The big story of the week has been a new slump in the gold price, falling below $1,200 per ounce. This represents its lowest level in nearly three years. Shares took a bearish view on gold nearly two months ago (see Cover, 9 May) and reiterated this stance yesterday in our 'sell' story on Highland Gold. Key to the falling metal price is the actions of the US amid signs it could soon wind down its stimulus programme.
On the markets, there was limited newsflow from the large caps with Serco (SRP) among the few FTSE 100 stocks providing investors with new information. The service giant advanced 3.5% to 621.5p after saying it was on track to meet earnings expectations. Strong organic growth is being offset by higher investment in contract bidding. This will depress operating margins.
A trading update spooked investors in insurance outsourcing group Quindell Portfolio (QPP:AIM), sending the shares down 4.4% to 10.75p. The market is likely to be concerned that the marmite stock only gave a muted outlook for near-term growth. It said second quarter earnings before interest, tax, depreciation and amortisation (EBITDA) would be 'at least' that of the first quarter which was 'in excess of £25 million'. Investors no doubt wanted Quindell to explicitly state there would be quarter-on-quarter growth rather than today's statement which could imply a potential flat performance. Daniel Stewart analyst Sophie Blandford forecasts £123.5 million EBITDA for 2013, so Quindell needs to increase its quarterly EBITDA to hit this target. Blandford remains confident, pointing to recent contract wins helping to boost income.
The runt of the intellectual property investor litter, Amphion Innovations (AMP:AIM) slumped 22.2% to 1.75p after pre-tax losses increased more than six-fold to $6.9 million. It has suffered from falling revenue and higher administrative expenses.
Property investor CLS (CLI) has expanded its portfolio in Germany after buying an office building in Freiburg for €13 million. The property, which includes the government, KPMG and Commerzbank among its tenants, provides the company with an 8.75% net initial yield. This rent after accounting for expenses, expressed as a percentage of the portfolio valuation. CLS benefits from having lower vacancy levels than the industry standard, but this means it needs to buy more properties to drive earnings. Read our recent Plays of the Week story on CLS.
US onshore oil & gas firm Magnolia Petroleum (MAGP:AIM) gushed up 6.6% to 2.42p after announcing an initial production rate of 1,216 barrels of oil equivalent per day from the Marathon operated Gustafson 31-30H well in the Bakken formation, North Dakota. Magnolia holds a 4.1% interest in the well.
Mongolian oil explorer Petro Matad (MATD:AIM) surged 8.1% to 5p after its full-year results revealed a narrowed pre-tax losses £12.2 million and confirmed a fundraising earlier this month would allow field operations to commence this year.
UK onshore focused oil & gas producer Egdon Resources (EDR:AIM) ticked up 2.7% to 9.6p after securing planning approval from Dorset County Council for the development of its Waddock Cross oil field near Dorchester.