Wall Street reverses and finishes below 10,000

Stock markets are again under pressure this morning as the U.S. markets reversed strong gains last night to finish down. The Dow Jones Industrials closed at 9,899 down 41 points after being up more than 100 points earlier in the session. The only reasons for the switch in sentiment seem to have been a weakening euro (back below the $1.20 level) and a huge sell off in BP shares on dividend cut or even bankruptcy fears which sent it to a 14 year low.  BP was forced to issue a statement this morning that it was financially strong, had good cash flows and had a borrowing level below target. It opened down over 30p to £3.38 but has since recovered to £3.68. A buy for the portfolio was made on the weakness which now seems overdone since its seems unlikely the firm would ever go bust despite the Gulf of Mexico liabilities.

The FTSE 100 is currently down 31 points to 5,057 after moving below 5,000 in early trades.

BP slides again and triggers sale

Further falls in BP (BP.) were triggered today on fears that political pressure from the Obama administration would mean that dividend payments would be suspended or cut due to the impact of the Gulf of Mexico oil spill. The shares fell as low as 380p today, triggering a stop loss on a buy yesterday. This stock is certainly struggling to find a bottom having fallen from £6.50 since April and buyers seem in short supply as income funds divest their holdings. Contrarian Investor's attempt at bottom fishing on this one proved unsuccessful with a tight stop loss of 5% in place. However it seems conceivable that any further progress on plugging the Gulf of Mexico leak and further news on the dividend in July will finally put a floor on BP's valuation.

Some buying opportunities on weakness

The FTSE 100 continued to fall today and is currently down 55 to 5,011 after falling below the 5,000 mark earlier in the day. A move back to the 5,000 level has meant that I have been making some selective buys on weakness on stocks I have been watching for the last few weeks as they hit my target price. Although further falls in the market are possible, quite a few names are back into the "good value" range. Timing the absolute bottom is never easy, so its a question of picking away rather than going all in.

BP (BP.) is down 19p or 4.4% to £4.11 following US president Barack Obama's comments that he'd sack the British company’s chief executive Tony Hayward. During an interview due to be aired tonight he said "He wouldn't be working for me after any of those statements," referring to Haywards comments like "it's a big ocean". A second piece of bad news came for BP when Russia’s state-run gas giant Gazprom said it had no need for the British oil company’s Kovykta gas field in Siberia which at one point in 2007 was said to be worth nearly $1 billion. Although I am a little nervous about BP, I today bought a position at £4.13 with a 5% guaranteed stop loss given the speculative nature of this share.

Rockhopper (RKH) announced that it had raised £48.5 million for the further development of its North Falkland basin field with the issue of 17,320,000 new ordinary shares at 280 pence each. I took the opportunity on this news to re-establish a holding in the company at £2.86 following yesterday's 8% fall as rumours of the placing circulated. I have also bought a small holding in Falkland Oil and Gas (FOGL) for potential gains on a discovery on the Toroa prospect which is currently being drilled to a depth of 2700 metres and was spudded on June 1st.  Target depth is expected 35 days from June 1st.

The fall in ITV (ITV) back to 52p also was taken to buy back a holding in the company which has drifted from the low 70p range in the last month or so and should benefit from an increase in advertising during the World Cup.

BP taking the flak for Deepwater horizon disaster but what about others?

Since the Deepwater horizon disaster in the Gulf of Mexico BP's (BP.) share price has fallen from around £6.50 to today's £4.38, a drop of 33% wiping £40 billion of its market capitalisation. Although little is being said in the media of the other company's involved in the rig disaster, they too have seen their share prices hit hard. President Obama and the U.S. oil industry seem to be keen to maximise BP bashing whilst forgetting that U.S. companies like Anadarko have major interests in the well.

Anadarko Petroleum(APC) owns 25% of the well, Transocean Ltd. (RIG) operated the rig, Halliburton (HAL) provided the drilling equipment and Cameron International Corp. (CAM) provided the failed blow out preventer. Transocean has fallen from the high $80's to $50 since the disaster and Halliburton has fallen from $35 to $23.

Deepwater drillers not involved in the Deepwater horizon have also fallen heavily as the Obama administration announced a 6 month moratorium on new deepwater drilling. For example, one quality stock which stands out is Noble Corp (NE), falling from $43 to $27 and now trading on a forward price/earnings of around 5. At this price level it looks a tempting entry point as the block on drilling will be unlikely to be retained for any length of time given the pressure to find new sources of oil.

For the Contrarian Investor UK portfolio some of the oil names such as Conoco Phillips (COP) at $50 and Chevron at $71 looks tempting. The sector has taken a tremendous hit on the negativity surrounding the Gulf of Mexico issues and the effect of the oil price moving back into the low 70's. The oil price has moved down as speculators started to bet against the commodity when it moved into the 80's and the strengthening U.S. dollar also reduced it's value. I am looking at an entry point in some of these stocks if markets look weak again during the early part of this week.

Continued economic worries move down stocks

The after effects of last Friday's disappointing U.S.jobs numbers and fears about the health of Hungary and other European economies are moving stocks down this morning. The FTSE 100 is currently down 73 points to 5,051 and Dow futures are down a further 40 points to 9,897. Commodity stocks are baring the brunt of the pain with metal prices falling heavily - Kazakhmys (KAZ) is down 3.5% at £10.80 and Aquarius Platinum (AQP) is down 5% to £3.41.

BP (BP.) moved against the trend with a 5p rise to £4.38 as they reported some success in stemming the flow of oil from the damaged well in the Gulf of Mexico.

Markets looking strong today after rise in U.S. last night

On Wednesday, the Dow Jones Industrial Average gained 225 points or 2.3% to close at 10,250 with all 30 components closer higher. The Nasdaq Composite Index rose 2.6% or 60 points to finish at 2,281 and the S&P 500 rose 28 points to 1,098. The rise was driven by an industry report that pending home sales were up 6% in April. However commentators have noted that this is probably as a result of buying activity ahead of the expiry of a tax credit.

The FTSE 100 is currently up 85 points to 5,237 with miners in particular helping the index. For example Rio Tinto is up 3.5% to £32.47. BP (BP.) bounced this morning following news that progress to cut off the flow of oil had progressed after a jammed cutting saw had been dislodged at the well head. After being as high as 4.5% up at 450p, it is now 15p higher at 444p. Dow futures are up 26 points.

German short selling of bonds ban worries market - send dollar to four year high against euro

The FTSE 100 is currently down 128 points to 5,177 after a fall of 115 points to 10,511 last night on the DOW industrials as traders reacted negatively to the news that German authorities are banning naked shorting of certain financial instruments in the debt market.

The euro fell sharply to hit a four year low against the U.S. dollar of 1.21 versus a 52 week high of 1.51. The rise in the dollar sent commodity stocks sharply lower this morning with BHP down 5% to £18.35 and financials are also under pressure with the likes of Barclays down over 6% to £2.86. BP continued its slide down to hit £5.26, a fall of 1.5%. After announcing its rights issue on Monday to acquire the assets of AIG's Asian unit AIA, Prudential shares are down over 4% this morning to £5.09 as analysts still remain unconvinced about the deal.

The heavy fall in Ithaca Energy (IAE) to £1.53 on no news (down 15p, 9% today) has made it a buying opportunity and this has been added to the portfolio this morning. The volatility is Ithaca is amplified by its dual listing on the Toronto Stock Exchange (TSX) and the London Stock Exchange (LSE) which means that currency and trading in Canada have an impact on the U.K.price. WTI crude oil went below $70 yesterday (the lowest point this year). 

Markets suffer on further European debt fears and commodity sell off

Today the euro fell to a 12-month low against the dollar on skepticism over the Greek government's ability to carry out harsh austerity measures required by the EU/IMF aid package. The DOW Jones Industrials are currently down 155 points to 10,996, the Nasdaq composite is down 55 points at 2,441 and the FTSE 100 is down 100 points at 5,441. Although the German government negotiated to provide the majority of the European Union contribution to Greece, there are fears that Angela Merkel may not get a crucial vote passed to allow the aid to be used.

In the UK, miners and BP dragged down the FTSE 100 index. BP (BP.) is currently down 4% to £5.52 on fears that the clean up bill and compensation payments may amount to as much as $10 billion, only some of which will be covered by liability insurance policies. BHP Billiton, Xstrata and Rio Tinto were all down on news of the Australian resources super tax. BHP (BHP) is currently down 7% to £18.86, Xstrata (XTA)is down 6% to £10.21 and Rio (RIO) is down 4.8% to £32.14.


The correction has given an opportunity to start a little buying after several weeks of sells. The FTSE 100 has been bought at 5,431 and DOW at 10,988. Coal of Africa (CZA) position initiated at 130p. Ithaca Energy (IAE) position increased at 176p.

BP shows strong earnings growth on high oil price

BP (BP.) today announced 1st quarter results which exceeded analysts’ expectations. Replacement cost profit, which strips out the effect of changes in the value of inventories and fluctuations in the oil and gas price, was $5.6 billion for the quarter, up from $2.39 billion in the same period a year ago and ahead of expectations of $4.8 billion . Earnings per share were up 134 per cent at 29.82 cents, boosted by oil prices which averaged $71.86 during the quarter, compared with $41.26 during the same period last year.

Stripping out exceptionals, the rise in earnings was 118 per cent, well above analysts’ average expectations of a rise of about 85 per cent. The oil and gas exploration and production business reported a 94 per cent rise in operating profit over the year to $8.3bn, although this was slightly lower than in the final quarter of 2009. In refining and marketing, profits fell 33 per cent compared to the first quarter of 2009 to $729m. However, this still marked a sharp improvement from the $1.9bn loss reported for the fourth quarter of 2009. BP’s net debt dropped to $25.2bn at the end of March, down from $26.2bn at the end of last year. The company said that oil and gas production was unchanged at 4.01 million barrels of oil equivalent per day. TNK-BP, the group’s Russian joint venture, also lifted overall profits. Net income from TNK-BP increased to $543 million, compared with $134 million a year ago. The group kept its dividend frozen at 14 cents per share.