Global Markets Today

12 Jan 2010  Global Markets Today:
Overview: the FTSE 100 was in decline today, shedding 1.2% to slip below 5,500 after reaching 5,600 during yesterday’s session as the mining sector suffered heavy losses amid declining metal prices and yesterday’s disappointing quarterly results from Alcoa (NYSE: AA).

America’s largest aluminium producer started the corporate reporting season in the US, posting a loss of US$277 million, which was much lower than a loss of US$1.2 billion a year ago, but still fell short of market expectations to raise doubts about the strength of the ongoing corporate recovery in the US.
The US Dollar strengthened as investors started pouring more money into currencies to avert risks, which brought down oil and metal prices, which had a negative impact on the energy and mining sectors.
Miners were the heaviest fallers in the index with Fresnillo (LSE: FRES) sliding to the bottom with a 5.5% loss with base metal focused Kazakhmys (LSE: KAZ) and Xstrata (LSE: XTA) shedding 4% to make it to the top three on the fallers list. Other notable fallers included power generation company International Power (LSE: IPR) and software developer Autonomy Corporation (LSE: AU), which declined 3.8% and 3.3% respectively.
Just six FTSE 100 constituents managed to add more than 1% by mid afternoon. Insurer Aviva (LSE: AV) emerged atop the leaderboard with a 2% gain, while peer Standard Life (LSE: SL) and telecom group BT (LSE: BT) followed, climbing 1.5%. Another insurer RSA (LSE: RSA), commercial property company Land Securities Group (LSE: LAND) and medical devices manufacturer Smith & Nephew (LSE: SN) also tacked on more than 1%.
The Alcoa results also had a negative impact on the US futures, which slid today to signal a lower open on Wall Street. Futures for the Dow Jones Industrial Average were roughly 0.5% lower, which futures for the broader S&P 500 index and the technology heavy NASDAQ composite declined marginally.
Commodities
Oil prices declined, giving away most of the strong gains made so far this year amid forecasts of a warmer weather in the US following a few weeks of unusually low temperatures in key energy consuming countries including the US and China to boost the demand for heating oil, which was the main factor behind the crude’s surge.
The National Weather Service said that heating oil demand would be normal this week following last week’s 12% increase, while weather forecasts predict warmer than average temperatures late in the week.
Pressured by a stronger US Dollar and expectations of warmer weather, February Brent Crude fell to US$80.30/barrel in London after climbing above US$82/barrel last week, while US light, sweet crude retreated to US$81.75/barrel after standing just short of US$84/barrel a day ago.
The API (American Petroleum Institute) is set to release its weekly inventory data today with an increase of 1-2 million barrels expected.
Supermajors BP (LSE: BP) and Shell (LSE: RDSB) slid 1% and 1.5% respectively, while fellow FTSE 100 constituents Cairn Energy (LSE: CNE) and Tullow Oil (LSE: TLW) also lost 1.5%. BG Group (LSE: BG) went against the tide, posting a marginal gain.
Service companies Amec (LSE: AMEC) and Petrofac (LSE: PFC) were down 1.4% and 2.8% respectively.
Midcaps also were in decline. Salamander Energy (LSE: SMDR) led the retreat with a loss of nearly 5%. Melrose Resources (LSE: MRS) and Premier Oil (LSE: PMO) lost 4.3% and Heritage Oil (LSE: HOIL) was down 3.3%. JKX Oil and Gas (LSE: JKX) and Dana Petroleum (LSE: DNX) followed, shedding 1% and 2% respectively.
Dragon Oil (LSE: DGO) and Soco International (LSE: SIA) did better, posting small gains.
Service companies Wood Group (LSE: WG) and Wellstream Holdings (LSE: WSM) declined 2.3% and 2.8% respectively.
Juniors didn’t show much movement today. Irish oil and gas exploration company Petroceltic International (AIM: PCI) fell 9%, while Kazakhstan operating Max Petroleum (LSE: MXP) and US focused oil and gas junior Caza Oil & Gas (AIM: CAZA) followed with losses of 3.5% and 3% respectively.
Gold and silver decline as US Dollar strengthens
Gold eased below US$1,150/oz, settling at US$1,145/oz by middle afternoon, while silver and platinum retreated to US$18.41/oz and US$1,595/oz respectively.
Mining stocks were weak as metal prices declined.
Fresnillo (LSE: FRES) was at the bottom of the pile, sliding 5.5%. Platinum producer Lonmin (LSE: LMI) and gold miner Randgold Resources (LSE: RRS) followed, shedding 3% and 2% respectively.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) declined marginally.
Midcaps followed the trend as gold miner Petropavlovsk (LSE: POG), silver producer Hochschild Mining (LSE: HOC) and Aquarius Platinum (LSE: AQP) slipped 5%, 4.5% and 4% respectively.
African focused nickel and gold exploration and development junior Nyota Minerals (ASX&AIM: NYO) led the small caps with a 9% climb, while Fiji focused gold miner Vatukoula Gold Mines (AIM: VGM) and Turkey focused gold miner Ariana Resources (AIM: AAU) followed, advancing 8% and 7.5% respectively. Turkey and Saudi Arabia operating gold explorer KEFI Minerals (AIM: KEF) and Africa operating gold miner GMA Resources (AIM: GMA) both gained more than 6%.
Western Australia operating Norseman Gold (AIM: NGL), South American based explorer Mariana Resources (AIM: MARL) and Commodity asset development company Mercator Gold (AIM: MCR) headed in the opposite direction, sliding 6%, 4.5% and 4% respectively. Tajikistan operating gold miner Kryso Resources (AIM: KYS) was down 3.5%.
Copper and nickel slide to weaken miners
Base metals also retreated as copper and nickel slid to US$3.37/lb and US$8/lb and zinc declined to US$1.12/lb.
Base metal focused stocks were lower. Kazakhmys (LSE: KAZ) was the heaviest faller in the sector with a 4.2% drop. Vedanta Resources (LSE: VED) and Xstrata (LSE: XTA) lost nearly 4%, while Eurasian Natural Resources (LSE: ENRC) was down 3.5%, Anglo American (LSE: AAL), BHP Billiton (LSE: BLT) and Rio Tinto (LSE: RIO) shed almost 3%, while Antofagasta (LSE: ANTO) moved down 2.3%.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) moved with the sector, sliding 3%.
Mineral sands producer Kenmare Resources (LSE: KMR) was one of the top performers among the juniors, rising 6.5%.
Botswana operating nickel and copper miner Discovery Metals (AIM: DME) and tantalum concentrate supplier with assets in Mozambique Noventa (AIM: NVTA) slipped 5.5% and 5% respectively. Australia focused coking coal producer Caledon Resources (AIM: CDN), Uranium and copper explorer Kalahari Minerals (AIM: KAH) and London Mining (AIM: LOND) lost more than 3%.
Banks, insurance, private equity
Standard Chartered (LSE: STAN) was the biggest faller among the banks with a 2.5% decline. Barclays (LSE: BARC) retreated 1.4%, while part-nationalised banks Lloyds (LSE: LLOY) and Royal Bank of Scotland (LSE: RBS) shed about 1%. HSBC (LSE: HSBA) declined marginally.
Insurance stocks were mixed. Admiral Group (LSE: ADM) and Old Mutual (LSE: OML) posted small losses, while Aviva (LSE: AV), Standard Life (LSE: SL) and RSA Insurance Group (LSE: RSA) climbed 1%. Legal & General (LSE: LGEN) rose marginally, while Prudential (LSE: PRU) was flat.
Private equity group 3i (LSE: III) moved down 1.8%.
Small Cap Movers
Other notable movers among the small caps included Latin America operating power producer Rurelec (AIM: RUR), which lost 5%, and stamp dealer Stanley Gibbons (AIM: SGI), which declined 6% after stating it would miss profit expectations.
Large and Mid Cap News
UK construction and maintenance group Balfour Beatty (LSE: BBY) has been awarded two water utilities infrastructure contracts, jointly worth £600 million over the 2010-2015 regulatory period. United Utilities (LSE: UU.) appointed the FTSE250 constituent to deliver a £500 million long-cycle contract over the period and the group won a five year extension to its existing water infrastructure contract with Anglian Water, worth approximately £100 million.
Debenhams (LSE: DEB) said sales during the Christmas season were in line with expectations as like-for-like sales climbed 0.1% while total sales were reduced by 1.5% due to the retailer’s strategy of moving space away from concessions and into bought merchandise.
Game Group (LSE: GMG) said negative trends continued to persist in the PC and video games market over the Christmas period, pushing its sales down 12.1%, while like-for-like sales tumbled 13.8% during the holiday season and 14.8% for the the 49 weeks to January 9 2010.
International building and maintenance group Interserve PLC (LSE: IRV) announced it won several new contracts worth more than £350 million. The FTSE250 company also updated investors ahead of its annual results, due in March. Interserve said it has enhanced its ability to manage successfully through difficult market conditions following the actions taken during 2009. Overall group performance is expected to be in line with the board's expectations.
Supermarket giant Tesco (LSE: TSCO) said its UK business was outperforming the industry as a whole, while it has continued to experience improving trends internationally with positive sales growth in Asia, Europe and the United States. Overall group sales increased by 7.5% in the six weeks to 9 January 2010, at constant exchange rates.
Small Cap News
Central China Goldfields PLC (AIM: GGG) said it was notified by chairman Peter Ruxton that he bought a further 250,000 shares in the company today at 2.85 pence a share.
Proton exchange membrane (PEM) fuel cell products manufacturer IdaTech (AIM: IDA) reported sales volumes in 2009 ahead of expectations and announced a contract win, which positions it for 2010 with a backlog of nearly one quarter of the market expectations for the full year.
Amphion Innovations’ (AIM: AMP) 22 percent owned medical diagnostic company Myconostica has received a license from Health Canada for the sale of its diagnostic test MycAssay Aspergillus, paving the way for its introduction into the Canadian healthcare market.
William Ransom & Son (AIM: RNSM) has entered into a sale and purchase agreement to dispose of its Metanium brand made up of Metanium nappy rash ointment and Metanium cradle cap cream to Thornton & Ross Ltd for £2.2 million in cash.
Berkeley Resources Limited (AIM: BKY) has terminated its head of agreements signed in March 2006 with French nuclear power group Areva for off-take or marketing of uranium production from Berkeley’s projects with immediate effect, leaving it free to negotiate similar agreements with other parties.
Xtract Energy’s (AIM: XTR) Chief Executive, Andy Morrison bought 500,000 ordinary shares in the company at a price of 2.75p, and now holds 2.5 million shares, representing 0.31% of the company’s issued share capital.
Carlyle Group LLC has signed a memorandum of understanding with the Beijing Municipal Bureau of Financial Work to form an Renminbi (RMB) denominated fund in Beijing to invest alongside Carlyle Asia partners and pursue independent investments in larger growth companies.
Avia Health Informatics (AIM: AVIA) announced its third contract win since its admission to AIM in November 2009, securing a one year deal with Southern Area Urgent Care Services (SAUCS) for clinical decision support tools.
Stanley Gibbons Group PLC (AIM: SGI), specialised in stamps, autographs/memorabilia and related investment products, said results for the year ended December 31 2009 are encouraging and that the launch of the rare stamp investment fund, originally scheduled for 2009, is progressing well and planned to launch in 2010.
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