.1%.
Services companies Amec (LSE: AMEC) and Petrofac (LSE: PFC) also posted small losses.
Midcaps were mixed. Heritage Oil (LSE: HOIL) was the top performer with a 1.4% climb. Dana Petroleum (SLE: DNX) and JKX Oil & Gas (LSE: JKX) rose marginally, while Premier Oil (LSE: PMO) and Soco International (LSE: SIA) were flat.
Melrose Resources (LSE: MRS), Salamander Energy (LSE: SMDR) and Dragon Oil (LSE: DGO) headed in the opposite direction, posting losses of less than 1%.
Europe focused oil and gas developer Ascent Resources (AIM: AST) was the top performer among the juniors with a 7% gain.
Africa focused energy company Dominion Petroleum (AIM: DPL) was in correction, shedding almost 4%, while Western Europe operating oil and gas company Northern Petroleum (AIM: NOP) and Ukraine focused gas producer, Regal Petroleum (AIM: RPT) were down 3%.
Gold, silver and platinum fall
Gold declined sharply today, slipping all the way down to US$1,100/oz just two days after standing above US$1,130/oz as the US Dollar extended gains today on a weaker euro, which got hit by Greece’s debt situation, and yesterday’s declines in global stock markets after quarterly reports from Bank of America (NYSE: BAC) and Morgan Stanley (NYSE: MS) missed market expectations, boosting the greenback’s appeal as a safe haven for investors.
Gold, which is seen as an investment alternative to the US Dollar, was supported by a fall in bond yields in the US.
Meanwhile, platinum retreated from recent highs that it was able to reach due to the anticipated demand from new US exchange traded funds, causing Bank of America Merrill Lynch to up its price forecast for the metal to US$1,750/oz in 2010 and US$2,000 in 2011.
Today, gold declined to US$1,104/oz, while silver and platinum declined to US$17.67/oz and US$1,605/oz respectively.
Mining stocks were mixed in London today.
Platinum miner Lonmin (LSE: LMI) led the sector in the FTSE 100 with a gain of nearly 2%. Gold miner Randgold Resources (LSE: RRS) declined marginally, while silver producer Fresnillo (LSE: FRES) was down 2.3%.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) posted a small gain.
Gold miner Petropavlovsk (LSE: POG) led the midcaps with a 3.6% advance, while Aquarius Platinum (LSE: AQP) declined marginally and silver producer Hochschild Mining (LSE: HOC) lost 2%.
Kazakhstan operating gold producer and copper developer Frontier Mining (AIM: FML) was the top performer among the small caps with a 6% climb.
Most other juniors were in decline. African focused nickel and gold exploration and development junior Nyota Minerals (ASX&AIM: NYO) and Uzbekistan focused gold miner Oxus Gold (AIM: OXS) were in correction, sliding 7% and 6% respectively. Kyrgyzstan focused gold explorer and developer Chaarat Gold Holdings (AIM: CGH) and Fiji focused gold miner Vatukoula Gold Mines (AIM: VGM) both lost more than 5%. Africa operating gold miner GMA Resources (AIM: GMA) declined 4%.
Miners decline as copper slips
Base metals headed in different directions today as while copper slid to US$3.32/lb, nickel and zinc improved to US$8.48/lb and US$1.09/lb.
Base metal focused stocks were in decline as Anglo American (LSE: AAL) and Kazakhmys (LSE: KAZ) shed 2.5% and 2% respectively, while Rio Tinto (LSE: RIO) followed with a 1.8% drop. Vedanta Resources (LSE: VED) declined marginally and BHP Billiton (LSE: BLT), Eurasian Natural Resources (LSE: ENRC) and Xstrata (LSE: XTA) were flat.
Antofagasta (LSE: ANTO) went against the tide with a gain of nearly 1%.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) was in decline, shedding 4%.
Russia focused copper and nickel miner Amur Minerals (AIM: AMC) led the juniors with a 12.5% rally. Iron ore focused investor Red Rock Resources (AIM: RRR) and laterite nickel specialist European Nickel (AIM: ENK) followed with gains of 7% and 4.5% respectively.
Banks, insurance, private equity
Most banking stocks declined today. Royal Bank of Scotland (LSE: RBS) was at the bottom of the pile with a 2.6% loss, while fellow part-nationalised bank Lloyds (LSE: LLOY) lost 1.4% and Standard Chartered (LSE: STAN) and Barclays (LSE: BARC) both shed 2.3%. HSBC (LSE: HSBA) outperformed the sector, climbing 1.5%.
Prudential (LSE: PRU) led the insurance stocks with a 2% gain. Old Mutual (LSE: OML) added less than 1%, while Admiral Group (LSE: ADM), Legal & General (LSE: LGEN) and RSA Insurance Group (LSE: RSA) remained flat.
Aviva (LSE: AV) and Standard Life (LSE: SL) lost less than 1%.
Private equity group 3i (LSE: III) declined marginally.
Small Cap Movers
Other notable movers among the small caps included Rubicon Software (AIM: RUBI) and TyraTech (AIM: TYR), which lost 8% and 10% respectively.
Large and Mid Cap News
FTSE100 constituent Tullow Oil PLC (LSE: TLW) announced a significant oil and gas discovery in the Tweneboa field, offshore Ghana. The Tweneboa-2 appraisal well was drilled 6 kilometres southeast of the Tweneboa-1 discovery, intersecting a significant combined hydrocarbon column. Results have confirmed that Tweneboa is a major oil and gas condensate field.
In a pre-close update ahead of its financial year end on 31 January 2010, Wm Morrison Supermarkets (LSE: MRW) said it traded well through the Christmas period, continuing the strong momentum already reported. In the 6 weeks to 3 January, total sales excluding fuel were up by 11.2% and like-for-like sales excluding fuel grew by 6.5% compared with the same period a year earlier.
Anglo-Australian mining company Rio Tinto (LSE: RIO) said Thursday that demand for iron ore, copper and gold rose strongly in the fourth quarter, but was cautious about the current year as governments wind down economic stimulus programs.
During the third quarter ended 31 December 2009, the London Stock Exchange Group (LSE: LSE) said market conditions were not easy, with its cash equities business the worst affected. The division was pressured as reduced activity and continued competition from alternative venues led to a 29% drop in revenue compared with the previous year.
As we wait for production results for 2009’s final quarter, JKX’s (LSE, JKX) third quarter provides investors with an idea of what could lie in wait. The company’s latest ramp up in output could not be better timed as the global economic recovery continues to gain traction and underpinned by a robust balance sheet, long term earnings look extremely secure.
In a production update ahead of its annual results, Petropavlovsk (LSE: POG) said it increased total attributable gold production by 21% in 2009. The company’s average gold sales price was also substantially higher, with a 15% increase to US$975 per ounce. The precious metals miner now intends to resume its dividend, with a £0.07 per share payment scheduled for March 2010.
The British appeal court has ruled against BSkyB (LSE: BSY) in relation to the forced reduction of its shareholding in ITV (LSE: ITV), and this is the fourth ruling against Sky in this matter. The FTSE100 constituent bought a 17.9% stake in ITV in 2006. In December 2007 the Competition Commission ruled that the shareholding in its competitor was against public interest and ordered Sky to reduce its holding to 7.5%.
Small Cap News
Minera IRL (AIM: MIRL) achieved its best production in 2009 in the final quarter as the Corihuarmi gold mine in Peru exceeded expectations, also achieving significant cost cuts and benefiting from all time record gold prices.
Gulfsands Petroleum (AIM: GPX) said its Khurbet East (KHE)-14 delineation well at its Block 26 in Syria intersected an oil column and flowed at 613 barrels of oil per day, indicating a deeper field oil-down-to (NASDAQ:ODT) depth.
Philippines-focused Gold producer Medusa Mining (AIM&ASX: MML) has announced record gold production of 21,108 ozs at the Co-O Mine during the quarter.
Papua New Guinea-focused gold producer and explorer developer Allied Gold is paving a rosy outlook for the Pigiput Deposit after receiving additional high-grade gold assays from diamond core holes drilled at the Deposit.
Atlantic Coal (AIM: ATC) has agreed the termination of its legacy supply agreement with Pagnotti Enterprises. The board estimates that the termination will save the company in excess of US$10 million during the life of its Stockton mine. Previously the agreement obligated Atlantic to sell 100,000 tons of coal annually, below current market prices. Atlantic said it will utilise the improved cash-flow to expand its asset base and production.
B.P. Marsh & Partners (AIM: BPM) has agreed to sell its entire stake in JMD Specialist Insurance Services Group (JMD) to Randall & Quilter Investment Holdings (AIM: RQIH) for 650,000 shares in R&Q, which is at prersent worth 23% more than the £569,000 valuation put on JMD back in July 2009.
Following the announcement of Planet Payment’s (AIM: PPT) trading update for year ended 31 December 2009, Daniel Stewart and Co maintained its 'buy'recommendation and reiterated its 151p price target.
Greystar Resources (TSX, AIM: GSL) released initial assay results from the ongoing drilling programme on its Angostura gold-silver deposit in north-eastern Colombia. Drilling targeted high grade mineralization at the Los Laches area of the deposit. The results highlights included an intersection of 86 metres grading 2.92 grams per tonne gold.
Indus Gas Limited (AIM: INDI) said it was encouraged by the results it has so far received from the frac stimulation of the Indian Shingli-1 well, one of the deepest in the region, targeting the tight gas play within the Baisakhi/Bedesir (B&B) formation at the company’s Block RJ-ON/6 in India.
African Minerals Limited (AIM: AMI) has raised £80 million through a cash placing to fund the construction of key infrastructure for phase 1 of its flagship iron ore project at Tonkolili in Sierra Leone.
Disclosure: The author holds no positions in the company