London close: South African miners rally
Market Movers
- techMARK 2,139.61 -0.26%
- FTSE 100 5,893.52 -0.37%
- FTSE 250 12,080.88 -0.29%
Footsie finished the day below 5900, having traded in a narrow range
spanning from 5,883 to 5,916, as worries about Chinese growth weighed on
investors' minds.
Last week London enjoyed a good run on the
back of apparent enthusiasm of central banks worldwide to give the
global economy a leg-up, but speculation mounted over the week-end that
the Chinese authorities might not quite as keen on sprightly
intervention as previously assumed.
Adding weight to that view
was the decision by economists at Citigroup to cut their forecast for
Chinese gross domestic product growth this year to 7.6% from 8% before.
African miners shrug off lower metals prices
Mining companies were generally off the pace, with the exception of a Lonmin and Aquarius Platinum,
both of which benefited from developments in South Africa, where
violent industrial unrest and tensions have been running high.
Mining operations have resumed at Aquarius Platinum's Kroondal platinum mine and at Xstrata's chrome mine near the city of Rustenburg in South Africa. American Platinum
(Amplats) said work would resume at its strike-hit Rustenburg mines on
Tuesday, although defiant striking workers cast doubt on Amplats's
management's confident assertion.
South African police
launched an offensive over the week-end to disarm miners and bring to an
end five weeks of often violent protests which have interrupted mining
in the area.
Global platinum powerhouse Lonmin, which
said today that strikes at its mines in South Africa have reduced full
year sales expectations to somewhere between 685,000 and 700,000 ounces
of platinum by the year's end in September, has resumed talks with its
striking miners.
The dispute is in its sixth week but could be
drawing to a close, with signs of a softening of the miners' demands
for an increase in basic pay to 12,500 rand a month.
"We have
been mandated to negotiate on a specific figure. The workers are not
married to the R12,500," said Jo Seoka, President of the SA Council of
Churches, according to the South African Press Asociation.
Other news agencies suggest that the workers have lowered their demand to R11,000 a month.
Elsewhere in the resource sector, FTSE-250 oil and gas company Ophir Energy
updated the market on its drilling programme in block R, Equatorial
Guinea. These were better than expected, but the market was more
concerned by an instruction by the Minister of Energy and Mines,
Sospeter Muhongo, ordering the board of Tanzania Petroleum to review all
of its agreements with energy companies. Ophir said it is fully
compliant in respect of all its Tanzanian licences.
Royal Dutch Shell
has suffered a setback on its Alaska drilling programme, with the
containment dome aboard the Arctic Challenger barge sustaining damage
during a final test of the containment system. The time required to
repair the dome, along with steps taken to protect local whaling
operations and to ensure the safety of operations from ice flow
movement, have led the oil giant to revise its plans for the 2012-2013
exploration programme.
Brokers busy
Anglo-Dutch household goods firm Unilever was wanted after UBS issued a "buy" note on the stock. The same broker has turned bearish on chip-designer Imagination Technologies, downgrading it to "sell" from "neutral".
Mining group Petropavlovsk
was upgraded by Citi to "buy" from "neuitral", as the US bank believes
the US Federal Reserve's renewed enthusiasm for quantitative easing will
support he price of precious metals.
Telecoms titan BT was friendless after Exane BNP Paris downgraded the shares to "neutral" from "outperform".
FTSE 100 - Risers
Ashmore Group (ASHM) 338.10p +3.14%
G4S (GFS) 266.90p +2.26%
Capita (CPI) 753.00p +2.24%
Serco Group (SRP) 595.00p +1.54%
Next (NXT) 3,401.00p +1.22%
GlaxoSmithKline (GSK) 1,432.50p +1.06%
Unilever (ULVR) 2,268.00p +1.02%
Hargreaves Lansdown (HL.) 652.00p +1.01%
Intertek Group (ITRK) 2,743.00p +0.92%
United Utilities Group (UU.) 688.50p +0.81%
FTSE 100 - Fallers
Evraz (EVR) 284.00p -3.30%
International Consolidated Airlines Group SA (CDI) (IAG) 156.00p -2.56%
Anglo American (AAL) 2,036.50p -2.28%
CRH (CRH) 1,251.00p -2.11%
Glencore International (GLEN) 370.85p -2.11%
BT Group (BT.A) 228.20p -2.06%
Rio Tinto (RIO) 3,216.00p -2.00%
Antofagasta (ANTO) 1,308.00p -1.95%
Burberry Group (BRBY) 1,075.00p -1.74%
Johnson Matthey (JMAT) 2,530.00p -1.67%
FTSE 250 - Risers
Aquarius Platinum Ltd. (AQP) 53.00p +8.61%
Lonmin (LMI) 649.00p +5.61%
Cable & Wireless Communications (CWC) 38.25p +4.71%
Cape (CIU) 260.50p +4.33%
Bwin.party Digital Entertainment (BPTY) 110.40p +3.66%
Ladbrokes (LAD) 184.10p +3.14%
Petropavlovsk (POG) 447.40p +3.11%
Stobart Group Ltd. (STOB) 119.40p +2.75%
Kentz Corporation Ltd. (KENZ) 441.00p +2.56%
Dunelm Group (DNLM) 656.00p +2.42%
FTSE 250 - Fallers
Fenner (FENR) 395.00p -5.75%
Dechra Pharmaceuticals (DPH) 569.00p -5.40%
Ophir Energy (OPHR) 608.00p -5.15%
Imagination Technologies Group (IMG) 568.50p -3.64%
FirstGroup (FGP) 253.60p -2.65%
UBM (UBM) 692.00p -2.60%
Kier Group (KIE) 1,366.00p -2.36%
Ruspetro (RPO) 109.50p -2.32%
Fidelity China Special Situations (FCSS) 73.25p -2.20%
Jupiter Fund Management (JUP) 263.10p -2.12%
FTSE TechMARK - Risers
AEA Technology Group (AAT) 0.075p +25.00%
Antisoma (ASM) 1.73p +12.38%
Filtronic (FTC) 46.00p +10.84%
E2V Technologies (E2V) 137.75p +6.99%
Torotrak (TRK) 36.12p +4.71%
Vislink (VLK) 33.00p +3.94%
Pace (PIC) 166.25p +2.31%
Kofax (KFX) 305.75p +0.99%
XP Power Ltd. (DI) (XPP) 1,059.00p +0.86%
Gresham Computing (GHT) 66.00p +0.76%
FTSE TechMARK - Fallers
Electronic Data Processing (EDP) 47.00p -3.09%
Hiwave Technologies (HIW) 1.77p -2.74%
Skyepharma (SKP) 95.00p -2.56%
Psion (PON) 86.25p -1.71%
Emblaze Ltd. (BLZ) 47.75p -1.04%
BATM Advanced Communications Ltd. (BVC) 15.38p -0.81%
NCC Group (NCC) 918.00p -0.70%
Optos (OPTS) 179.75p -0.69%
Microgen (MCGN) 133.00p -0.37%
| Europe Market Report |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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Europe close: Spanish delays and China weakness hit markets
Market movers
FTSE 100: -0.37%
Dax 30: -0.11%
Stoxx 600: -0.34%
Cac 40: -0.78%
Ibex 35: 0.08%
FTSE MIB: 0.93%
A lack of agreement over the future of banking supervision within
Europe, uncertainty over whether Spain will request assistance from the
European Central Bank (ECB), reduced growth prospects in China and
rising tensions between Japan and China all served to push European
stocks lower on Friday.
EU finance ministers failed to agree
to changes to the powers of the European Central Bank at a meeting in
Cyprus at the end of last week. This was seen as an important step in
helping to avoid catastrophic losses within the Spanish and Irish
banking sectors, as it would clear the way for the direct
recapitalisation of these countries´ banks.
In addition, Spain
has yet to make a formal request for assistance from the European
Central Bank. The move, which would see the ECB enter the secondary
market to keep down the cost of borrowing for the Eurozone's fourth
largest economy, would also entail strict budget conditions that the
Spanish government is loathe to accept.
Investors have been
expecting Spain to bite the bullet for several weeks but Madrid has so
far resisted the political and economic pressure to press the emergency
help button.
News out of China further darkened the mood with
Citigroup cuttings its growth forecast for the world's second largest
economy from 8% to 7.6%. The official Xinhua Chinese news agency also
carried a warning that the recent announcement by the US that it would
begin a third round of quantitative easing might have inflationary
consequences. Companies
The weakest sector on the
Stoxx Europe 600 was basic resources, which fell 1.4%, the strongest
was food & beverage which gained 0.24%.
Amongst the most troubled stocks were two of the big steel companies ThyssenKrupp which fell on a downgrade from UBS and Swedish outfit SSAB which reported lower demand for "strip" products.
Fashion retailer H&M slipped after claiming the heat wave in southern Europe this August dented sales.
The world's biggest maker of wind turbines, Vestas Wind Systems
rose sharply on growing expectations of a tie up with Japanese firm
Mitsubishi heavy industries. Japan has announced it will phase out
nuclear power in the wake of the Fukushima nuclear disaster. |
| US Market Report |
US open: Apple announces record pre-orders for iPhone 5
The
main US equity benchmarks have begun today´s trading session with
slight falls. That as some observers ask themselves just how effective
the Fed´s third round of quantitative easing will really be or not.
Also weighing on sentiment may be the increasing tensions between China
and Japan, and the effect which that could have on trade relations in
the region.
Apple is on the rise after the company
reported that pre-orders for the iPhone 5 topped two million units in
the first 24 hours, twice the demand seen for the iPhone 4S last year.
Shares of Office Depot are surging 13% after activist investor
Starboard unveiled a 13.3% stake in the office-supply giant, calling the
company "undervalued."
Lowe´s has pulled a $1.81bn offer for its Canadian rival Rona.
Waste Connections will pay $1.3bn for various subsidiaries of R360 Environmental Solutions.
Analysts at Stiefel Nicolaus have downgraded their recommendation on shares of Wells Fargo to hold from buy.
Weaker than expected manufacturing data
The New York Fed´s regional manufacturing gauge for the month of
September has fallen to -10 points (Consensus: -2) from -5.85 in August.
Treasuries rise after Empire State survey
10 year US Treasuries are now gaining 7/32 dollars, with yields at 1.85%.
Front month West Texas crude futures are now rising by 0.25% to the 99.29 dollar per barrel mark on the NYMEX.
| Broker Tips |
Broker tips: Aggreko, ASOS, Falkland Oil & Gas
Analysts at Seymour Pierce have this morning raised their price target on shares of temporary power solutions provider Aggreko, while reiterating their "buy" stance on the company´s shares.
This followed a visit to the company´s new bespoke manufacturing
facility in Dumbarton, Scotland. In their opinion, the £22m purpose
built site highlights how Aggreko's manufacturing expertise is a key
source of competitive advantage, in so far as it allows the outfit to
react quickly to new opportunities. The broker also calls attention to
the cost savings which accrue to the company as a result of its relative
size in the market for 1MW class engines.
Due to the above,
Seymour Pierce indicates that it remains a Buyer of the shares with an
increased £27 target (previously £25). In their view Aggreko has a
robust business model to tap into unrivalled growth opportunities.
Furthermore, they are of the belief that in its IPP business the gap
between supply and demand for power is unlikely to abate anytime soon.
Following a meeting with ASOS, partly to discuss new forecasts following the change in accounting date from March to August, analysts at Seymour Pierce
came back reassured that earnings momentum is unlikely to slow and that
there remains a wealth of opportunity to drive sales. They could not,
however, identify a catalyst for a re-rating of the stock, which is
valued at 39.5 times its fiscal year 2013 fully diluted earnings.
Nevertheless, Seymour Pierce is confident that the company can achieve
its longer term target of £1bn of sales, and because of this has decided
to maintain its hold recommendation, while at the same time upgrading
its price target from 1,600p to 1,900p, toward the upper end of the
recent trading range.
Merchant Securities has decided to place its valuation of Falklands Oil and Gas under review after the explorer announced the discovery of six Tertiary aged gas bearing reservoirs at Loligo.
While it believes that the "scale of the resource is potentially
enormous," its analysts are cautious given that the reservoir was unable
to produce a good sample and because the water saturations were
reported to be high.
In that same vein, the broker adds that:
"From our perspective, obtaining a fluid sample was really the whole
point of drilling the prospect. It is frustrating that this was not
possible; however, it could now be possible to design a fit for purpose
test for a second well. For now, we believe that much more analysis of
the data must be performed in order to draw conclusions."
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