On Monday, Chemring Group announced a significant long-term agreement between its Norwegian subsidiary, Chemring Nobel, and American aerospace and defense giant Northrop Grumman.

The 15-year partnering deal secures Chemring Nobel as a supplier of HMX, a powerful energetic material used in missile propellants, to Northrop Grumman’s missile programs.

Alongside the 15-year partnership, Northrop Grumman has also placed an $83 million delivery order with Chemring Nobel for HMX supplies. Deliveries under this order will commence in fiscal year 2026 and continue over the following three years. All production will take place at Chemring Nobel’s facility located in Sӕtre, Norway.

“These awards, which illustrate the long-term and valued relationship that we enjoy with Northrop Grumman, support our decision to invest in increasing the capacity of our three energetics businesses over the medium-term, and reinforces Chemring’s position as a key supplier to NATO,” said Michael Ord, Chief Executive of Chemring.

Just four weeks ago the shares of Adriatic Metals (LON:ADT1) were trading at 253p, by the middle of last week they had fallen back to 196p, before closing on Friday night at a slightly improved 203p.

From this level, market analysts are said to be looking for a recovery back to and then above the 253.50p at which they peaked on 21^st May.

The £658m-capitalised Cheltenham-based precious and base metals mining group is the owner of the Vares Silver Operation, which covers a 44sq.km area in Bosnia and Herzegovinia.

It also owns the Raska Zinc-Silver Project in Serbia.

Vares Silver Operation

The world-class Vares site is gaining most investor attention, it contains two advanced exploration deposits, Veovaca and Rupice, which have previously been mined for Lead, Zinc and Barite.   

The company’s exploration programme is focused on the northern and southern extremities of Rupice. 

At the end of May, the company announced that it had agreed a sale of on-specification grade concentrates from Vares.

Currently, it produces high-quality concentrates, with silver content exceeding 2,500g/t and nearly 50% zinc.

It dispatched the first shipment of ore concentrate from the Vares processing plant to the port of Ploče, officially initiating the first sales contract for the concentrate and securing the first million-dollar payment from international buyers.

The company has rapidly achieved significant success with the first shipment of concentrate from the Vareš mine, less than three months after starting production.

Noteworthy too was that it has also reconstructed the railway line connecting Vares with the port of Ploče, enabling ore transport to smelters in Belgium, Norway, Sweden, Spain, and Italy.

With increasing feed tonnage of development ore available, the processing plant will now transition to 24-hour operations in anticipation of first stopes in July.

The company is continuing to ramp up production, with nameplate capacity expected in the final quarter of this year.

CEO Paul Cronin stated that:

“The production of saleable concentrates from the Vares Silver Operation represents a major milestone for the Company and I am very pleased with the progress made by the processing team with the plant producing concentrates with recoveries as expected.

High silver, gold and zinc prices and low treatment charges due to a tight concentrate market are providing positive tailwinds for Adriatic’s free cash flow generation, as we progress towards full production capacity in Q4 of this year.”

Recent $50m Placing

At the same time in late May, Adriatic announced a $50m institutional placement of stock, with the fresh funds expected to boost the company’s balance sheet as it continues to progress the ramp-up and building upon of recent milestones, such as the production of the first saleable concentrate, and then further towards delivering on its mine plan.

Market analysts have Price Objectives of around 300p on the group’s shares.

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.”