Overview: the FTSE 100 performed better than was projected in pre-trade, climbing 0.7% to eclipse 5,300 and extend its winning streak to four days.
Aerospace and defence systems manufacturer BAE Systems (LSE: BA) led the blue chips with a 3.5% climb after reporting on its final results. Other notable risers included consumer goods company Reckitt Benckiser (LSE: RB) and retailer Kingfisher (LSE: KGF) with a gains of over 2% and turbine manufacturer Rolls-Royce (LSE: RR), which added 1.8%
Telecom group BT (LSE: BT.A) was at the bottom of the pile with a 2.3% slide. United Utilities (LSE: UU), publisher Reed Elsevier (LSE: REL), satellite communications company Inmarsat (LSE: ISAT) and utility company Severn Trent (LSE: SVT), which gained about 1.5%.
US stocks were off to a positive start today as the Dow Jones Industrial Average, the S&P 500 index and the technology heavy NASDAQ composite all climbed 0.2% in early trade.
Oil prices continued their rally after taking a break yesterday after data from the American Petroleum Institute (NYSEMKT:API) showed a fall in US crude imports, while gasoline and distillate stockpiles, which includes heating oil, increased by 1.4 million barrels and 1.5 million barrels respectively, signalling weaker demand. Crude oil inventories fell, but the decline was marginal at just 63,000 barrels.
A more closely watched inventories report from the US Department of Energy is due to be released later today.
Crude got a boost from today’s update on US housing starts update, which rose at an annual rate of 2.8% in January to hit six month highs, and got further help when the US dollar softened against the euro, making oil, which is denominated in the American currency, cheaper for holders of other currencies to drive up the demand.
April Brent Crude climbed to US$76.86/barrel, while US light, sweet crude rose to US$78.01/barrel.
In other news, minutes form the latest policy meeting of the Federal Reserve showed that the members discussed withdrawing the economic stimulus programme sooner than previously expected.
Blue chip oil and gas producers showed little movement today. Supermajors BP (LSE: BP) and Shell (LSE: RDSB) posted insignificant gains, while fellow FTSE 100 constituents Cairn Energy (LSE: CNE) and Tullow Oil (LSE: TLW) were sitting just below the opening level.
BG Group (LSE: BG) performed slightly better, tacking on nearly 1%.
Oil and gas engineering firms Amec (LSE: AMEC) and Petrofac (LSE: PFC) rose marginally.
Midcaps were mixed. Dragon Oil (LSE: DGO), Premier Oil (LSE: PMO) and Soco International (LSE: SIA) were in the lead with gains of 1.2%. Dana Petroleum (LSE: DNX) was flat, while Heritage Oil (LSE: HOIL) posted a marginal loss and JKX Oil & Gas (LSE: JKX) declined 1%. Melrose Resources (LSE: MRS) was down 1.3% and Salamander Energy (LSE: SMDR) was at the bottom of the pile with a 1.8% loss.
Gold rebounds on weaker US dollar
Gold slipped below US$1,100/oz from this week’s high of US$1,126/oz after the International Monetary Fund (NYSE:IMF) said it would sell 191.3 tonnes of gold out of the total 403.3 tonnes earmarked for sale to push down the prices. IMF sold the first 212 tonnes to India, Sri Lanka and Mauritius last year.
Further pressure came from a stronger US dollar, which gained against a basket of six other currencies ahead of today’s US employment data.
Later, however, the yellow metal rebounded to climb back to US$1,118/oz as the initial impact from the IMF update softened and the American currency fell after the update from the Labor Department showed that jobless claims rose by 31,000 to 473,000 last week, which was a far greater increase than projected, casting yet more doubts over the strength of the ongoing economic recovery.
Other precious metals headed in opposite directions as while silver advanced, reaching US$16.21, platinum inched lower to US$1,527/oz.
Another FTSE 100 constituent, specialty chemicals firm Johnson Matthey (LSE: JMAT) lost 1.2%.
Midcaps were in decline as Aquarius Platinum (LSE: AQP) moved down 1.9% and silver producer Hochschild Mining (LSE: HOC) dropped 1.2%. Petropavlovsk (LSE: POG) recovered from early falls to get back to the opening level.
Turkey focused gold miner Ariana Resources (AIM: AAU) was one of the leading performers in the sector, gaining 12.5% after updating the market on its Red Rabbit project.
Africa operating gold miner GMA Resources (AIM: GMA), which today said it has raised £0.48 million via share issue, and Uzbekistan focused gold miner Oxus Gold (AIM: OXS) also were in demand, advancing 7.5%. Turkey and Ethiopia operating gold miner Stratex International (AIM: STI) and Iran focused gold explorer Persian Gold (AIM: PNG) followed with gains of 7%, Africa focused gold deposit developer Cluff Gold (AIM: CLF) and Zambian emerald seller Gemfields Resources (AIM: GEM) added nearly 5%. Tajikistan operating gold miner Kryso Resources (AIM: KYS) and Philippines focused Metals Exploration (AIM: MTL) rose 4%.
Turkey and Saudi Arabia operating gold explorer KEFI Minerals (AIM: KEF) headed in a different direction, slipping 12.5%. Commodity asset development company Mercator Gold (AIM: MCR) and Kazakhstan operating gold producer and copper developer Frontier Mining (AIM: FML) followed with losses of 8% and 5% respectively.
Copper and nickel advance to support miners
Base metals also were on the rise as copper and nickel improved to US$3.29/lb and US$9.18/lb and zinc advanced to US$1.05/lb.
All major mining stocks rose today. Kazakhmys (LSE: KAZ) was in the lead with a gain of 3%. Eurasian Natural Resources (LSE: ENRC), Vedanta Resources (LSE: VED) and Xstrata (LSE: XTA) added 2.5%, while Anglo American (LSE: AAL), Antofagasta (LSE: ANTO) and BHP Billiton (LSE: BLT) climbed 1.8%, 1.7% and 1.5%. Rio Tinto (LSE: RIO) tacked on 1.3%.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) recouped yesterday’s losses, advancing 2%.
Tantalum concentrate supplier with assets in Mozambique Noventa (AIM: NVTA) led the juniors with a 13.5% rally. Australia focused coking coal producer Caledon Resources (AIM: CDN) advanced 7% and Canada based junior gold developer Rambler Metals and Mining Plc (AIM: RMM) and zinc mining and recycling specialist ZincOX (AIM: ZOX) both added 4%.
Specialty minerals exploration and development company Thor Mining (AIM: THR), copper and nickel explorer Regency Mines (AIM: RGM) and South Africa based coal exploration and production company Strategic Natural Resources (AIM: SNR) were in decline, slipping 12.5%, 9.5% and 6% respectively.
Banks, insurance, private equity
Barclays (LSE: BARC) led the banking sector with a 2% climb. Standard Chartered (LSE: STAN) added 1.2%, while HSBC (LSE: HSBA) rose marginally.
Part-nationalised banks Lloyds (LSE: LLOY) and Royal Bank of Scotland (LSE: RBS) lost less than 1%.
Insurance stocks were in selling mode today with the sole exception of RSA Insurance Group (LSE: RSA), which made a small gain.
Sector peers Admiral Group (LSE: ADM), Aviva (LSE: AV), Legal & General Group (LSE: LGEN), Old Mutual (LSE: OML), Prudential (LSE: PRU) and Standard Life (LSE: SL) all lost less than 1%.
Private equity group 3i (LSE: III) rose 1%.
Small Cap Movers
Other notable movers among the small caps included software developer Rubicon (AIM: RUBI), which rallied 10%, and mobile email and data synchronisation group Synchronica PLC (AIM: SYNC) with a 9% loss.
Large and Mid Cap News
Carbon and ceramic products manufacturer and FTSE 250 constituent Morgan Crucible (LSE: MGCR) said full year pre-tax profits plummeted 45% to £31.4 million and earnings declined to £89 million as margins narrowed from 13% in 2008 to 9.4% in 2009, though a “game changing” focus on cost control led to an improvement in the margins from 9.2% in the first half to 9.7% in the second half of the year.
FTSE 100 mining group, Eurasian Natural Resources Corp (LSE:ENRC) has beefed up its presence in the copper and cobalt markets through the acquisition of Chambishi Metals, a Zambian copper and cobalt producer, and Comit Resources, a Dubai based marketing and sales company. ENRC is paying US$300 million for the two companies, and will fund the transaction from its existing cash.
Aerospace and defence conglomerate BAE Systems (LSE: BA) reported a 21% increase in sales to £22.415 billion for the 12 months ended 31 December 2009, and said it would lift its full year dividend by 10% to 16 pence.
Anglo American (LSE: AAL), the diversified mining giant, reported this morning that its 64% investment in Kumba Iron Ore (LSE: KIO)(“Kumba”) would generate underlying earnings of $490 million for the year ended 31 December 2009.
Halfords (LSE: HFD) the FTSE 250 constituent, has significantly expanded its presence in Britain’s car service and repair market through the acquisition of Nationwide Autocentres for £73.2 million in cash.
Barrick Gold (NYSE: ABX, TSX: ABX) intends to spin-out its African gold mining operations into a newly created subsidiary, African Barrick Gold (NYSE:ABG) which is planned to float on the London Stock Exchange. ABG will hold Barrick's African gold mines and exploration properties. ABG will offer approximately 25% of its equity in an initial public offering (NYSEARCA:IPO) and Barrick will retain the remaining 75% interest.
Small Cap News
Edison Investment Research has revisited its stance of Red Rock Resources (AIM: RRR), saying the iron ore focused investor could be trading at a 89% discount to its NAV (net asset value) after revising its valuation of exploration assets following an analysis of the gold market.
Aminex PLC (LSE: AEX) has spudded the Olympia Minerals-1 (OM-1) well at Shoats Creek, which is the first well in a drilling programme based on interpretation of new 3D seismic data over the property.
Microgen (AIM: MCGN) said its Microgen Aptitude Solutions Division (MASD) would continue to deliver growth in 2010 after posting a 55% revenue increase in 2009 to help drive up group revenues 9% to £29.1 million, while the group transitioned into being fully software-based after the disposal of the billing services division.
London-based stockbroker, Charles Stanley said in a note to investors this week that Amphion Innovations’ (AIM: AMP) is well positioned should IPO markets open-up later this year. Though several high profile IPO’s failed to happen last week, five companies have announced their intention to float this week alone, suggesting the freeze on IPO’s in London is beginning to thaw.
African Aura Mining (AIM: AAAM, TSX-V: AUR) reported new results from the ongoing drilling programme at its wholly owned New Liberty gold deposit in western Liberia, which it said confirmed the continuity of the mineralized zone significantly deeper than the lower limit of the present resource estimate of 300 m (metres).
Blackthorn Resources (ASX: BTR) and joint venture partner BHP Billiton (LSE: BLT, ASX:BHP) have been granted renewal of the Mumbwa prospecting licence in Zambia for a further two years to allow continuation of exploration activity in the region.
Ariana Resources (AIM: AAU) said that its proposed JV (joint venture) with Proccea Construction has made significant progress towards production at the Red Rabbit gold and silver project as a scoping study and an environmental scoping assessment have been completed along with preliminary designs of the processing plant.
The York-headquartered, CPP Group has announced its intention to float on the London Stock Exchange. The life assistance company intends to use the proceeds to pay-down a proportion of its £48.8m debt and to partially realise the investment of certain private shareholders, particularly CPP’s founder Hamish Ogston.
Nighthawk Energy (AIM: HAWK, OTC: NHEGY) has appointed Stuart Eaton to the board as a Non-Executive Director. Eaton has significant experience of investment in the oil and gas sector, up until November 2009 he was Insight Investment Management’s Head of UK Equity Alpha.
Specialist supplier to the medical research sector, Asterand (LSE: ATD) has completed its acquisition of BioSeek Inc. The takeover was finalised following the approval by Asterand's shareholders at today’s EGM. Asterand announced its plan to buy the privately-held BioSeek for up to US$14 million in cash and shares, back in November 2009. The newly created BioSeek LLC entity is now a wholly-owned subsidiary of Asterand.
Cove Energy (AIM: COV) has announced a significant discovery at the Windjammer exploration well, the first in a minimum four well offshore programme operated by Anadarko Petroleum Corp (NYSE: APC) in the frontier Rovuma Basin offshore Mozambique.
Namibian Resources (AIM: NBR) has entered into an exclusive three month option agreement with the owner of an offshore diamond recovery ship for the purchase of the ship, which accounted for diamond sales of £1.2 million for 2009 despite a weak diamond market.
Gulf Keystone Petroleum (AIM: GKP) said it has negotiated an agreement with BG (LSE: BG.), thus settling the claims and counterclaims between the parties on confidential terms. The agreement provides for the immediate stay of the arbitration and the proposed transfer of the company's interests in the Hassi Ba Hamou Permit, in Algeria. BG will pay US$9.9m to Gulf Keystone in respect of the asset transfer.
Lonrho (AIM: LONR) has unveiled its latest investment in Africa, the company has formally agreed to acquire the licensed John Deere and Komatsu dealerships in Mozambique from Trak-Auto Lda, in a deal worth up to US$5m. Lonrho intends to support the business by arranging new working capital to fund the dealerships future growth.
Gemfields (AIM: GEM) announced the first production from its underground mining trial in Zambia. The milestone marks the first step in a transformational innovation for the Zambian emerald mining industry, Gemfields said. The company initiated the underground mining project in February 2009, the trail aims to expand the Kagem mine into areas of high quality emerald production, and enable the mining operation to follow the ore zone efficiently.
Acquisitive telecommunications company, Daisy Group (AIM: DAY) confirmed this morning that it had entered into an agreement with fellow telecoms minnow, BNS Telecom Group at a price of 20 pence per share.
Disclosure: The author holds no positions in the company