The FTSE 100 surged higher on Tuesday with China-focused stocks doing most of the heavy lifting after the Chinese authorities stepped in to prop up their depressed equity markets.

London’s leading index was 0.55% higher at the time of writing, with names such as HSBC, Prudential and Antofagasta among the top risers.

BP was the top riser after following in Shell’s footsteps in announcing a considerable share buyback even though profits fell in the last year.

“The big story on the markets was the sharp rally in Chinese stocks after a state-backed initiative to stir up interest in equities,” said Russ Mould, investment director at AJ Bell.

“The Hang Seng advanced 4% and the SSE jumped 3.2%, some of the biggest one-day gains we’ve seen on the Chinese market in a long time. The Hang Seng Tech index did even better, soaring by 7%.

“A state-owned investment fund indicated it would continue to buy up shares in what looks like a concerted effort to breathe some new life back into Chinese equities after they fell out of favour. The securities regulator also pledged to encourage more long-term funds to buy shares and to encourage companies to buy back more of their own shares.”

The Miners are the most obvious beneficiaries of Chinese stimulus, and the sector posted respectable gains but didn’t run away with itself as the measures were focused on the stock markets rather than the economy. Antofagasta added 1.2% and Rio gained 0.3%. Glencore slipped 0.3% signalling slight disappointment China wasn’t doing more to support the underlying economy and demand for commodities.

On the other hand, HSBC and Prudential, who are more concerned with China’s financial system, gained 1.8% and 2.7%, respectively. HSBC, as the FTSE 100’s third largest company, would have added a significant number of points to the index.

BP was the FTSE 100’s top riser, jumping 5.8%, as the oil major revealed another share buyback that caught investor’s attention. Profits nearly halved as the firm readjusted to lower oil prices, and refining margins were hit.

“The priorities of BP’s new CEO Murray Auchincloss have been made clear. Although on appointment he pledged that BP’s strategy to transition from an international oil company to an integrated energy company was unchanged, the big share buy-back announcement shows the immediate focus is on boosting the share price and returning value to shareholders.

“BP also said that shareholders would get a further $3.5 billion in buybacks in the months to come, and more in 2025.

“This strategy is being pursued even though BP reported a sharp drop in underlying annual profit from $27.7 billion to $13.8 billion as oil and gas prices were lower and refining profit margins also weakened.”

Futura Medical (LON: FUM) says 2023 product revenues were around £3.1m following the launch of erectile dysfunction treatment Eroxon in the UK and Belgium. It has already built up a 20% market share. A $4m upfront payment from Haleon for US rights will be recognised in 2024. There was cash of £7.7m at the end of 2023. The share price jumped 31.6% to 36.45p.

Cloud computing services provider Beeks Financial Cloud (LON: BKS) has secured a significant multi-year contract with one of the world’s largest global exchange groups. The contract requires regulatory approval so it may not make a contribution in the year to June 2024. The value of the deal was not disclosed but it could be worth £3m or more each year. Another contract has been increased in size. Canaccord Genuity is maintaining its 2023-24 pre-tax profit forecast at £4.1m and increasing the 2024-25 figure from £5.3m to £6m. The share price increased 30.6% to 141p – the highest level since March last year.

Quadrise (LON: QED) has signed a collaboration agreement with Cargill and MAC2 Solutions for the production of the company’s MSAR and bioMSAR fuels for marine vessel trials on the MSC Leandra. Cargill will supply feedstocks and MAC2 provide jetty space. Cargill has its own fleet of more than 500 vessels. The fuels are more efficient and have less emissions than rival fuels. The share price rose 28.3% to 2.675p.

Internet services company SysGroup (LON: SYS) had a good third quarter with double digit growth year-on-year. AI services are building sales with new and existing customers. The company has secured a three-year cyber security contract worth more than £500,000 and this will be recognised in the fourth quarter. Owen Philips has been appointed as finance director. The Liverpool office is being closed. The share price improved 20.7% to 35p.

FALLERS

Tracking systems provider t42 IoT Tracking Solutions (LON: TRAC) lost most of yesterday’s gains after it secured an order from a customer for 30,000 Lokies keyless padlock units and that could generate $7.5m in revenues over three years. The share price slipped 23% to 2.75p – just above the Friday closing price.

Secure payments services provider PCI-Pal (LON: PCIP) increased interim revenues by one-fifth to £8.7m and achieved positive EBITDA. Annualised recurring revenues were 23% ahead at £14.7m. Net cash was £540,000 at the end of 2023, after paying £1.1m of legal costs for the patent case with Sycurio. The US trial is set for February 2025. PCI-Pal has secured a partnership deal with Zoom. The share price dipped 11.7% to 49p.

Tiger Royalties and Investments (LON: TIR) reported a steady unaudited portfolio value of 0.08p/share. The share price declined 9.09% to 0.25p.

There was profit taking in MicroSalt (LON: SALT) shares, which fell from its peak to 9.42% to 62.5p. To put that in context the low-sodium salt developer raised £3.14m at 43p/share when it joined AIM on 1 February. The company has set out its strategy and expects to announce additional US orders. It is in early-stage discussions with three UK supermarkets.

BP rose on Tuesday after the oil giant revealed the impact of lower oil prices in 2023 but pushed on with another bumper share buyback.

BP shares were 6% higher at the time of writing.

BP followed Shell’s lead as far as investors looked past falling profits and focused almost exclusively on an increased share buyback. BP announced an additional $3.5bn share buyback programme to be completed in the first half of 2024.

Lower profits at BP were telegraphed after energy prices slid in 2023, and the halving of Underlying Replacement Cost Profit to $13.bn in the full year would not have come as a surprise to investors.

Oil majors’ profitability is notoriously volatile and largely in the hands of underlying energy market pricing. As profitability swings dramatically, investors will be conscious of the company’s cash position and the ability to continue to grow distributions.

Looking at BP’s cash flow, shareholders have nothing to be concerned about. Despite operating cashflow falling in 2023 due to lower oil prices, BP increased shareholder payouts, maintained the same level of CAPEX as in 2022, and still ended the year with more cash in the bank than at the end of the prior year.

In many respects, the comparison to 2022’s earnings will be discounted by the market due to the war unfolding in Ukraine, sending oil prices above $100.

With oil prices falling back to the $70-$80 range, BP is now operating in an environment more representative of historical conditions and shareholders may feel comfortable with the macro influences on earnings going forward.

“The priorities of BP’s new CEO Murray Auchincloss have been made clear. Although on appointment he pledged that BP’s strategy to transition from an international oil company to an integrated energy company was unchanged, the big share buy-back announcement shows the immediate focus is on boosting the share price and returning value to shareholders. BP also said that shareholders would get a further $3.5 billion in buybacks in the months to come, and more in 2025,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“This strategy is being pursued even though BP reported a sharp drop in underlying annual profit from $27.7 billion to $13.8 billion as oil and gas prices were lower and refining profit margins also weakened. 

“However, the company continues to generate highly impressive cash flows so there will be disappointment that BP is not using this strength to go farther and faster with its green transition. The emerging focus on cleaner forms of energy, are highly capital intensive but the dial is not being moved on capital expenditure guidance for 2024 of around $16bn and it looks likely to stay at a similar level till at least 2030. The focus is now going to be trained on simplifying the business, providing stability for investors, with what Auchincloss calls ‘more pragmatism’.”

Fusion Antibodies has announced a new follow-on project that is expected to generate substantial fees for the company. Under the project, Fusion will further progress the lead antibody that was successfully developed under an existing collaboration agreement with a US biotech company.

Fusion Antibodies shares were 13% higher at the time of writing.

The follow-on project is anticipated to bring in approximately $650,000 in fees for Fusion by the end of March 2025. This comes on top of the fees already received under the initial agreement, which slightly exceeded the original minimum of $1.83 million due to additional work elements.

Fusion Antibodies said the ongoing partnership demonstrates the value of Fusion’s proprietary antibody discovery and engineering capabilities, which continue to drive revenue growth through service agreements.

Leveraging Fusion Antibodies’ RAMP antibody maturation platform, the new follow-on project focuses on advancing the lead therapeutic antibody identified in earlier discovery work. Further optimisation and development of potential backup candidates may also be undertaken.

“It is always thrilling and satisfying to share in our clients’ successes. We are delighted that the programme has been so productive, and we look forward to continuing to work with our Client to bring better antibodies to the clinic more rapidly,” said Adrian Kinkaid, CEO of Fusion.

“The collaborative nature of the project, with creative problem solving from both parties over the full length of the programme, makes this a model example of Fusion’s Integrated Therapeutic Antibody Service (ITAS) and highlights the strong reputation that Fusion has for delivering high quality therapeutic antibodies.

“Whilst it is not anticipated that revenues from the new Follow-on Project will substantially impact revenues in the current financial year, it provides a valuable bedrock for the following year. We look forward to continuing to build on the excellent relationship with our Client and to repeating the success with more ITAS projects in the future.”

The FTSE 100 gained on Monday as the wave of positive sentiment established by robust US jobs data on Friday pushed into a second session.

A bumper Non-Farm Payrolls reading on Friday confirms the US economy can stomach the high-interest rate environment.

The 353,000 increase in the headline jobs added may have unnerved some equity investors concerned the Federal Reserve would push the first rate cut even further into the future.

Instead, US stocks surged higher in Friday’s session, suggesting equity bulls are happy for rate cuts to be put off as long as the US economy remains supportive of earnings.

“The markets continue to forge ahead despite a blowout jobs report from the US last Friday which seems to have finally put the nail in the coffin of the idea rates will be cut next month,” said AJ Bell investment director Russ Mould.

“The FTSE 100 clawed its way to its best levels in nearly a month with fairly broad-based strength throughout the index. There are just the first signs that we are inching away from a looking glass world where bad news is good news because of the implications for monetary policy to good news being good news once again.”

The FTSE 100 was 0.4% higher at the time of writing on Monday.

The US economy has been remarkably resilient in the face of the cost of living crisis, and higher rate environment, and predictions of a recession have been largely extinguished.

In the UK, the economic situation is less certain. Still, investors seem to be happy to follow the United States’ lead, given the Bank of England and Federal Reserve are making similar sounds on rate cuts.

There were signs of concern about UK-focused companies on Monday, with 3% falls for Howden Joinery and JD Sports.

We wrote last week that GSK looked set to trend to the top of the well-established trading range after releasing a positive update. This view was corroborated by equity analysts at Deutsche Bank, who raised their price target to 1,950p, sending GSK shares 2.5% higher.

Ocado was the FTSE 100’s top riser, gaining 4.4%, as the retailer bounced off support at 500p.

Vodafone shares were down marginally on Monday after the group announced 4.7% organic revenue growth in Q3 and a 1.4% decline in reported revenue growth.

The update provided nothing for investors to get excited about and shares slipped 0.4%. However, the update did demonstrate Vodafone were addressing the problems that have ravaged shares in recent years as German revenue grew 0.3%.

“We’ve made good strategic progress in the first nine months of the year, with improving customer satisfaction and three consecutive quarters of service revenue growth in Europe,” said Margherita Della Valle, Vodafone Group Chief Executive.

Despite stabilisation in Germany, group revenue fell 2.3% as southern Europe continued to drag on revenue.

Italy and Spain were causes for concern with negative revenue growth while the African business Vodacom was again the bright spot with service revenue growth of 8.8%.

“Vodafone’s third quarter had some pockets of optimism for investors to cling to. Growth was in line with the second quarter, arguably a better result than some had feared. The key German market managed to scrape its way into growth territory but saw a slowdown. Comparisons to the second quarter were always going to be tough, with some non-recurring revenue streams not repeating. Regulatory changes in Germany are set to kick in this year, adding a layer of uncertainty to operations in the region,” said Matt Britzman, equity analyst, Hargreaves Lansdown.

“Streamlining the business remains a top priority and potential deals in Italy are still on the table. There’s scope for upside in the region if a deal can be found, but whether that would translate to a meaningful share price reaction remains to be seen. Deals in the UK and Spain failed to stir up too much excitement.

Britzman highlighted the value in Vodafone shares but cautioned the dividend may come under pressure as analysts predict dividend cuts.

“Vodafone looks cheap by most measures and with a forward yield of 9.2% it’s easy to see the attraction. But an argument can be made that the dividend is under some pressure in the near term. The Spanish sale, while a positive move for earnings given it’s a loss-making region, will be a hit to free cash flow. A capital allocation review is on the cards post-completion, and some analysts are already pencilling in dividend cuts as a result.”