After all, the FTSE 100 managed to stay on positive territory yesterday despite a late retreat into the red, matching the record winning streak of 11 days. It is now poised to post a record setting 12 session winning streak and clear the 4,600 point hurdle, a significant milestone for technical traders.
It was once again hard to figure out the direction in which the FTSE 100 was headed.
The market was on the rise this morning, yet it was 8 points down by midday dragged down by significant declines in the mining sector, which was in for a correction after a few straight days, signalling it could be overbought overbought. Xstrata’s fall was the steepest in the group after reporting a 60% year on year ferrochrome production decline in H1 2009.
Yesterday’s top riser publisher Pearson was flat in the morning.
Software developer Sage Group emerged as the top riser after announcing both the results for the first nine months ending 30 June and the expected results for the full year ending September 30 are in line with the management’s expectations.
Packaging group Rexam (LSE: REX) continued to slump with a 3.7% loss. Building supplies group Wolseley (LSE: WOS), which recently announced it was looking to sell some of its international businesses, dropped 3.2%.
The negative impact delivered by the mining sector was tough to overcome.
Commodities
Commodity prices mostly accounted for marginal increases today and mining fell and oil & gas was mixed.
Gold was fluctuating early in the day and was at USD 955/ounce by afternoon. Silver was steady around USD 14/ounce. After making considerable progress yesterday, platinum underwent a slight correction declining USD 2.00 to USD 1214/ounce.
Base metals also saw their value increase. Copper was floating around USD 2.54/pound, zinc also didn’t show much movement and stayed at USD 0.76/pound, while nickel went up to USD 7.66/pound. Brent Crude closed at USD 70.5/barrel.
Platinum miners mostly fell in view of today’s correction in platinum prices. Lonmin (LSE: LMI) was down 1% at 1289p. Aquarius Platinum (LSE: AQP) eliminated yesterday’s gains with a loss of 5% to retreat to 237p per share. Johnson Matthey (LSE: JMAT) slightly added to yesterday’s gains improving by less than 1%.
Gold and silver producers were on decline. Randgold Resources (LSE: RRS) lost 3% after reporting Q2 results. Peter Hambro Mining (LSE: POG) was down 2.7% and Yamana Gold (LSE: YAU) was flat.
Silver producer Fresnillo (LSE: FRES) was flat, while Hochschild Mining (LSE: HOC) lost 2%.
Junior Gold companies suffered early losses. Oxus Gold (AIM: OXS) was flat following a strong performance yesterday. Kryso Resources (AIM: KYS) and Pan African Resources (AIM: PAF) and Patagonia Gold (AIM: PGD) were flat, while Medusa Mining (AIM & ASX: MML) slipped 5.1%. Cluff Gold (AIM & TSX: CLF) lost 3.7%. Norseman Gold (LSE: NGL) added 4%.
Coal miner BHP Billiton (LSE: BLT) was flat in the morning. Anglo American (LSE: AAL) declined slightly. Rio Tinto (LSE: RIO) was down 2%.
Copper miners were in for a significant correction and dropped considerably, dragging the market down. Vedanta (LSE: VED) lost 1.2%, Kazakhmys (LSE: KAZ) was down 2.5% and Antofagasta (LSE: ANTO) lost 3%. First Quantum Minerals (LSE & TSX: FQM) was unmoved.
Eurasian Natural Resources (LSE: ENRC) was down 2.5%.
BP (LSE: BP.) released mixed Q2 results and fell 1.5%, while Shell (LSE: RDSB) moved up insignificantly.
Juniors were also mixed. Cairn Energy (LSE: CNE) moved up slightly, Dragon Oil (LSE: DGO) lost just less than 1%, and Dana Petroleum (LSE: DNX) lost 2%. After having an independent estimate of recoverable C3 resources at its West Med field in Russia approved by the authorities, Victoria Oil & Gas (LSE: VOG) jumped 12%. Empyrean Energy (AIM: EME) fell 2%. Enegi Oil (AIM: ENEG) retreated considerably, slipping 11%. Max Petroleum (AIM: MXP) was up 23%. Green Dragon Gas (LSE: GDG) slipped less than 1%.
Insurance, banks, private equity rise
Banks showed some volatility early in the day, but weren’t far off from the opening levels by midday.
Lloyds Group (LSE: LLOY) made good gains after naming Win Bischoff new chairman, but was in the red by the afternoon with a loss of 1%. UK’s other partly nationalized bank RBS (LSE: RBS) held steady. HSBC (LSE: HSBA) showed little movement, while Barclays (LSE: BARC) was down 1% to fall further after a disappointing performance yesterday. Just like on Monday, Standard Chartered (LSE: STAN) was flat.
Insurance groups were once again mixed. Legal & General (LSE: LGEN) posted small losses, while Prudential (LSE: PRU) gained a little over 1%. Aviva (LSE: AV.) was down insignificantly and Old Mutual (LSE: OML) lost 3%.
Private equity group 3i (LSE: III) added 1.8%.
Large Cap News
FTSE 100 business management software company, The Sage Group (LSE: SGE), confirmed that trading for the first nine months of its financial year remained in line with expectations.
For the most recent quarter to 30 June 2009, Sage did note that market conditions “remained challenging” but mostly unchanged. Subscription revenues continue to show “solid growth” and the group’s cost base has been trimmed to reflect the slowdown in the software and software related services markets.
Xstrata PLC (LSE: XTA) reported a 11 percent rise in coal output in the first half to end-June 2009, to 43.8 million tonnes from 39.6 million a year earlier, while total mined copper production rose 1 percent to 447,509 tonnes.
Australian thermal coal production increased by 11 percent, mainly from the highly productive Newlands Northern Underground mine in Queensland and due to New South Wales mines switching semi-soft coal production to thermal production. The increase more than compensated for lower production from South Africa due to the planned closure of Impunzi Underground and industrial action.
In the midst of acquisition talks and with a share offering around the corner, Randgold Resources (LSE: RRS) reported on its Q2 results and production updates from its key projects, boasting a 45% quarter on quarter hike in profits.
Randgold’s profits jumped to USD 18.9 billion in Q2, driven primarily by the 10% increase in attributable gold production to 121,685 ounces and the 3% rise in gold prices. Yet the profits attributable to shareholders actually declined to USD 14,946 million from USD 17,911 million for the equivalent period of 2008.
South African bank, Investec plc (LSE: INVP, JSE: INP) spiked lower this morning after the company announced that it would be undertaking a book building process to raise fresh capital to tidy up its balance sheet, only to recover quickly on strong demand for the new shares.
Small Cap News
Biocompatibles International PLC (LSE: BII) said Eisai Co Ltd (TSE: 4523.JP) has exercised its option to license Biocompatibles' DC Bead and PRECISION Bead products in Japan, and the company will receive an initial fee of £3 million, followed by further substantial payments based on Eisai's achievement of targets.
The option agreement was previously announced in May 2008.
Mineral exploration junior, Horizonte Minerals (AIM: HZM) received encouraging news from its Tangara joint venture (‘JV’) with Troy Resources (TSX & ASX: TRY).
The Tangara JV covers the Tangara Project, a gold project located in the Carajas Mineral Province in Brazil. Horizonte first entered into the JV with Troy Resources in December 2007. The agreement allows Troy Resources to acquire 100% of the project from Horizonte Minerals by meeting a number of milestones, including a US$800,000 staged cash payment, a royalty of US$30 per ounce on the first 500,000 ounces produced, a 2% Net Smelter Return on production in excess of 1 million ounces of gold and finally a payment of US$2 million if Troy Resources exercises its option to advance the project to production. Troy Resources is also committed to a US$2 million exploration budget.
Leading independent Italian gas developer, Po Valley Energy (ASX: PVE) has completed drilling of the Sillaro#2 production well, to its target depth of 2,364 metres.
Logs of Sillaro #2 well have been run and analysis has confirmed the main pay zones in the Sillaro#1 production well, are across a gross interval of 140 metres from 2,180m to 2,320m. The two wells are laterally 500m apart at target depth.
African uranium developer West Australian Metals (ASX: WME) has undertaken downhole probing at Marenica Uranium Project in Namibia, Southern Africa.
In tandem with with the recently commenced 5,000 metre in-fill Reverse Circulation drilling program, the work is designed to upgrade a significant portion of the current resource at Marenica from Inferred to Indicated.
TyraTech Inc (AIM: TYR) said it executed a private label agreement with Natural Forces LLC of Davidson, North Carolina, under which Natural Forces will market and sell co-branded TyraTech Nature’s Technology insecticide and repellant products into the US mushroom production and processing markets.
Explorer Victoria Oil & Gas (AIM: VOG) put in solid gains on the AIM market after releasing an update on its West Medvezhye (West Med) gas and condensate project in Russia.
VOG said the independent estimate of West Med’s resources carried out by local geological institute SibNats has been approved by the Russian Ministry of Natural Resources (MNR), putting the resources of 3 structures within West Med at 170 million barrels of oil equivalent. More than 30 other structures have been identified and received MNR’s approval.
It was a mixed signal from mixed-signal semiconductor specialist, Wolfson Microelectronics (LSE: WLF) this morning. On the positive side, second quarter revenues growth rose 31% on Q1 2009, to US$33.2 million. However, this was still way below the comparable period in 2008, when revenues hit $53.9 million. Perhaps more worrying for investors, Gross Margins slipped 1.2% to 50.5% from 51.7% in Q2 2008.
Cash balances did grow to over US$100 million, and Wolfson Electronics has no debt.
UK based provider of subsea solutions to the oil and gas industry Hallin Marine Subsea International plc (AIM: HMS) said it was able to secure a deal for its Sanko Angel vessel to provide support and services for a major oil and gas operator.
The Sanko Angel will provide offshore construction support to the operator’s oil and gas platforms and subsea infrastructure. Among other things, the 76 metre vessel will also be providing accommodation support to the client’s offshore crew, while Hallin’s own divers, engineers and technicians will undertake various tasks including saturation diving and Remote Operate Vehicle (ROV) services from the vessel.
Recruitment software specialist, Dillistone Group plc (AIM: DSG) climbed this morning after the company announced a contract win with GSI Executive Search, a subsidiary of The GMP Group of Singapore. The contract is for Dillistone’s “Filefinder9” plus ongoing support. Filefinder is an executive recruitment software product, which provides tailored workflow and round the clock support for its users.
Metal trader Wogen PLC (AIM: WGN) is recommending that shareholders accept the 41 pence a share in cash management buy-out proposal, the acquisition vehicle Sanctuary Partners Ltd announced. The management team contemplating had initially tabled a 36p offer on June 11, but raised it to 41p a fortnight later.
Games Workshop Group PLC (LSE: GAW), owner of the Warhammer tabletop miniature wargame franchise, has increased revenue in the year to end-May 2009 to £125.7 million from £110.3 million previously while pretax profit rose to £7.5 million from £1.1 million.
The company has reduced its net borrowings to £1.6 million from the previous year-end-figure of £10.1 million.
British Virgin Islands based CIC Energy Corp (TSX: ELC) announced it signed a development agreement with International Power PLC (LSE: IPR) with respect to the Mmamabula Energy Project (MEP) in Botswana.
This latest deal follows the September 2008 agreement in which the parties pledged to develop one or more power stations utilizing coal from the Mmamabula coal field.
Shares in computer based business training specialist ILX Group PLC (AIM: ILX) were lifted by the announcement it won considerable new business in the current financial year, including several major contracts from its competitors.
The stock was trading up 12 percent by midday.
Stockbrokerage Charles Stanley Group PLC (LSE: CAY) said the business has performed solidly since the beginning of the new financial year on April 1 2009 in markets that continue to be challenging, and income has been resilient across all three divisions Private Clients, Financial Services and Charles Stanley Securities.
Revenue for the three months to June 30 was 2.4 percent higher than in the previous first quarter at £26 million.
www.proactiveinvestors.co.uk
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