The market appeared to be bullish in the morning as the Footsie got off to a good start climbing back to 4,600 shortly after trading began. Yet the trends were quickly reversed as the FTSE 100 slipped into the negative, only to get back on positive territory with a 20 point improvement.
The indices were still dragged down by the utilities sector, yet to a lesser extent than last week. Pennon Group (LSE: PNN) and Northumbrian Water Group (LSE: NWG) were downgraded by HSBC last week to neutral and underweight respectively, placing more pressure on utilities. Northumbrian lost 1.5%. United Utilities (LSE: UU.) was down 2%.
Packaging group and FTSE 100 constituent Rexam Plc (LSE: REX) hit sentiment too, falling 10% after revealing plans for a cash call to help its credit rating from falling to junk status.
Publisher Pearson Group (LSE: PSON) acted as counterweight to the fallers with a 9% improvement on better than expected sales results for H1 2009 and an improved outlook for 2009 earnings.
Midcap coach and rail operator National Express (LSE: NEX) was up 7% on the news that rival Stagecoach was pondering an offer, with few details available.
Should it stay above the water, the Footsie will extend its winning streak to 11 days and get a shot at setting the new record at 12 tomorrow, if it puts up another positive performance.
Commodities
Commodity prices continued to improve, helping the mining sector to yet another round of gains.
Gold was up USD 5 to USD 956/ounce, once again pushing closer to the USD 960 plateau; silver was up USD 0.17 to reach USD 14.4/ounce, while platinum made significant gains adding USD 21 getting to USD 1207/ounce.
Base metals also saw their value increase. Copper was up by USD 0.05 to USD 2.54/pound, zinc slightly improved to USD 0.77/pound, while nickel went up to USD 7.63/pound. Brent Crude was at USD 69/barrel.
Boosted by the improved prices, platinum miners have had themselves a good day so far. Lonmin (LSE: LMI) was up 3.8%, climbing to 1290p. Aquarius Platinum (LSE: AQP) added 4.3% by midday, surging to 248p per share. Johnson Matthey (LSE: JMAT), which was recently removed from Goldman Sach’s conviction sell list after a positive Q1 update, was unmoved.
Gold and silver producers started the day with modest gains. Randgold Resources (LSE: RRS) was up 0.5%, Peter Hambro Mining (LSE: POG) added just 1% but Yamana Gold (LSE: YAU) stayed flat.
Junior Gold companies mostly opened flat with the exception of Oxus Gold (AIM: OXS), which added 14%. Kryso Resources (AIM: KYS) and Pan African Resources (AIM: PAF) were flat, Patagonia Gold (AIM: PGD) was up 1.6% while Medusa Mining (AIM & ASX: MML) slipped insignificantly. Cluff Gold (AIM & TSX: CLF) opened with minor losses, down 0.5 by midday.
Silver producer Fresnillo (LSE: FRES), which made good progress last week, was up slightly by less than 1%. Hochschild Mining (LSE: HOC) retreated after making gains slipping by 2%.
BHP Billiton (LSE: BLT) was up 1.5%. Coal miner Xstrata (LSE: XTA) didn’t show much movement, nor did Anglo American (LSE: AAL). Rio Tinto (LSE: RIO) made insignificant gains, barely climbing over 1%.
After receiving a positive price update, copper miners opened with gains. Vedanta (LSE: VED) gained 1%, while Kazakhmys (LSE: KAZ) and Antofagasta (LSE: ANTO) were both up 2.5%.
First Quantum Minerals (LSE & TSX: FQM) held steady.
Eurasian Natural Resources (LSE: ENRC) gained around 1.8%.
BP (LSE: BP.)’s stock once again increased, this time by 1.7%. Shell (LSE: RDSB) added 1.3%.
Juniors tented to stay around the opening levels as Cairn Energy (LSE: CNE) was unmoved, Dragon Oil (LSE: DGO) was up insignificantly as was Dana Petroleum (LSE: DNX).
Insurance, banks, private equity rise
The worse than expected GDP data, which was shaken off by the market on Friday as the winning streak continued, actually bolstered financial shares. While it signalled that the long-awaited recovery wasn’t approaching as fast as the recent FTSE 100 gains might have suggested, it became clear there was still room for more stimulus packages from the government. Banks continued the strong performance into Monday, with the key market players making good gains yet again.
The banks are also riding the momentum established by the strong results posted by US banks in hopes they will be repeated in the UK.
Lloyds Group (LSE: LLOY) rose 4% following Friday’s strong performance, RBS (LSE: RBS) gained 2.6%. HSBC (LSE: HSBA) went against the market trend and slipped by less than 1%. Barclays (LSE: BARC) also went down by around 1%. Standard Chartered (LSE: STAN) was up 1%.
Insurance groups were headed in different directions. Legal & General (LSE: LGEN) and Prudential (LSE: PRU) were both up this morning, gaining 1.0% and 1.5% respectively. Aviva (LSE: AV.) was down by a little over 1%. Old Mutual (LSE: OML) was up 2.3%.
Private equity group 3i (LSE: III) was little moved.
Large Cap News
Plumbing products and building materials supplier Wolseley PLC (LSE: WOS) issued a rather downbeat pre-close trading statement ahead of its full-year results, saying it expects market conditions will continue to deteriorate with trading remaining challenging until at least the end of the calendar year.
Revenue from continuing operations in the 11 months to end-June 2009 were down 1.5 percent, or 16 percent in constant currency. Pretax profit before exceptionals and amortisation from continuing operations was down 60 percent.
Packaging products group Rexam PLC (LSE: REX) confirmed that it is considering a number of options enabling it to continue paying down debt, and options considered include an equity raising. The group said it made the statement in response to press coverage regarding a possible issue of new equity by Rexam.
Friends Provident Group PLC has rejected a revised proposal by Resolution Ltd to acquire the pensions and life insurance group and has terminated discussions as it sees no basis for further engagement with Resolution.
In a statement, it said that following a period of engagement, Friends received a revised proposal from Resolution yesterday, but the terms and structure remained wholly inadequate.
Shares in publishing group Pearson PLC (LSE: PSON) jumped 10% in early deals after the company reported better than expected results for the first half of 2009.
The owner of the Financial Times and Penguin Books reported an impressive 25% jump in adjusted operating profit and 41% surge in adjusted earnings per share.
Shares in Ryanair Holdings PLC (LSE: RYA) were hit in early trade after the Irish no-frills airline announced that it expects net profits in the current year to come in at the bottom of the €200-€300 million range it has guided for, as a result of lower yields which in turn are caused by ongoing price wars in the industry and the recession.
The stock was trading down 10 percent by midmorning.
The fast developing take-over battle for FTSE 250 bus, coach and rail operator, National Express (LSE: NEX) took another twist this morning, after rival Stagecoach Group (LSE: SGC) confirmed media speculation that it was considering an offer.
Drinks group, Diageo plc (LSE: DGE) announced that its East African subsidiary, East African Breweries (‘EABL’) Limited had entered into a conditional agreement to acquire a “substantial” interest in Tanzania’s second largest brewer, Serengeti Breweries (‘SBL’). Serengeti Breweries has around 17% of the Tanzanian market by volume and has grown strongly over the past three years with its premium Serengeti Lager.
Famous London department store Liberty (LBE.L) released a confirmation of the press reports that appeared in the media stating the company was set to hire advisers to conduct a review for Liberty to help identify potential growth areas for the business and possibilities for expansion in the UK as well as abroad.
Liberty's Board said the expansion plans are fuelled by the impressive trading performance in the first half. Liberty said it experienced double-digit increases in sales.
Small Cap News
EMED Mining (AIM: EMED) announced it has raised £2.9 million gross through placing 38,170,001 new ordinary shares with Fox-Davies Capital Limited acting as the broker. The money will help the company work on the increasingly important Rio Tinto Mine project in Andalucia and pay off a loan to avoid shareholder dilution.
The placing is still pending approval from the company’s shareholders, which is expected to be passed at an Extraordinary General Meeting the day before the planned admission.
York Pharma (AIM: YRK), whose shares have been in suspension since March 31, 2009, reported this morning that it had been forced to appoint administrators for the company after it failed to secure additional funding.
The pharmaceutical minnow which supplies products to wholesalers, hospitals and practitioners, appointed Andrew Poxon and John Malcolm Title of Leonard Curtis in Lancashire as administrators.
Pan-African investment group Lonrho PLC (AIM: LONR) said the the third quarter of its 2008/09 financial year has seen continued growth in its core businesses despite depressed global markets, with turnover from continuing operations up 16 percent on a like-for-like basis.
Turnover in the quarter to end-June from continuing operations came in at £18.5 million, the company said in a trading statement, noting that the period is traditionally the slowest in trading terms due to seasonal effects.
India-based animation and gaming group DQ Entertainment PLC (AIM: DQE) reported a 93 percent rise in EBITDA and a 34 percent rise in revenue for the full-year to March 31 2009 and said it expects the current financial year to be another period of continued progress.
EBITDA rose to US $13.9 million from US$7.2 million a year earlier, while revenue was up at US$32.2 million compared with US$24.1 million.
Heating solutions provider Inditherm Plc (LSE: IDM) has released a statement cooling off its growth plans set for 2009. The company announced in March that it was poised to maintain the same rate of growth in the Medical sector as last year, and increase sales in the Industrial sector, contingent on the conversion of significant prospects.
Video surveillance solution developer COE Group Plc (LSE: COE) announced it has landed a contract to provide video surveillance systems for the Seoul Metropolitan Subway network which has a revenue value of £1 million, propelling its stock up by a third.
The system provided by the Leeds-based COE will operate on lines 1, 3 & 4 of the Seoul Metropolitan subway and control up to 8,000 cameras at 67 stations. The surveillance network will provide solutions for real time monitoring of all video, automated camera tracking and include a sophisticated video management system.
Biomaterials and medical device development company Aortech International PLC said it has been granted the US patent for its Polymer Heart Valve (PHV).
The addition of this patent expands AorTech's Heart Valve portfolio to include manifestations for catheter delivered and a conventional open-heart surgically implanted device. AorTech has previously been issued PHV patents in the United Kingdom and Europe.
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