Overview: just as was expected, the FTSE 100 responded to yesterday’s sharp fall on Wall Street with a decline of 0.7% in early trade, shedding over 30 points. The blue chip index was further weighed down by a decline in stock index futures in the US, sliding all the way down to the 5,000 mark.
The US non-farm payroll update, which is due to come out at 12:30 GMT today, will likely set the direction for the market for the rest of the day.
The leaderboard didn’t look very busy today with just one FTSE 100 constituent, money broker ICAP (LSE: IAP), gaining more than 1%. Asset management firm Schroders (LSE: SDR) came close with a gain of about 0.8%.
Insurer Legal & General (LSE: LGEN) emerged as the leading faller in the FTSE 100 with a 5% slide, while miner Lonmin (LSE: LMI) and Xstrata (LSE: XTA) followed with losses of over 4.5%. Bailed out banks RBS (LSE: RBS) and Lloyds (LSE: LLOY) also were on a slump, shedding over 4%.
Hotel manager Whitbread (LSE: WTB) and engineering firm Invensys (LSE: ISYS) both lost about 3%. Another hotel group InterContinental Hotels (LSE: IHT) lost 2.8%.
Commodities
Oil prices inched lower in the morning. November Brent Crude declined to US$68.2 per barrel, while US light, sweet crude for November delivery slipped below US$70/barrel.
Most blue chips in the oil and gas sector were in decline this morning. Supermajors BP (LSE: BP) and Shell (LSE: RDSB) were flat in early trade, while fellow FTSE 100 constituents Cairn Energy (LSE: CNE) and Petrofac (LSE: PFC) both declined more than 2%, while BG Group (LSE: BG) was down 1%.
Tullow Oil (LSE: TLW) outperformed the sector, posting a marginal gain, recovering from its recent losses.
In the FTSE 250, Dana Petroleum (LSE: DNX) and Heritage Oil (LSE: HOIL) both shed over 1%, while Dragon Oil (OLSE: DGO) lost less than 1%.
Atlantic Canada operating oil and gas group Enegi Oil (AIM: ENEG) led the juniors, soaring 49%. Europe focused oil and gas developer Ascent Resources (AIM: AST) and North American based explorer Nighthawk Energy (AIM: HAWK) both added about 3%.
Latin American focused Gold Oil (AIM: GOO) was one of the leading fallers among the small caps with a 6% decline. Eastern Europe focused junior Aurelian Oil & Gas (AIM: AUL) and North Sea explorers Xcite Energy (AIM: XEL) both shed 5%. Iraq and Algeria operating Gulf Keystone Petroleum (AIM: GKP), Western Europe operating oil and gas company Northern Petroleum (AIM: NOP) and North American focused oil & gas junior, Pantheon Resources (AIM: PANR) all lost 4%.
Africa and FSU operating oil and gas junior Victoria Oil & Gas (AIM: VOG) and US focused junior Empyrean Energy (AIM: EME) were down 3%.
Gold, Silver and Platinum drop to weaken miners
Metals prices also declined. Gold slid to US$997/oz, while Silver slipped to US$16.25/oz. Platinum dropped to US$1,267/oz.
Major mining stocks also were in decline this morning. Platinum miner Lonmin (LSE: LMI) extended yesterday’s losses, shedding a further 4%, slipping to 1,450 pence per share after standing at 1,700 pence per share earlier this week.
Gold miner Randgold Resources (LSE: RRS) lost 1.5%, while silver producer Fresnillo (LSE: FRES) opened with marginal losses, as did specialty chemicals firm Johnson Matthey (LSE: JMAT).
In the FTSE 250, gold producer Petropavlovsk (LSE: POG) declined marginally, while Aquarius Platinum (LSE: AQP) shed 1.5%. Hochschild Mining (LSE: HOC) outperformed its sector peers with a small gain.
Uzbekistan focused gold miner Oxus Gold (AIM: OXS) was one of the leading fallers in the sector with an 11% slide. Copper and gold miner EMED Mining (AIM: EMED) followed with a 7% decline. Fiji focused gold miner Vatukoula Gold Mines (AIM: VGM) lost 5%.
Western Australia operating Norseman Gold (AIM: NGL) and commodity asset development company Mercator Gold (AIM: MCR) both shed over 3.5%.
Rio, ENRC and Kazakhmys slide on lower Copper, Nickel
Base metals focused stocks weren’t any different from the rest of the sector, slipping in early trade as Copper slid to US$2.67/pound and Nickel declined to US$7.78/pound. Zinc slid to US$0.83/pound.
Anglo-Swiss miner Xstrata was the leading faller, sliding over 4%. Eurasian Natural Resources (LSE: ENRC), Rio Tinto (LSE: RIO) and Vedanta Resources (LSE: VED) all lost more than 2%.
Kazakhmys (LSE: KAZ) was down 1.7%. Anglo American (LSE: AAL) and BHP Billiton (LSE: BLT) declined marginally.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) moved with the market, posting a loss of about 1% in early trade.
Most juniors also were in decline this morning.
Laterite nickel specialist European Nickel (AIM: ENK) was in the lead, sliding 7%. Zinc mining and recycling specialist ZincOX (AIM: ZOX) lost 6%. Northern Mozambique operating Irish mineral sands producer Kenmare Resources (AIM: KMR) and tantalum miner Noventa (LSE: NVTA), which also operates in Mozambique, declined 5% and 4% respectively.
Canada based junior gold developer Rambler Metals and Mining Plc (AIM: RMM) and Indonesia operating coal miner Churchill Mining (AIM: CHL) both lost 3%.
Banks, insurance, private equity
All financial stocks turned negative early in the day.
Bailed out banks Lloyds (LSE: LLOY) and Royal Bank of Scotland (LSE: RBS) were in the lead with losses of over 4%. Standard Chartered (LSE: STAN) declined 1.3%, while Barclays (LSE: BARC) and HSBC (LSE: HSBA) were sitting slightly below the opening levels.
Insurer Legal & General (LSE: LGEN) dipped over 5%. Sector peers Aviva (LSE: AV) and Old Mutual (LSE: OML) lost more than 2%, while Prudential (LSE: PRU) was down 2%. RSA Insurance Group (LSE: RSA), Standard Life (LSE: SL) lost more than 1%. Friends Provident (LSE: FP) slid 1%.
Private equity firm 3i (LSE: III) lost 1.2%.
Large and Mid Cap News
FTSE 250 Oil & Gas producer Emerald Energy Plc (LSE: EEN) released an operational update of its exploratory drilling in Colombia. In Emerald’s Matamo block in Upper Magdalena Valley, the Gigante Caballos 2# well has produced natural flow rates almost 3 times higher than in previous testing. Emerald now plans to conduct an extended flow and formation pressure build-up test.
Bloomberg has reported that BHP Billiton (ASX: BHP), the world’s largest mining company, may report full-year earnings 22 percent greater than earlier forecast because of higher metal prices, Royal Bank of Scotland Group Plc said.
Small Cap News
Xcite Energy Ltd (TSX-V, AIM: XEL), a developer of heavy oil assets in the UK North Sea, said it has conditionally placed 10.14 million new shares at a price of 21 pence, or C$0.37, per share to raise approximately £2.1 million before expenses, or C$3.8 million, from investors in the UK and Canada.
Ceramic Fuel Cells (AIM, ASX: CFU), which manufactures power products for homes, announced its first commercial agreement with an Australian energy utility, which has agreed to install its BlueGen gas-to-electricity generator in a showcase sustainability home.
India-based animation and gaming group DQ Entertainment PLC (AIM: DQE) said it is producing a live action TV series, 'Toomai The Story of an Elephant Boy'. It is due for completion by late 2010 for an early 2011 release, and is supported by ABC of Australia and other major global broadcasters.
Shares in Upstream Marketing and Communications (AIM: UPS) soared after the company reported progress on its radical makeover campaign, having entered into a conditional agreement to sell its PR subsidiaries Upstream Asia and Camber Communications, which the company said would result in a “fundamental change of business”.
Platinum producer Platinum Australia (ASX: PLA, AIM: PLAA) has raised $30 million (£16 million) from an institutional placement of 37.5 million shares priced at $0.81 per share (44 pence) after an earlier proposed equity raising fell through.
Inspired Gaming Group (AIM: INGG) announced the renewal and four year extension of its exclusive contract with bookmaker Paddy Power (LSE: PAP). Under the agreement, Inspired Gaming will continue to supply Paddy Power's 79 outlets in the UK with 316 gaming machines. The existing three year relationship, resulted in 81% growth in machine income for the bookmaker.
Venture capital investor SPARK Ventures (AIM: SPK) said today its partly owned online and mobile services provider IMImobile has entered into an agreement to become telecom operator MTN Group’s strategic managed services and hosting partner.
