The FTSE 100 defied a US tech selloff to push higher on Thursday as the relatively boring nature of London’s leading index provided a haven for investors seeking shelter from volatility in US mega caps.

“A catastrophic day for US tech shares hasn’t caused widespread contagion on the markets,” explained Dan Coatsworth, investment analyst at AJ Bell. 

“While the Nasdaq had a miserable day on Wednesday, only Japan’s Nikkei 225 caught a cold in response. Its semiconductor industry might be affected if the US government gets heavier with measures to stop China getting its hands on foreign chip technology.”

The FTSE 100 was trading 0.7% higher at 8,247 at the time of writing in a broad rally that saw most sector gain.

London’s flagship index is comprised largely of stocks with defensive attributes and lacks the racier technology shares that have driven substantial gains in US indices. Of course, investors focused on UK stocks will have missed out on the sharp gains enjoyed in US stocks over the past two years but will certainly be relieved to be shielded from overnight declines in tech names such as Nvidia, Meta, and Advanced Micro Devices.

The catalyst for the selling was Donald Trump’s approach to relations with China and Taiwan and what it could mean for the sector should he win another term as president in November.

“Semiconductor shares have been some of the strongest in the market so far this year. At one point, Nvidia, the leading AI chip producer, became the world’s most valuable company,” said Steve Clayton, head of equity funds, Hargreaves Lansdown.

“Last night, however, investors took a very different view, leading to sharp declines in the prices of major chip producers, from Nvidia to AMD and beyond. An interview with Donald Trump, for Bloomberg Businessweek saw the former President casting doubt on US willingness to defend Taiwan, should he be elected in November.

“With much of the world’s most advanced chip manufacturing capabilities located within Taiwan, sixty-eight miles offshore China.  That was not a message the market wanted to hear. Nor did it want to hear the Biden administration talking about tougher trade restrictions against China.”

Thankfully, London is largely immune to such concerns, leaving UK-centric stocks free to push higher after positive UK economic data. UK banks ticked higher and JD Sports had another good session with another 2% gain.

Asset managers and brokers had a strong with Schroders adding 5% and Hargreaves Lansdown gaining 1.5%. AJ Bell was a key driver for the sector after announcing robust customer additions in the last quarter.

Frasers Group was the standout performer as the retailer shares jumped 8% after announcing a 13% increase in profits amid a strategic push to revamp the brands it stocks.

Sports Direct was becoming a jumble sale of dead and dying brands, and the model was starting to infect House of Fraser stores. Today’s results signal progress in shedding this image, and investors will be pleased to see that it is translating to higher profitability.

“The so-called elevation strategy is moving along nicely, with more stores upgraded in the period,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.

“This improves the overall customer shopping experience by displaying products in a more flattering and digitally integrated environment, which is also helping to strengthen relationships with major global brands. These stronger partnerships should help unlock further growth opportunities and increase the brand’s ability to pull consumers into its stores. Increased automation at its warehouses, which significantly reduced inventory levels, should help improve profitability moving forward too.”

SSE said performance was in line with expectations in the three months to June 30th as renewable energy output jumped during the period.

After abnormal weather patterns last year dented renewable energy generation, output jumped 60% in the last quarter as normal conditions resumed.

SSE saw markedly better generation in both onshore and offshore wind, as well as milder improvements in pumped storage and hydro.

Renewables total output rose from 1,625 GWH in the three months to 30th June 2023 to 2,596 GWH in the same period this year.

Although SSE is making commendable steps forward in renewable energy generation, the company still generates most of its power from gas powered facilities which totalled 3,338 GWH output in the last quarter.

This, however, may not be the case for much longer. SSE provided an update on a raft of renewable energy projects due to come online in the near future. The company has recently generated the first power from onshore wind in the Shetlands and is due to launch a new farm in Ireland in early 2025. These are two among many projects to ramp up renewable energy power generation.

Given the company’s trajectory, it’s only a matter of time before the vast majority of SSE’s output is renewable. 

“The UK’s determination to move away from fossil fuels has moved into overdrive following Labour’s election win, and SSE is moving in tandem with the new government to embrace the transition. In its latest trading update, SSE confirmed performance in line with expectations, with renewables output for the quarter up 60% year-on-year,” said Mark Crouch, analyst at investment platform eToro.

“SSE has already made significant investment to improve their electric power infrastructure and is committing a further £20.5bn to its investment programme, including what will be the world’s largest wind farm, Dogger Bank, off the coast of England, capable of powering six million homes.

“Projects like this though have come at the expense of shareholder dividends, dividends that in the past have been synonymous with utility stocks. And the glaring risk is that renewable energy methods are unreliable, thus profits will likely be volatile. 

“However, the company believes that with the business continually expanding its high-quality asset base, shareholders stand to reap the rewards over the long term.”

With its management expectations that 2024 will be a year of significant momentum in terms of both EBITDA margins and cash generation, it will be very interesting to see how this global integrated medical diagnostics business has fared in the first half of this year.

Based in Cardiff, with sites in five other countries, EKF Diagnostics Holdings (LON:EKF), will be issuing a H1 Trading Update within days.

Will it be good enough to get some excitement back into its share price?

The Business

Specialising in the development, production, and distribution of innovative medical technologies and patient-centric solutions EKF is a leading global diagnostics and biotechnology company.

Its solutions help to empower healthcare and medical providers to make informed clinical decisions through point-of-care testing and life sciences applications.

The company’s product portfolio includes small blood analysers and associated consumables used in testing patients for conditions including diabetes and anaemia.

EKF sells through a network of some 200 distributors covering every country around the world; while its German and American offices also sell directly into hospital laboratories, GP surgeries, universities and sports organisations.

The group has sold over 90,000 analysers all around the world since 2008. 

This installed based forms the cornerstone of the EKF Point of Care business, requiring more than 60m tests to be manufactured every year to service existing demand.

New Launch And Contract Wins

Possibly the start of good news to come is this morning’s announcement of the launch of its new and enhanced Biosen C-Line, an industry leading benchtop glucose and lactate analyser within its Point of Care range, in response to customer demands for greater connectivity options and improved usability. 

It also announced that it has secured new contract wins from two tenders: Hong Kong Red Cross (three years) and Thai Red Cross (two years) worth approximately £600k in total.

The Equity

There are some 455m shares in issue, with Harwood Capital being the biggest holder (29.09%), followed by Liontrust (11.99%), Gresham House Asset Management (8.87%) and others accounting for over 70% professional holders.

Analyst Views

Dr Julie Simmonds and Dr Mike Mitchell at Panmure Liberum rate the shares as a Buy, looking for 37p as their aim.

They estimate current year, to end December, sales of £54.2m (£52.6m) with adjusted pre-tax profits of £8.2m (£6.5m).

For 2025 they see £57.9m and £10.1m, then in 2026 £63.8m and £12.7m respectively.

Singer Capital Markets also have the shares as a Buy with 36p as their Price Objective.

Its analysts have very similar sales and profits projections, while looking for the group’s shares to be re-rated in due course on the back of higher numbers.

My View

Capitalised at almost £139m this group has the historic basis of growth driven by expanding sales of its consumables, especially as it develops more specific products into the ‘point of care’ marketplace.

Until much better estimates prevail, I would not be in a rush to chase this stock, now 31p, but instead, perhaps, wait to to buy on any dips.

Frasers Group’s profitability improved materially in the full-year ended 28th April as the fashion retailing group repositioned its product strategy to focus on better thought of brands.

The group has been associated with tired brands at the end of their life, which Frasers Group sold at a discount through outlets including Sports Direct.

The discounting even started to creep into House of Fraser, damaging perceptions of that brand and risked the entire group being perceived as a B&M for dead fashion brands.

The company set about rectifying this with its ‘Elevation Strategy’ focused on attracting a wider audience with high-profile brands – and it’s working.

The successful execution of the Elevation Strategy has strengthened brand partnerships, including the onboarding of new brands such as The North Face, On, and Columbia.

This helped drive a strong year with Adjusted Profit Before Tax (APBT) reaching £544.8 million, a 13.1% increase and at the upper end of the guidance range. Adjusted Earnings Per Share (EPS) saw a significant rise of 33.6% to 95.8p. The firm anticipates continued strong growth, projecting APBT for the fiscal year 2025 to be between £575 million and £625 million.

Sports Direct delivered year-on-year growth in both revenue and gross profit as the company strengthened relationships with third-party brands and worked on Sports Direct’s market positioning.

Demonstrating a clear growth strategy, Sports Direct are increasing presence in the Nordic countries, establishing a joint venture in Southeast Asia, and the ongoing acquisition of a leading sports retailer in the Netherlands.

“This has been a break-out year for building Frasers’ future growth. As well as delivering a strong trading performance, particularly from Sports Direct, we made significant progress with our Elevation Strategy,” said Michael Murray, Chief Executive of Frasers Group.

“We expanded our retail ecosystem, establishing valuable partnerships with new brands. Our brand relationships have never been stronger, giving us invaluable support as we continue the international expansion of our business. We invested in group-wide operational efficiencies in warehouse automation and digital infrastructure, which we expect to yield a tangible impact as early as FY25. And we generated new growth opportunities with the rollout of Frasers Plus, including recently signing our first third party partner in THG.

“I’m really proud of what we have achieved at Frasers this year and would like to thank all colleagues for their continued hard work and our brand partners for their support. Together, we are building a resilient, profitable growth retail ecosystem that delivers exceptional value for our partners, consumers and shareholders. We have built a lot of momentum this year and are entering the new financial year with many exciting growth opportunities ahead of us, which we will continue to invest in for the long-term benefit of the Group.”  

A strategic partnership with THG plc has been agreed upon, which will integrate Frasers Plus into THG’s Ingenuity platform, marking the first external partnership for Frasers Plus.

The launch of Frasers Plus, the FCA-regulated credit scheme, has shown encouraging early performance as the group gets in on the finance game. Frasers have set ambitious long-term goals for Frasers Plus, including over £1 billion in sales, £600 million in balances with a yield exceeding 15%, and more than 2 million active customers.

Avacta Group has announced its decision to settle the upcoming July quarterly amortisation payment for its unsecured convertible bonds in cash. The payment, totalling £3.13 million, comprises £2.55 million in principal and £580,000 in interest.

The company, known for developing innovative cancer treatments and diagnostics, said it carefully deliberates each payment as it arises. The board considers various factors, including the firm’s cash runway, potential shareholder dilution, and overall business outlook before making a decision.

Investors will be pleased that this particular payment has been settled in cash and avoids any dilution for investors.

Following this cash settlement, the outstanding principal on Avacta’s convertible bonds will decrease by £2.55 million to £33.15 million.

Avacta raised around £30m by way of a placing in Q1 2024 to develop the AVA6000 pre|CISION molecule targeting improvements in patient outcomes during chemotherapy.

The FTSE 100 dipped on Wednesday after UK inflation data made a Bank of England rate cut in August less likely. 

Many investors were hoping the stars are aligning for a reduction in borrowing costs and today’s data will only serve to dash these hopes. 

“UK stocks took a tumble after components of the latest inflation data lowered the chances of a near-term interest rate cut from the Bank of England,” said Dan Coatsworth, investment analyst at AJ Bell.

“Services inflation still looks too high for comfort. The Bank has long said it is data-driven and today’s numbers don’t look soft enough across the board to convince the policy committee to change gear.

UK inflation remained steady at 2% – the Bank of England’s target – yet the reading was higher than expected, fuelling doubts about the trajectory of inflation in the coming months. 

“The BoE hawks take the victory. UK inflation held steady at 2% in June, slightly above expectations, driven by rising hotel and restaurant prices, while clothing prices fell. This persistent inflation reduces the likelihood of an August rate cut, with markets reacting cautiously. Further wage data on Thursday will be crucial in shaping future monetary policy decisions,” said Sam North, analyst at investment platform eToro.

“The GBP initially spiked higher before pulling back to pre-release levels. For those hawkish BOE members, the ones who wanted to see the central bank keep things on hold again next month, this is exactly what they would have wanted to see. Whilst services inflation was higher, it wasn’t higher than the previous month. A silver lining for the dove maybe but I would be surprised now to see the BOE cut rates on August 1st.”

The Bank of England has been clear that it wants to see sustained evidence of falling inflation, and the figures released this morning do not fit the bill. 

The disappointment with this morning’s release was evident in UK-centric stocks with retailers including JD Sports, Frasers Group and Next among the top fallers.

Although there will be concerns about borrowing costs and the impact on the real economy, some of the FTSE 100’s weakness on Wednesday can be attributed to the stronger pound that weighed on mega-cap overseas earners such as AstraZeneca.

Antofagasta was the top faller, down 4%, as the copper miner followed the recent trend of releasing poor production updates. Despite production rising 20% in the last quarter, full-year production is down, and the group lowered its guidance for the year.

Morningstar analysts have reacted to yesterday’s Ocado results with a fair value estimate suggesting Ocado is worth three times the current share price.

Yesterday, Ocado reported a reassuring increase in revenue and a very encouraging increase in EBITDA guidance for the year. After many periods of disappointing updates, Ocado finally produced respectable increases in revenue, demonstrating progress in the rollout of its technology business and higher engagement with premium food delivery in conjunction with M&S.

Shares spiked higher early in the session after results were released, but the gains diminished with short-term traders banking profits as the session progressed.

However, those with longer time frames, such as the equity analysts at Morningstar, see the potential for substantial appreciation in the share price as the company gains further traction in its grocery delivery service, and the technology element of Ocado’s product suite.

“Ocado shareholders finally received some good news yesterday in the form of a strong half year update, with group revenues up almost 13%. The strong share price reaction came as management upgraded profit guidance for the full year,” explained Michael Field, European Equity Strategist, Morningstar.

“Underlying this strong performance was Ocado’s Technology Solutions business, the area of the company that deals with automation, fulfilment, and the online grocery market. Technology Solutions saw growth of more than 20% in the first half of the year, with an operating margin of 14.5%, materially higher than the rest of the Ocado business. 

“Some investors might expect that shares are up with events after a near 15% move in the share price, but we believe there is far more to come with this story. Our fair value estimate for this stock is GBX 920, almost triple the current share price!

“How do we square the difference between our fair value and the GBX 400 consensus target price? Ultimately it comes down to small differences in assumptions, but over a very long time period. Over the longer term we believe online penetration will reach 25% of the grocery market, with this generating strong growth for both Ocado’s retail and technology solutions businesses.”

Ocado shares were trading at 358p at the time of writing.