The FTSE 100 started the session off in the front foot and the day got better for equity bulls after the ECB announced its first interest rate cut since 2019 on Thursday.

The reduction in European interest rates to 3.75% had been widely predicted by economists, so it was no surprise to markets. That, said a major central bank cutting interest rates will go a long way to improving sentiment given the growth outlook has become increasingly cloudy in recent went weeks. 

“The European Central Bank has, as widely predicted, cut the eurozone’s key interest rate to 3.75%, moving faster than the Bank of England and the Federal Reserve. The reduction will come as a relief for many consumers and companies, whose finances have been stretched to breaking point by the rapid ratcheting up of interest rates,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“But ECB policymakers are expected to hit the pause button now, as sticky inflation has returned as a worry. While rates went straight up like a rocket, they look likely to descend in bumpy fashion.”

The FTSE 100 gained 0.4% on Thursday amid a clear move to the downside in gilt yields with the 10-year falling below 4.18% as markets priced in the prospect of rate cuts by the Bank of England.

Today’s ECB interest rate decision is fascinating prelude to the Bank of England and Federal interest rate decisions next week. Although the ECB’s decision will have little bearing on what either do with rates, they will face increasing scrutiny if they hold off cutting rates when many other western central banks are starting to ease monetary policy.

“The Bank of England and Federal Reserve might give the impression they aren’t swayed by what the ECB and other countries do, but the greater the number of central banks cutting, the more pressure they will be under to do the same,” said Russ Mould, investment director at AJ Bell.

There was a notable risk-on trade on Friday, with cyclical sectors leading the way higher. Miners enjoyed a wave of buying and UK banks has a good showing.

Antofagasta was the top riser with a 3% gain.

ITM Power shares rose on Thursday after the Green Hydrogen specialist announced that it expected a tripling of profits and halving of losses in the full year.

Ahead of its preliminary results scheduled for release on August 15th, 2024, ITM Power PLC has provided a summary of its financial performance for the 12 months ending April 30th, 2024. The company’s revenue is expected to be in the range of £16.0m to £16.5m, which falls within the guidance range of £10m to £18m and represents a remarkable threefold increase compared to the previous year.

The expected financial results, subject to audit, also indicate an adjusted EBITDA loss between £39.0m to £44.0m. While this figure is better than the guidance of £45m to £50m, it still represents a year-on-year reduction of more than 50%, reflecting the company’s ongoing efforts to improve its financial performance.

Furthermore, ITM Power PLC reported a net cash position of £230m at the year-end, surpassing the guidance range of £200m to £220m. This positive result is attributed to the stringent cost and capital disciplines that have now become ingrained in the company’s DNA, demonstrating its commitment to financial prudence and sustainability.

“During the year, we completed our 12-month plan, transforming ITM into a credible delivery organisation, and we have attained a positive operating rhythm of deploying products to our customers,” said Dennis Schulz, CEO of ITM.

“We grew revenue more than threefold and halved our losses, and in line with our strategic priorities, we managed our cash carefully. I am pleased with our progress, and look forward to providing further details, including guidance for the current year, at the time of our preliminary results announcement in August.”

SolGold, the developer of a world-class copper-gold project in Northern Ecuador, has announced that it has signed off a significant contract for its flagship Cascabel Project that covers an area of approximately 50 square kilometres located in Imbabura province.

It is a mineral exploration and development company, that explores for and develops mineral properties in Ecuador, Australia, Chile, and Solomon Islands, primarily exploring for copper, gold, silver, and molybdenum deposits.

The Important EC Contract

The Exploitation Contract establishes the legal and financial terms and conditions for the development of the Cascabel Project by the Brisbane, Australia-based £272m capitalised SolGold (Lon and TSX: SOLG).

It covers key contract items such as: not less than a 50% share of the benefits going to the Ecuador Government; that there will be a renewable 33-year contract for copper, gold and silver production; that SolGold will make a total of $75m royalty payments, of which $25m is an advance sum; the Government Royalty will be on net smelter revenues ranging from 3%-8% based on mineral and price; a mechanism to balance out the effects of any changes in Ecuador fiscal policy, taxes, laws and other regulations; investor protection rights; and importantly that it develops the autonomy and freedom of the company to make its commercial decisions. 

SolGold shares, which were trading at 19.20p this time last year, before easing back to 6.02p in early March this year, are currently just 9.07p.

Pantheon Resources (LON: PANR) has entered a gas sales precedent agreement with the state-owned Alaska Gasline Development Corporation, which is developing the Alaska LNG project. This is designed to supply Alaska and export up to 20 million tonnes of LNG each year. Pantheon Resources would supply up to 500 mmcf/day of gas at a maximum base price of $1/mmbtu. There are plans to increase the scale of the Ahpun development. The share price jumped 29.4% to 36.3p.

Restaurants operator Tasty (LON: TAST) gained court approval of its restructuring plan on Tuesday afternoon. Tasty has got out of the leases of 23 sites. This leaves 38 restaurants, which are predominantly the Wildwood brand. This should improve EBITDA by up to £2.1m between 2003 and 2005. The share price continued its rise today and it is up a further 29.2% to 1.55p.

Insig AI (LON: INSG) has raised a further £813,000 at 12.5p/share. New Insig AI chief executive Richard Bernstein had subscribed £100,000 at 20p/share. Insig AI recently bought a 5.45% stake in AI and blockchain company ImpactScope OU for 900,000 shares at 13.75p each and Insig Ai has an option to subscribe for more shares. The share price improved 15.7% to 14.75p.

Empire Metals (LON: EEE) considers further positive exploration results as a major development for the Pitfield prospect. There is rutile at surface, and it should be easy to mine. Titanium dioxide mineralisation gets more prevalent at lower depths. This should improve project economics. The share price increased 13.5% to 11.75p.

FALLERS

Jersey Oil & Gas (LON: JOG) has progressed its FEED programme for the Buchan development in the North Sea, but decisions have been put on hold until after the General Election. The first offshore survey has been completed. The final investment decision is expected in 2025, dependent on clarity over ongoing UK government policy, which means first oil could be in 2027. Jersey Oil & Gas contributes 20% of the joint venture project costs. The share price dipped 16.7% to 125p.

There is another fundraising by cancer biopsy company Angle (LON: AGL) is raising £8.5m at 15p/share and could raise up to £2.06m more via an open offer. The cash will be spent on additional staff, commercial development, developing lab capacity. Angle says that it should reach cash flow breakeven by the end of 2025. There was £16.2m in cash at the end of 2023. In 2023, revenues more than doubled to £2.2m and the loss was £20.1m. Interim revenues are expected to be more than £1m. The share price declined 12.5% to 15.75p.

Seed Innovations (LON: SEED) has completed its share buyback programme. This used up £510,000 on top of the £2m dividend. That followed the disposal of its Leaf Gaming stake for £2.4m. The share price declined 7.14% to 1.95p. There has been a 9.3% share price decline so far this year, but that is not adjusted for the 1p/share special dividend.

Lupus treatment developer ImmuPharma (LON: IMM) reported a reduction in loss from £4.46m to £3.42m. It has taken longer than thought to approach commercialisation of the Lupus treatment Lupuzor. There should be enough evidence to move to a phase 3 clinical study. There was cash of £200,000 at the end of 2023. ImmuPharma raised £1.5m from the sale of its shares in Aquis-quoted skincare company Incanthera, which was valued at £600,000 at the end of 2023, although it retains warrants. The share price slipped 5.36% to 2.47p.