The FTSE 100 jumped on Monday as European stocks grabbed the tailcoats of a US rally later on Friday in which the NASDAQ and S&P 500 closed over 1.5% higher.

The FTSE 100 added 0.6% to trade at 7,404 shortly after midday in London.

UK equities are trading almost exclusively on improved sentiment inspired by a rally in US stocks at the end of last week, although a strong showing Phoenix Group helped matters.

Markets chose to discount concerns about the Federal Reserve hiking rates again in the near term, instead pricing risk assets for interest rates to stay on hold until they are eventually cut in the middle of next year.

Any economic news or commentary to the contrary could cause sharp swings in stocks.

“The FTSE 100 made strong progress on Monday morning, following on from gains on Wall Street on Friday,” said AJ Bell investment director Russ Mould.

“An easing in government bond yields supported the biggest one-day gain in the Nasdaq Composite index since May as investors remained confident in the idea of interest rates having peaked despite an attempt by Federal Reserve chair Jerome Powell to counter this narrative last week.

“US inflation numbers out tomorrow will tell their own story and a higher-than-expected reading could well prompt renewed jitters among investors.

“Also helping the positive mood were strong updates from UK property investor British Land, which also boosted its peer Land Securities, and insurance outfit Phoenix surged higher after lifting its cash generation target.”

Phoenix Group was the FTSE 100’s top riser with a gain of 5% after the wealth and insurance group upgraded their 2023-2025 cash generation target to £4.5 billion, up from £4.1 billion previously.

“The completion of the funds merger of the Standard Life and Phoenix Life businesses into Phoenix Life Limited, bringing together 8 million policies, is one of the largest UK insurance Part VII transfers ever completed,” said Phoenix Group CEO, Andy Briggs.

“This reaffirms Phoenix Group’s position as the UK’s leader at delivering cost and capital synergies and generating value for customers and shareholders. This funds merger enables us to materially upgrade our cash generation targets and creates further balance sheet optionality for the Group.”

BAE Systems carved out minor gains after reaffirming its guidance for the full year after strong order levels throughout the year, including £10bn since the beginning of the half year. BAE Systems were 0.6% higher at the time of writing.

BAE Systems upbeat release seemingly did more for peer Rolls Royce shares, which added 2.2%.

Diageo was again among the losers as investors continued to react to last week’s disappointing trading statement.

BAE Systems has experienced demand consistent with heightened geopolitical nervousness and is set to deliver ‘another year of good sales and earnings growth, together with strong cash flow generation.’

The group maintained revenue growth guidance at 5%-7% as customers in the West continued to bolster their defence capabilities.

The UK-based company said it had enjoyed orders of around £10bn since the beginning of the half year, including a UK submarine contract, Bradley tank awards and artillery orders. Orders for the full year stand in the region of £30bn.

In addition, BAE has built up a large order backlog that provides them with a base for future growth.

“BAE occupies a key space in the defence market, and another promising update proves why the group’s so highly regarded in the defence space. With some of its biggest buyers, the UK, US and Europe, all expected to continue raising defence budgets over the coming years, the sky really is the limit for this jet-maker,” said Aarin Chiekrie, equity analyst at Hargreaves Lansdown.

“Given the elevated threat environment, demand for BAE’s products and services has remained strong with around £10bn of order intakes since the half-year mark. That takes the year-to-date figure up to around £30bn, and because these are typically long-cycle orders, with payments spread over several years, it gives BAE multi-year revenue visibility. That’s given management the confidence to reiterate all recently upgraded full-year guidance, which is something of a novelty for most businesses in the current uncertain environment.”

When Russia invaded Ukraine early last year, BAE Systems shares soared and have since comfortably settled into trading ranges above 1,000p.

BAE Systems shares ticked 0.8% higher in early trade on Monday to trade at 1,111p.

BAE Systems will release preliminary results for the full year 21st February.

Mineral Resource Estimate update, a speculative investment, and the high-risk end of FTSE AIM trading. Take your position.

The FTSE AIM market is not the FTSE 100.

With the UK’s premier index, the popular strategy is to buy an index tracking ETF, and then sit back and relish the passive income dividends.

In the small cap market, this strategy is rarely a good idea. The AIM market is down by 26.8% over the past five years — and yet within that time, certain specific companies have seen genuinely extraordinary returns. For example, Novacyt shares rose by 18,000% between October 2019 and October 2020, spurred on by pandemic-era demand.

In a depressed market — albeit one showing signs of green shoots — the chance of picking an AIM stock which can deliver outsized returns is larger. Add in the fact that interest rates may now be at their peak, and adding some risk assets into your portfolio may be a good idea.

With the standard caveats surrounding financial resilience and diversification.

Three AIM shares to watch this week

1. Greatland Gold

Greatland Gold is on the verge of updating investors regarding the results of more than 80,000 metres of drilling that’s been ongoing since March 2022. For context, flagship Havieron’s current Mineral Resource Estimate stands at 6.5Moz @ 2.2g/t AuEq, but this was already more than 50% of the original maiden resource estimate from December 2020.

This updated MRE estimate has been delayed for some time, but significant financial confidence in Greatland can be found in both its banking syndicate and backer Wyloo, which suggests the upgrade will be significant — and perhaps might even start with a 9.

Analysts — and likely even Newmont itself — remain conflicted over whether the new titanic hybrid will want to retain Telfer and Havieron. Positive comments made by management about the jurisdiction last week point one way, but the fact remains that the value proposition at the current MRE simply does not meet Newmont’s objective criteria.

Of course, there’s always a little fudging room. And a huge MRE update will drastically change the economics.

2. ECR Minerals

Beaten down AIM shares are often where the best value can be found — and if nothing else, ECR is beaten down, even if it remains a higher risk proposition. The company’s shares surged in mid-September when it announced that Nick Tulloch was joining as Managing Director and Mike Whitlow as Chief Operating Officer — though have since fallen back to what appears to be an attractive entry point.

It’s worth noting that ECR also raised £580,000 at the time to fund operations across its Australian assets — where good news seemed to have stalled for much of 2023.

However, there are some green shoots to consider, including some decent results at Lolworth — where ECR discovered gold bearing quartz veins that Whitlow described as being ‘cause for optimism’ even if it is ‘still early days.’

Some perspective is important here; ECR has a market capitalisation of just £3.5 million. This is unlikely to be attractive as a main portfolio share like Greatland — but a small stake could be rewarding.

3. Horizonte Minerals

If Greatland is an exceptional long-term opportunity and ECR Minerals is a speculative investment, then Horizonte is probably closer to a gamble — but a gamble with a decent risk/reward ratio.

Horizonte Minerals told investors that capex costs at its flagship Araguaia nickel mine in South America would need to increase by at least 35% in early October. Predictably, the share price has fallen sharply, though the depth of the fall is perhaps an overreaction.

Reta Engenharia has been contracted to calculate exact excess costs; but in timeline terms, the company is expecting a six month delay to production to H2 2024. How these costs are met is the key question and will determine whether shareholders see a huge recovery or get almost completely wiped out.

The review reports back in ‘mid Q4’ — essentially any day now — and the smaller the number is, the better the chances are that shareholders get to enjoy something of a recovery. Those who bought at the top are unlikely to recover everything, but in the context of the size and life of this particular asset, this may yet prove to be a hiccup on the way to production.

Or not. AIM shares are not Phoenix Group.

You can trade Greatland Gold, ECR Minerals and Horizonte Minerals using our partner Spreadex — use the link below!

Warpaint London expects full-year revenue to exceed £85 million, a significant increase from £64.1 million in 2022, the company announced Friday.

Warpaint shares jumped on the news, adding 6% to 334p.

Strong trading across all geographic regions has boosted sales growth ahead of expectations this year. Operating profit is now predicted to surpass £16 million, more than double last year’s £7.7 million.

The cosmetics supplier, which owns the W7 and Technic brands, continues expanding with new retailer partnerships.

Warpaint recently launched W7 products in 400 Etos stores in the Netherlands and 100 Watsons stores in the Philippines.

It also introduced Technic items to over 200 Wibra stores in the Netherlands. Further growth is planned for early 2024, including additional W7 products in 372 CVS locations in the United States and 102 Boots stores in the United Kingdom.

Warpaint first indicated strong post-period sales in September when reporting first-half results. Robust margins have remained consistent.

Investors will look forward to gaining further insight into their key Christmas shopping season.