Lingering uncertainty over the US government shutdown

Lingering uncertainty over the US government shutdown continued to rattle markets with the shutdown extending to a third day. Leaders in Congress are still showing no sign of progress towards resolving the debt crisis after President Barack Obama met with Republican and Democratic leaders last night but failed to come up with a solution to put the country back on track.

 

Despite the negativity in the majority of global markets, the FTSE 100 has managed to keep its head above water, up 20 points at midday. BP has helped UK sentiment today after the energy giant won a legal reprieve in a settlement related to the 2010 Mexico oil spill which could spare the oil company billions of dollars of extra costs. Shares in BP were up almost 2 percent on the open.

 

European retail sales helped pare losses which came in 0.4% better than expected. German 10-year bonds fell for a fourth day after the report which added to signs the European economy is healing. Unemployment claims from the US showed fewer Americans filed applications for unemployment benefits this week, indicating US employers were maintaining staff counts in the days leading up to the government shutdown.  

Risers:

Aviva
Climbing the most amongst FTSE 100 shares, Aviva has surged after the insurer announced the sale of its US life and annuities business to Athene Holding. The sale reaped £1.6 billion in total, surpassing the December 2012 estimate of £1.1 billion. The additional £493M represents estimated earnings and other improvement in statutory surplus over the period from June 30, 2012 to September 30, 2013.

GlaxoSmithKline
GlaxoSmithKline announced it has reached agreement to sell its thrombosis brands, Arixtra and Fraxiparine, and the Notre-Dame de Bondeville (NDB) manufacturing site in France to The Aspen Group, a South African pharmaceuticals company. The sale price is $1.14 (£0.7) billion in cash, of which $0.16 (£0.1) billion relates to inventory.

BTG plc
BTG shares have kicked on this morning following good progress in Q2. The Healthcare company has announced that H1 trading has been in-line with expectations, whilst also lifting its full-year revenue guidance. The company stated that overall, the business is in great shape and looks forward to continued progress in the second half year. For the full fiscal year, the firm currently expects revenues to be in the range of 275 million pounds to 285 million pounds, up from the prior guidance of 235 million pounds to 245 million pounds.

Essar Energy
After announcing plans to sell its 50 percent stake in Mombassa - East Africa sole refinery – shares in Essar Energy have risen considerably, now trading nearly 10% higher year-to-date. This comes following plans to abandon a $1.2 billion upgrade. Essar had planned to increase the refinery's crude handling capacity to 4 million tonnes of crude per year (79,000 barrels per day) by 2018 from 1.6 million now but oil marketers in Kenya, unhappy with the refinery's products and costs, have called for it to be closed.

Phorm Corp
Registering the most impressive gains amongst AIM stocks, Phorm Corp shares have rocketed after the advertising technology specialist launched in China. The company have confirmed that in its first week in mainland China, they have enjoyed an average of 4.3 million users.

Fallers:

Fresnillo, Randgold resources, Antofagasta, Anglo American, Vedanta Resources
Despite reasonably strong data coming out from China, the world’s largest metal consumer, shares in multiple mining stocks within the FTSE 100 are trading lower during this morning’s session. Whilst this is somewhat confusing, a possible explanation could be that with the on-going wrangling in congress regarding the partial government shutdown, tapering now seems less likely in December. The expectation would be that the price of gold would rise, treated as an inflationary hedge against the dollar.

Sports Direct
As markets head higher, Mike Ashley's Sports Direct International is leading the fallers after two senior directors cashed in £13m worth of shares. Chief executive Dave Forsey and finance director Bob Mellors each exercised bonus scheme options to acquire 1m shares each, and immediately sold 950,000 each at 680p a share. They each raised almost £6.5m, leaving them with just the 50,000 remaining as their stake in the company.

Unite Group
Shares in Unite Group have slid after announcing plans to launch a £90M bond issue. The offer will provide the Bristol-based company with debt finance to fund its regional development programme and also forms part of a wider financial strategy to diversify sources of capital and extend its debt maturity profile.

African Barrick Gold
Shares in African Barrick Gold have tumbled following the completion of the sale of three Australian mines. The largest gold producer in the world has sold the three mines for a total consideration of $300M. The amount is subject to certain closing adjustments worth $30 million. The Yilgarn South assets include the Granny Smith, Lawlers and Darlot mines and produce around 450,000 ounces of gold per year.

Albemarle & bond Holdings
Attempts by Britain’s second biggest pawnbroker to shore up its finances have been dealt a blow after it failed to secure a £35m cash injection. Albemarle & Bond, which has its head office in Wakefield, said it had not been able to conclude negotiations with its biggest shareholder over a deeply-discounted rights issue, which it needs in order to repair its balance sheet. The company is now focused on talks with its lenders after they agreed a month’s breathing space on covenant tests due on the £51m debt pile.