AP: FTSE 100 inches lower after house prices decline, Dow Jones and S&P 500 poised for lower open
Overview: the FTSE 100 declined 0.1% by mid afternoon after data from Rightmove (LON:RMV) showed that house prices in the UK declined for the second month in a row in July. Investors are now awaiting the Empire State index and National Association of Home Builders’ (NAHB) housing market index that are due to be released in the US later today.
Indian miner Vedanta Resources (LON:VED) emerged atop the leaderboard with a 5.5% gain after buying Cairn Energy’s (LON:CNE) Indian assets. Cairn was a distant second with a 3.2% climb. Insurer Prudential (LON:PRU) added 2.2%, while miner Anglo American (LON:AAL) and gold producer Randgold Resources (LON:RRS) added just over 1%.
Oil and gas supermajor BP (LON:BP) was at the bottom of the pile with a loss of over 1.5%. Satellite telecommunications company Inmarsat (LON:ISAT), RSA Insurance Group (LON:RSA) and defence and aerospace systems manufacturer BAE Systems (LON:BA) lost 1.5%. Chipmaker ARM Holdings (LON:ARM) declined 1.2%. Software developer Autonomy Corp (LON:AU) lost 1%.
Futures for the Dow Jones Industrial Average and the broader S&P 500 index declined 0.2% in pre-trade, pointing to a lower start on Wall Street.
Commodities
Oil prices were slightly higher in early afternoon on optimism about today’s US economic data, which will include the Empire State manufacturing survey and an update on the National Association of Home Builders’ housing market index.
Crude futures were in decline last week amid a sell-off in equity markets. Investors were disappointed with weaker than expected US data, which showed gains in initial jobless claims and a slower than expected growth of retail sales. In addition to that, both the Federal Reserve and the Bank of England made bearish comments on the respective economies, while the Fed said it would buy US bonds to bolster the recovery.
Rightmove (LOJN:RMV) today reported that house prices in the UK declined for the second month in a row, slipping 1.7% to £232,000 in July following a 0.6% slid in June. The data has contributed to the perception that the economic recovery is slowing. However, oil prices were immune to the housing data as crude futures are believed to have been oversold and current economic conditions coupled with shrinking US inventories could justify a higher price.
Crude is expected to be tracking the movement in global stock markets this week, which will be heavily influenced by the US economic data that is due out in the next five days of trading. This will include building permits, the Empire State manufacturing index, weekly jobless claims update and the Philly fed index.
September Brent Crude climbed to US$75.34/barrel, while US light, sweet crude for September delivery rose to US$75.73/barrel.
Blue chip oil and gas producers were in decline today with the sole exception of Cairn Energy (LON:CNE), which advanced 3% for the lead.
BG Group (LON:BG) and Tullow Oil (LON:TLW) were sitting just below the opening level, while supermajors BP (LON:BP) and Shell (LON:RDSB) lost 1.6% and 1% respectively.
Oil and gas engineering firms did better with Amec (LON:AMEC) and Petrofac (LON:PFC) tacking on nearly 1%.
Most midcaps followed the trend. Heritage Oil (LON:HOIL) and Soco International (LON:SIA) dropped 3% and 1%.
Salamander Energy (LON:SMDR) and Premier Oil (LON:PMO) declined marginally, while Dana Petroleum (LON:DNX), Dragon Oil (LON:DGO), Melrose Resources (LON:MRS) and JKX Oil & Gas (LON:JKX) were flat.
Wood Group (LON:WG) was unmoved, while fellow services company Wellstream Holdings (LON:WSM) posted a small loss.
Europa Oil & gas (LON:EOG) and Iraq operating Irish oil company Petrel Resources (LON:PET) were among the leading performers in the sector with gains of over 5.5%.
Gold reaches $1,220
Precious metals rose today with gold getting enough support to stay above the US$1,220/oz level after UK house prices were reported to have declined for the second month in a row. Rightmove (LON:RMV) today said that the average price declined 1.7% to £2232,000 in July after sliding 0.6% in the previous month in yet the latest sign that the economic recovery is slowing.
Investment bank Goldman Sachs (NYSE:GS), which projected gold to reach US$1,300/oz within six months last week, retained its “overweight” rating for the yellow metal and other commodities, including platinum, oil, copper and zinc. Goldman attributed the positive outlook for the prices to limited growth in supplies and demand from emerging economies.
Gold reached US$1,223/oz, while silver and platinum advanced to US$18.21/oz and US$1,529/oz respectively.
Major mining stocks were mixed today. Gold miners did well with Randgold Resources (LON:RRS) and African Barrick Gold (LON:ABG) advancing 1%, while peer form the FTSE 250 Petropavlovsk (LON:POG) climbed 2.3%.
Silver miner Fresnillo (LON:FRES) was flat and platinum miner Lonmin (LON:LMI) posted a small gain.
Specialty chemicals firm Johnson Matthey (LON:JMAT) was unmoved, as was silver producer Hochschild Mining (LON:HOC). Another midcap Aquarius Platinum (LON:AQP) rose 1%.
UK-registered China operating copper and gold miner Central China Goldfields (LON:GGG) led the sector with a 43% rally after upping the resource estimate for its Bullabulling gold project by 450% to 1.98 million ounces of gold. Gemstone producer Gemfields Resources (LON:GEM) followed with a 5.5% gain.
Africa operating gold miner GMA Resources (LON:GMA) moved in the opposite direction, slipping 9%. Western Australia operating Norseman Gold (LON:NGL) declined 5%.
Copper rises to bolster miners
Copper rose to US$3.26/lb, while nickel and zinc held steady at US$9.62/lb and US$0.92/lb.
Most base metal focused miners were on the rise. Vedanta Resources (LON:VED) rallied 5.5% to take the lead in the sector. Anglo American (LON:AAL) followed with a 1.1% gain. Antofagasta (LON:ANTO), Kazakhmys (LON:KAZ) and Xstrata (LON:XTA) added almost 1%, while BHP Billiton (LON:BLT) posted a small gain.
Eurasian Natural Resources (LON:ENRC) and Rio Tinto (LON:RIO) went against the tide, shedding less than 1%.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LON:FXPO) was little moved.
Australia focused coking coal producer Caledon Resources (LON:CDN) slipped 13% after saying it was no longer in an offer period after receiving unsolicited and indicative enquiries from third parties in respect of possible alternative transactions to that terminated with Polo Resources in late June, including one related to an indicative offer for the company at 68 pence per share.
Copper and nickel explorer Regency Mines (LON:RGM) followed, retreating 7.5%.
Specialty minerals exploration and development company Thor Mining (LON:THR) and Indonesia operating miner Finders Resources (LON:FND) surged 15.5% and 8.5% respectively, emerging among the top performance in the sector.
Indonesia operating coal miner Churchill Mining (LON:CHL) also did well, climbing 5.5%.
Banks, insurance private equity
Banking stocks didn’t show much movement today. HSBC (LON:HSBA) rose marginally, while Barclays (LON:BARC), Lloyds (LON:LLOY) and Standard Chartered (LON:STAN) were sitting just below the opening level. Royal Bank of Scotland (LON:RBS) declined 1.4%.
Prudential (LON:PRU) led the insurers with a 2% climb. Admiral Group (LON:ADM), Old Mutual (LON:OML) and Standard Life (LON:SL) added less than 1%.
Aviva (LON:AV) and Legal & General (LON:LGEN) were in the negative with small losses.
RSA Insurance Group (LON:RSA) dropped 1.4%.
Private equity group 3i (LON:III) lost less than 1%.
Small Cap Movers
Other notable movers among the small caps included mobile email and data synchronisation group Synchronica PLC (LON:SYNC) and developer of advanced vision based industrial systems Seeing Machines (LON:SEE), which advanced 12.5% and 7.5% respectively.
Small Cap News
Oil and gas company with assets in Iraq, Syria and Gulf of Mexico, Gulfsands Petroleum (LON:GPX) has advised that preliminary evaluation of the MWD (measured while drilling) petrophysical logs from the Lambouka-1 exploration well offshore Tunisia suggested that the first reservoir target for the well, the Tertiary aged Birsa Sand, has been encountered and was water bearing.
Helius Energy (LON:HEGY) plans to build a 100MWe (Megawatt equivalent) biomass fuelled power plant on the South Coast. The company announced that it has signed an option to lease a 20 acre site in the Port of Southampton for the power plant. According to Helius, the biomass plant will contribute to the ‘South East Plan’ objective to cut carbon emissions by 20% before 2020.
South America focused explorer Mariana Resources (LON:MARL) has commenced drilling at its Buenaventura iron-oxide-copper-gold (IOCG) project in Northern Chile to test a number of targets generated by data from previously conducted surveys.
One of the AIM market’s perennial takeover targets, Caledon Resources (LON:CDN, ASX:CCD) told investors that it is no longer in an offer period, after an unsolicited and ‘very early stage’ 68p per share offer for the company was withdrawn.
Latin American precious metal miner Minera IRL (TSX:IRL, LON:MIRL, BVL:MIRL) reported an impressive quarterly performance in terms of sales and production that helped it achieve strong interim results with production, sales and revenues climbing year-on-year with excellent progress made at the Corihuarmi gold mine in Peru.
Brisbane-based Auzex Resources (ASX:AZX) has surprised on the upside with a larger than expected 450% jump in JORC reported Mineral Resource to over 1.98 million ounces of contained gold at the Bullabulling Gold Project in the Coolgardie Goldfields of Western Australia. The project is being developed in joint venture with GGG Resources PLC (LON:GGG), which recently changed its name from Central China Goldfields.
Large and Mid Cap News
Specialist recruitment group Michael Page International (LON:MPI) increased revenues by 7.9% in the first half to £393.5m, driven by greater activity levels in permanent recruitment which led to higher confidence levels and a higher rate of ‘job churn’.
Energy services group Hunting (LON:HTG) has acquired harsh environment electronics technology supplier Innova-Extel Acquisition Holdings for US$125 million in cash, calling the deal an important component of its states growth strategy that will allow it to increase exposure to the rapidly growing global directional drilling market.
Major international mining group, Vedanta (LON:VED) confirmed its acquisition
of established oil producing assets in India, in a deal with Cairn Energy (LON:CNE) which could be worth as much as US$9.6bn. The company has agreed to buy between 51-60% of Cairn India (BOM:532792) for an aggregate consideration of US$8.5-9.6bn in cash.
Construction company and FTSE 250 constituent Balfour Beatty (LON:BBY) has announced that the Denver Transit Partners (DTP) team has reached financial close for the design, build, finance and operation (DBFO) of the Eagle P3 commuter rail project in Denver and that the group will be responsible for 50% share of the engineering, procurement and construction contract and 33% of the 29-year operations and maintenance contract.
