The FTSE 100 sank with global equities on Friday after US Non-Farm Payrolls provided a much stronger snapshot of the UK economy than investors had been expecting.

Non-farm payrolls rose by a whopping 272,000 jobs, much stronger than the expected 180,000. Such a strong beat in jobs added is great news for the US economy but terrible news for stocks.

The bumper Non-Farm Payrolls report effectively closes the door on a rate cut by the Federal Reserve next week and throws doubt over when the Federal Reserve will eventually cuts rates.

The big risk for the Federal Reserve is easing too quickly and leaving themselves vulnerable to a slowdown in the US economy. Easing borrowing costs when the economy is still humming will erode the impact of further rate cuts if and when the economy slows. This risk of cutting rates too early is the reason why financial markets are no longer pricing a 100% chance of a US interest rate cut in 2024.

Attention will shift to the US CPI reading due for release on Wednesday for further insight into the Fed’s next move. Should we see an inflation reading higher than expected, equities could come under real pressure.

“FOMC members continue, unsurprisingly, to place greater weight on the inflation side of the dual mandate, and are likely to reiterate next week that they are yet to obtain the ‘confidence’ being sought on a return towards the 2% target to enable the first rate cut to be delivered,” said Michael Brown, Senior Research Strategist at Pepperstone.

“As such, the May CPI report, also due next Wednesday, is likely to be a much more significant event, particularly after the core CPI metric fell, on an annual basis, to a near 3-year low in April.”

The prospect of few or no rate cuts in 2024 has sent equities into a tailspin and bond yields soaring. US futures were down heavily and the FTSE 100 fell in sympathy.

The FTSE 100 was trading negatively before the jobs data was released at 1.30pm and losses accelerated as the news hit the wires. The selloff was broad with 89 of the FTSE 100 constituents trading negatively at the time of writing.

Miners were the worst hit, with Fresnillo falling 4% and copper miner Antofagasta dropping 3.4%. JD Sports felt the pressure of higher borrowing costs for longer and fell 3%. Ocado never misses out on a big move and was down 2.5% after earlier this week it was confirmed they will be removed from the index in upcoming reshuffle.

Utilities companies were among the few companies trading in positive territory

Bellway is confident it will return to growth in the 2025 financial year after sales rates picked up in early 2024, which were helped by improving affordability.

The group released a trading statement for the period 1 February to 2 June 2024 on Friday, revealing a 6.9% increase in the private reservation rate per outlet per week.

Bellway reiterated completion guidance of 7,500 homes in the full year. This is substantially below the 10,945 homes completed in the last year, but Bellway has suggested that this will form a base for growth in 2025.

Overall average selling price is now anticipated to be around £305,000 in 2024, a welcome increase from £295,000 in the las year, due to a change in its product mix.

“Bellway bosses expect the housebuilder to return to growth in 2025 and this morning’s trading update indicates that target is just about on track. The UK housebuilder recorded stronger trading through the spring selling season as customer confidence looks to be creeping back up in the housing market,” said Mark Crouch, analyst at investment platform eToro.

Bellway’s statement was released as Halifax said UK average house prices fell 0.1% in the month to May, rising 0.1% in April. There has been a stronger start to the year for the housing market, but concerns about high interest rates will be slow to diminish, and we now have the uncertainty of what measures Labour will take should they win the election.

“The company and its peers will be hoping for a return to the trifecta of attractive supply and demand dynamics (likely given housebuilding volumes have dropped markedly of late), state support and cheaper mortgages,” said AJ Bell investment director Russ Mould.

“Investors will certainly hope for the same given a healthy period for the industry through the course of the 2010s enabled Bellway to dole out plenty of cash to shareholders. 

“The Halifax house price index reading was a mixed bag – on a year-on-year view it was encouraging and came in ahead of expectations but month-on-month prices are largely static. However, after a rollercoaster ride coming out of the pandemic a steady period may be just what the market needs. There will be hope for an interest rate cut from the Bank of England sooner rather than later, too.”

Tekcapital portfolio company Guident has set out an industry framework for the wider adoption of autonomous vehicles and safety solutions at the US National Autonomous Vehicle Day Conference.

Guident led the visionary US National Autonomous Vehicle Day in Florida, further establishing its prominence as a market leader in AV safety solutions. The event was met with buying activity in Tekcapital shares as investors gained a deep insight into Guident’s vision for the future of the industry.

Many investors will be invested in Tekcapital solely for exposure to Guident, and the National Autonomous Vehicle Day event demonstrates why.

“The AV Day 2024 Conference crystallized the path forward for the autonomous vehicle industry: drive driverless somewhere before everywhere, and do it in collaboration with your co-founders, users, builders, and stakeholders in your ecosystem,” said Keynote Speaker at the conference, Prof. Paul Newman, Founder and CTO of Oxa.

Although still in the early stages, the autonomous vehicle market is making steady and assured strides forward, and Guident is delivering commercial innovations while gaining traction with strategic partners. Many of Guident’s partners were present at the event, not only for the applications of their safety solutions but also for the Deep Tech systems supporting connectivity.

Expansion

Guident recently launched the first remote monitoring and control centre (RMCC) of its kind in the United States as the industry gears up for wider adoption of autonomous urban mobility.

This RMCC will be integral in the expansion of a strategic partnership with Auve Tech to power the rollout of its MiCa autonomous shuttle in the United States.

In addition, Guident has demonstrated the broad range of applications with a partnership with Star Robotics’ and a solution for surveillance robots.

The National Autonomous Vehicle Day was held in Jacksonville – which happens to be one of the largest municipalities in the US by landmass and has extensive public transport networks. Guident is working with the Jacksonville Transportation Authority on the deployment of autonomous public transport systems for which Guident will provide safety connectivity.

These innovations are not just happening in Jacksonville and Guident’s Boca Raton routes; there is a global wave of urban mobility developments attracting the interest of investors and automobile companies.

The total urban mobility market is thought to be worth $660bn by 2030. Guident needs exposure to just a fraction of this market to be valued at many multiple of Tekcapital’s current market cap.

Tekcapital has alluded to Guident pursuing a private funding round this year to provide the growth capital required to accelerate commercial traction. And there is plentiful capital ready to be deployed in sector.

According to Dealroom, VC investors poured $22bn into Electric Mobility in 2023. This sector includes electric vehicles, electric vehicle charging and lithium battery technology.

“The presence of international leaders, speakers, and demonstrators underscored the fact that borders do not confine the future of mobility; rather, it is a shared vision that transcends them,” said Guident CEO Harald Braun when describing the momentum building in the sector.

One stock that performed very well yesterday was Strip Tinning Holdings (LON:STG),with its shares leaping from 51p overnight to a top of 84p, before closing at 70p, but still showing an impressive 37% gain on the day, following some 665,000 shares having been traded.

The Business

The Birmingham-based company manufactures specialist flexible electrical connectors related primarily to heating and antennae systems embedded within automotive glazing and to the connection of the cells within electric vehicle battery packs, increasingly using flexible and lightweight printed circuit technology.

The Glazing related products are used on vehicles of all types.

Driven by new technologies, this market is growing strongly with the group as a leading player.

In addition, the EV revolution is presenting valuable new growth opportunities for battery-related products and the group’s Battery Technologies division is a leader in the Mid-Market for such solutions.

Its strategy is to remain a leading supplier of specialist connectors for Glazing worldwide, while in the Battery Technologies market its aim is to become a leading supplier of Cell Contact Systems.

In the end-April issued 2023 Report & Accounts CEO Richard Barton, who owns 47.54% of the group’s equity, gave a strong hint of better news to come when he stated that:

“We believe that 2024 will be a formative year for the business with a strong focus on preparing for profitable delivery of the nominations already received as they ramp up in in 2025 and maintaining the investment needed to maximise our success in converting the strong Battery Technologies and Glazing sales pipeline we have before us to secure the nominations that will return us to significant growth from 2025.”

Major Battery Technologies Nomination

Yesterday the £12m capitalised company announced the receipt of a major high volume strategic nomination in the Battery Technologies market, from a leading German automotive motion technology Tier 1 manufacturer.

This production nomination is the group’s fourth in the Battery Technologies market and marks a major step forward towards high volume manufacture. 

This state-of-the-art Cell Contract System is the largest yet supplied by Strip Tinning, measuring 800 mm x 400 mm and combines a laminated busbar laser welded to a flexible printed circuit that measures temperature and charge across the battery module.

Executive Chairman Adam Robson stated that:

“Momentum continues to build in the business and our positioning in the Battery Technologies market goes from strength to strength.

Our nominations order book in the last four months alone has nearly tripled, underpinning our medium-term ambitions and providing a very solid platform from which to grow.

We are delighted to be accelerating our recruitment drive and creating employment opportunities and remain confident in securing further sales progress.”

Analyst View

Caroline de La Soujeole, at Singer Capital Markets, rates the group’s shares as a Buy.

Her current year estimates to end December show £10.9m (£10.8m) of sales, with an adjusted pre-tax loss of £2.2m (£1.5m loss).

However, for the 2025 year she is predicting a £15.0m revenue and a reduced loss of just £1.0m but paying out an uncovered 1.00p (est. Nil) per share in dividend.

Jumping forward into 2026 the analyst estimates £20.8m of sales will help to turn the loss-making group into a £0.7m profit maker, generating earnings of 5.4p and covering a 2.00p dividend per share.

My View

Expectations are for the company to comment further on its first half performance and outlook for FY 24 and beyond in its H1 30 June pre close update which is due to be announced on 16^thJuly.

Despite the company’s small cap status, this stock is beginning to garner a lot more investor interest, as can be seen by yesterday’s frenetic dealings.

More such Nominations, I feel, can be expected in due course, certainly enough to spur spasmodic punter participation sufficient to rekindle further attempts at the 84p High achieved yesterday.