Date: Friday 21 Sep 2012
Footsie's movements were being directed by the Grand Old Duke of York today and, as in the old nursery rhyme, ended the day more or less neither up nor down.
What was set up to be the big item of the day, the decision from the independent directors of mining group Xstata on whether to accept the merger proposals from commodities broker Glencore also turned out to be a damp squib, with the company pleading for more time to canvas key shareholders.
The Takeover Panel duly granted a one week extension which means this time next week we could be sitting here experiencing a spot of deja vu.
Elsewhere in the mining sector, Lonmin reported that more than 80% of miners turned up for work at its Marikana operations after workers called off their strike late on Tuesday following a settlement.
The accord, however, will be quite costly for the company. Following the Marikana agreement Credit Suisse has downgraded its 2012/13 earnings before interest, taxes, depreciation and amortisation (EBITDA) forecasts from $218m to $95m in 2012 and from $195m to $29m in 2013.
“A positive equity case on Lonmin in our view could be made if the company can grow to 950koz per year. which would require capex of $450m at a minimum.” That, however, would require an equity raise of at least $500m, together with some debt, or $1bn should all its debt be eliminated, the Credit Suisse scribblers suggest.
Credit Suisse reiterated its "underperform" stance and 525p price target on the miner´s shares.
To be had in account, the top share index was unusually volatile today, a fact which many linked to options expiry. That was certainly a factor, and yet it might also be worth pointing out that just before that spasm in the markets Sterling was hitting one year highs (and inching above technical resistance) against the US dollar in an initial reaction to the latest public sector borrowing data.
Should those technical levels be breached then another large leg-up could be on the cards for our currency, although the unit is currently significantly overbought versus the "green back" as the US currency is also known, comment analysts at Digital Look.
Related to the above, the British economy is expected to show more signs of life later this year or in the early part of the next, according to Bank of England Chief Economist Spencer Dale whilst speaking to the BBC this morning. "There is some light at the end of the tunnel (…) it is an uncertain light ... but we are hopeful," he said.
The Sage Group has acquired EBS Empresa Brasileira de Sistemas, a provider of accounting, business management and tax software in Brazil. The acquisition will cost the group up to £10.6m, including a performance related sum of £1.8m.
Guinness brewer Diageo was wanted on rumours that it is preparing to have another crack at Indian outfit United Spirits. The drinks brands colossus made an offer back in 2009 but was sent off with a flea in its ear. This time round it is said to be negotiating to buy a stake in the company, with United Spirits stakeholder Vijay Mallya apparently keen to sell to plug a financing gap in another one of his holdings, the Kingfisher airline.
Lift platform firm going down
Tanfield, a global manufacturer of powered access equipment and an investor in Smith Electric Vehicles, slumped after plans to float Smith were binned.
"We received significant interest from potential investors, however, we were unable to complete a transaction at a valuation or size that would be in the best interests of our company and its existing shareholders," said Bryan Hansel, Smith's Chief Executive Officer.
Things just keep getting worse for HMV, the retailer which left it too late to move away from its dependency on selling CDs, DVDs and books in their physical forms. The group saw like-for-like sales decline 11.6% year-on-year in the 20 weeks to September 15th. Including the impact of previously announced store closures, total group sales declined by 14.8%.
"The like-for-like decline was less marked towards the end of the period and we should be helped in the remainder of the year by a strong pipeline of new releases in the music, DVD and games markets ahead of Christmas," said Trevor Moore, the group's newish Chief Executive.
Nighthawk, a US-focused shale oil development and production company, has said a continuous 24-hour flow test on the John Craig 6-2 well at its 75% owned and operated project at Jolly Ranch in the Denver-Julesburg Basin, Colorado, produced over 600 barrels of oil. The well tested commercial oil flow rates from the Cherokee shale formation, while three further potential oil-bearing zones have been clearly identified in addition to further Cherokee targets, which have not yet been tested.
Shares in Texan oil firm Empyrean Energy moved to a 52-week high on the back of a production update for new wells completed recently on the group's Sugarloaf project. The group has nine wells on the go at the project and has a 3.0% working interest in each of them. The two biggest producers - Davila 1H and Davila 2H - produced an average of 1,123 barrels of equivalent per day over a 30-day period, the group revealed.
The price of oil is back on the rise. The most widely traded futures contract for Brent crude rose $1.31 to $111.34 a barrel on the InterContinental Exchange.
Gilts were friendless on a day when Bank of England Chief Economist Spencer Dale predicted the UK economy is set to show more signs of late later this year or the early part of next year. The yield on the benchmark 10-year gilt is up to 1.83% from 1.80% overnight. Yields move inversely to prices.
FTSE 100 - Risers
Evraz (EVR) 270.00p +3.53%
Pearson (PSON) 1,220.00p +3.21%
Vedanta Resources (VED) 1,084.00p +2.85%
Royal Bank of Scotland Group (RBS) 275.30p +2.53%
Amec (AMEC) 1,171.00p +2.45%
Lloyds Banking Group (LLOY) 40.21p +2.26%
Standard Chartered (STAN) 1,490.00p +2.02%
Vodafone Group (VOD) 178.20p +1.83%
Sage Group (SGE) 325.20p +1.82%
BT Group (BT.A) 232.40p +1.75%
FTSE 100 - Fallers
Xstrata (XTA) 1,018.50p -2.91%
Reckitt Benckiser Group (RB.) 3,610.00p -1.61%
Glencore International (GLEN) 363.00p -1.40%
ITV (ITV) 89.90p -1.37%
National Grid (NG.) 685.00p -1.30%
Imperial Tobacco Group (IMT) 2,372.00p -1.13%
BG Group (BG.) 1,247.50p -0.99%
Weir Group (WEIR) 1,773.00p -0.95%
Rio Tinto (RIO) 3,048.50p -0.93%
Hammerson (HMSO) 449.60p -0.93%
FTSE 250 - Risers
Home Retail Group (HOME) 94.00p +4.85%
Dixons Retail (DXNS) 19.59p +4.76%
Imagination Technologies Group (IMG) 532.50p +4.11%
Halfords Group (HFD) 268.20p +3.35%
Homeserve (HSV) 224.20p +3.32%
JPMorgan Indian Inv Trust (JII) 360.50p +3.30%
Petra Diamonds Ltd.(DI) (PDL) 110.30p +2.99%
Grainger (GRI) 109.30p +2.82%
Ferrexpo (FXPO) 215.70p +2.81%
Essar Energy (ESSR) 121.40p +2.71%
FTSE 250 - Fallers
Bumi (BUMI) 201.00p -19.63%
Euromoney Institutional Investor (ERM) 752.00p -6.58%
Gem Diamonds Ltd. (DI) (GEMD) 178.80p -5.40%
Avocet Mining (AVM) 88.25p -4.08%
Bwin.party Digital Entertainment (BPTY) 106.60p -3.62%
Aquarius Platinum Ltd. (AQP) 43.53p -3.27%
SIG (SHI) 102.50p -3.21%
Lonmin (LMI) 593.00p -2.87%
Talvivaara Mining Company (TALV) 164.40p -2.78%
African Barrick Gold (ABG) 467.90p -2.56%
FTSE TechMARK - Risers
AEA Technology Group (AAT) 0.060p +9.09%
Emblaze Ltd. (BLZ) 49.50p +5.32%
Optos (OPTS) 176.50p +3.82%
E2V Technologies (E2V) 135.00p +3.65%
BATM Advanced Communications Ltd. (BVC) 16.75p +3.08%
FTSE TechMARK - Fallers
Antisoma (ASM) 1.55p -5.84%
Filtronic (FTC) 42.50p -5.29%
Phytopharm (PYM) 12.25p -3.92%
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