AMEC (LON:AMEC) and Petrofac (LON:PFC) were the FTSE 100’s biggest losers, falling more than 4% each, following a profit warning fellow oil services firm Wood Group (LON:WG.) – which itself fell out of the blue chip benchmark this autumn.
Wood Group told investors that earnings (EBITDA) this year will be lower than in 2012, and said that its engineering division is set for a 15% drop in earnings next year.
Another of the day’s fallers was Vedanta (LON:VED), which is soon to follow Wood Group down into the FTSE 250, and will be replaced by privateer’s champion Royal Mail (LON:RMG).
More broadly, it has been a subdued trading session with United Utilities (LON:UU.) the only blue chip to mark up more than a 1% gain.
UK shares have generally followed global markets lower as investors on both sides of the Atlantic brace for the tapering of America’s US$85bn a month stimulus programme.
In Washington DC the politicians appear to have averted another government shut down by striking a budget deal, ahead of time.
Negotiators in the Senate reached a compromise that will avoid the chaos seen in October, when the government was shut down for two weeks after failed talks, and whilst arrangements have still to be ratified, it removes one of the main risks to the US economy.
This breakthrough, although positive on the face of it, has actually the stock market bears who believe it is now much more likely that the Federal Reserve will taper QE. The fear is that without the liquidity that the cash injecting programme provides global markets will struggle to maintain recent stimulus fuelled gains.
At lunch the FTSE 100 benchmark was down 63 points, almost 1%, standing at 6,445.
The prospect of QE winding up, and the subsequent strengthening of the US dollar, dealt a blow to gold miners as investors fear more falls in the gold price.
Precious metal blue chips Randgold Resources (LON:RRS) and Fresnillo (LON:FRES) each shed about 3.5%, similarly African Barrick Gold (LON:ABG) and Petropavlovsk (LON:POG) were down by the same margin too.
Meanwhile, among the small caps, there were the usual handful of news driven climbers, but otherwise it was much the same as the senior market – with the FTSE AIM 100 down 0.45% at 3,753.
Shaking off the gloom was Tissue Regenix (LON:TRX), which has now doubled in value this year, as the group today announced the appointment of a 40-strong sales team in the US ahead of the launch of its first product, a skin replacement for use in chronic wounds, early next year.
The regenerative medical specialist is now worth £130mln. That looks a heady price for a company yet to sell anything, let alone in commercial quantities, but it reflects the fact that medical device giants are prepared to pay heavily for entry into a new market expected to show exponential growth.
Tissue’s speciality is a washing process, dCELL, which removes existing cells and DNA from donor human tissue but leaves it in a condition where the patient’s own cells can re-populate it, effectively eliminating the risk of rejection and speeding up healing.
Products under development include heart replacements, knee cartilages and blood vessels but the first product will be Dermapure, a skin replacement for repairing serious external wounds. This is a growing market. In the US alone annual sales are about US$1.5bn and rising 6% annually driven by donor organ supply shortages and the expense of treating bad wounds.
Elsewhere, Richland Resources (LON:RLD) was another of Thursday’s small cap risers, as it completed the deal with the Tanzanian state owned mining company that confirms its tanzanite licence for the next ten years.
STAMICO will own the licences on a 50/50 basis going forward and pay Richland US$4mln out of future profits for all of the work it has put in some far developing the mines.
Richland’s tanzanite business has been dogged by illegal mining and STAMICO said it will liaise with the Tanzanian government to curb both this and smuggling at the Meraleni mine.
North River Resources (LON:NRRP), meanwhile, advanced 12% as it posted a resource upgrade well in excess of its own internal forecasts for the Namib lead, zinc and silver project in Namibia.
Overall, it has increased by 129% to 1.53mln tonnes, with 917,000 tonnes added to the fresh ore resource. The company also unveiled a maiden tailings resource of 610,000 tonnes at 2.1% zinc.
AIM’s biggest loser was Brady Exploration (LON:BRDY) which lost half its value after its previously suspended shares restarted trading and the company told investors that money could not be raised money in time to complete a reverse takeover, to acquire oil assets in Nigeria.
Talks over the proposed deal have now ended.