Rolls Royce shares gained on Monday after the engineering firm enjoyed another broker price target increase.

Analysts at Deutsche Bank increased their price target to 400p from 310p and currently have a ‘buy’ rating on the stock.

The Rolls Royce share price was up 2.5% on Monday, trading at 296p. Shares in the jet engine maker are the FTSE 100’s best-performing of 2023 so far, gaining a whopping 218%.

Rolls Royce has left every other FTSE 100 stock in the dust, with the second-highest share, Marks and Spencer, gaining only 110%. The FTSE 100 index is up less than 1% year-to-date.

Today’s price target increase follows JP Morgan’s upgrading of Rolls Royce to ‘overweight’ from ‘neutral’ last week. JP Morgan also has a 400p price target.

Rolls Royce recently outlined a medium-term strategy to boost operating profits to £2.5bn-£2.8bn and free cashflow to £2.8bn-£3.1bn.

DG Innovate shares rocketed higher on Monday after the junior batteries and electric motor company said it had hired ex-Tesla executives and raised £2.4m via a convertible note issue.

The company is developing two core technologies: the Enhanced Drive Technology (EDT) electric motors and Enhanced Battery Technology (EBT) sodium-ion electric vehicle batteries.

DG Innovate is among numerous companies exploring the viability of sodium-ion batteries in electric vehicles, including AIM-listed AMTE Power and privately held Northvolt.

The addition of three ex-Tesla executives to the board has sparked a wave of speculation as to what the future holds for the company, especially after one of the incoming directors, Christian Eidem, took a 29% take in the company. The executives have extensive experience at the forefront of electric vehicle innovation, and their appointment is a major vote of confidence in DG Innovate’s technology.

“The new executive management team, with their world-class track record in the electric vehicle and mobility sector, recognise the significant commercial potential in DG Innovate’s technology and the wider opportunity to use DG Innovate as a platform to build a larger company focused on the sector,” said Nick Tulloch, Chairman of DG Innovate.

DG Innovate shares were up 160% to 0.11p at the time of writing.

“Most people will have never heard of DG Innovate yet the stock was certainly shouting from the rooftop as the market opened. Initially surging by 180% in value, this tiny company delivered the type of news that sends small cap investors into a frenzy,” said AJ Bell investment director Russ Mould.

“The research and development company looking to develop next-generation batteries and electric motors has appointed three executive directors, all of whom used to work for Tesla.

“Inevitably, when you see a small business appoint ‘heavyweight’ individuals there is speculation it will lead to a takeover by one of their contacts. The fact they’re linked to Tesla is the cherry on top as it implies to investors that this little-known company could eventually be gobbled up by the electric car giant. This is pure speculation but that’s how many investors operate.

“In such situations, investors look for a strong narrative around a stock and get carried away. Stirring the pot was an equity research group saying the shares could ‘5-10 bag into New Year’, namely increase by five to 10 times in value. That comment doesn’t appear to be based on any concrete analysis.

Mould continued to detail the use of the proceeds from the convertible note raise and suggested the company could raise further funds to facilitate its strategy.

“More noteworthy is that DG Innovate has raised £2.4 million – more than half the company’s value as of last Friday. This money will be used to advance existing projects; however, the new directors have already indicated they will use DG Innovate as a roll-up vehicle for acquisitions in the electric mobility and energy storage space. That implies we could see a succession of fundraises in 2024,” Russ Mould said.

The FTSE 100 slipped on Monday as worrying Chinese economic data hit mining companies ahead of a series of interest rate decisions.

London’s leading index was down 0.5% to 7,516 at the time of writing and was underperforming major European indices. The DAX was flat, and the CAC 40 gained 0.3%.

“The FTSE 100 started the week on the back foot, dragged lower by the mining sector as figures from China over the weekend showed the economy swung deeper into deflation,” said AJ Bell investment director Russ Mould.

“An indicator of depressed domestic demand and a very different story to the inflationary pressures faced in the rest of the world, the data inevitably hit the miners given the world’s second-largest economy is such a rapacious consumer of commodities.

A deflationary environment in China will damage the FTSE 100 with a strong weighting to commodity companies. This was evident on Monday with losses in diversified miners Rio Tinto and Glencore. Rio Tinto slipped 1.5%, while Glencore fell 3.2%. Anglo American rose 1.3% after a plummeting last week.

Pure-play copper miner Antofagasta bucked the trend and rose 2% on Monday. Antofagasta is the second-best-performing FTSE 100 stock of December so far. InterContinental Hotels is the best performing, gaining 12%.

Centrica was the top faller on Monday as utility companies dipped.

The interest rate-sensitive banking and housebuilding sectors were weaker as traders trimmed positions ahead of central bank action this week.

Central bank action

Markets are preparing for a bumper week of central bank action. According to Bloomberg, central banks representing 60% of the world’s economy will decide on interest rates this week.

This includes the Bank of England, the Federal Reserve, and the European Central Bank.

Although these major central are set to issue decisions on interest rates, all are expected to keep rates on hold. Investors will pour over the accompanying commentary for hints of where rates will go in early 2024.

These comments and projections have the power to move markets significantly before Christmas.

A narrative has been established around interest rate cuts in Q1; should we learn of anything to the contrary, one would expect negativity in stocks. If hopes of rate cuts are fuelled by central bank rhetoric, we could well be on for a Santa’s rally.

The FTSE 100 gained on Friday after stronger-than-expected Non-Farm Payrolls painted a resilient picture of the US economy.

The US economy added 199,000 jobs in November, exceeding economist forecasts of 185,000. The unemployment rate came in at 3.7% compared to estimates of 3.9%.

The conundrum for markets is the jobs report doesn’t support the argument that the Federal Reserve will cut rates in early 2024, but at the same time, it doesn’t support further interest rate hikes.

The FTSE 100 was up 0.5% at the time of writing and will likely remain choppy for the rest of the session. US stocks whipsawed and promised volatility going into the weekend as investors assessed the implications for central bank meetings next week.

The jobs report will influence the Federal Reserve’s thinking on rates and may dictate a more hawkish tone than equity bulls would like.

Anglo American

Anglo American was the FTSE 100’s top faller after the miner said it planned to cut production in the coming years to conserve cash. Mining investors never want to hear about production cuts, and Anglo shares sank over 14% on Friday.

“Mining giant Anglo American is taking the secateurs to its costs, and it plans to reduce expenditure by another $500m next year. The huge increase in the existing plan comes as production from its extensive Copper, iron, platinum, and other commodities will be lower than previously thought,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.

“Miners are at the mercy of cyclical material costs, and the wheel has been turning against new CEO Duncan Wanblad – with issues compounded by operational headaches too.”

Despite the destruction of Anglo American shares on Friday, the losses were limited mainly to Anglo, with only minor losses in Rio Tinto. Indeed, copper miner Antofagasta was the FTSE 100’s top riser, and Glencore edged higher.

Housebuilder Berkeley Group was among the fallers as investors booked profits after the company released reasonably respectable half-year earnings.