Early losses in the FTSE 100’s miners turned to gains on Tuesday and their transition helped London’s leading index swing from initial weakness to positive afternoon trade.

The FTSE 100 was trading 0.1% higher at 7,461 at the time of writing. The index had touched lows of 7,389 earlier in the session.

Natural resources stocks are trading from China headline to China headline and yesterday’s rally on positive support for China’s property market was today followed by dismal China export and services data.

“Nagging worries about the Chinese economy are a big contributing factor to the change in mood – the latest PMI reading from the services sector painting a shocking picture,” said AJ Bell investment director Russ Mould.

“Undoubtedly expectations for a Chinese economic recovery following the removal of zero-Covid measures got way ahead of themselves, but the manner in which things have panned out is probably worse than even most of the sceptics would have predicted.”

The FTSE 100’s miners started the session in the red but soon reversed the rally and swept the wider index up with it.

Ashtead was the top faller after warning of slowing US media demand due to the writer’s strike and spluttering growth in the UK. The plant hire company did, however, record 19% revenue growth in the first half. Ashtead shares were around 2% lower at the time of writing.

Investors may be interested in Ashtead’s growth not only because of the implications for the company, but what their activity reveals about the underlying economy.

“Equipment rental company Ashtead is seen as a bellwether of economic health and its latest update is a warning for deteriorating conditions in the UK,” said Susannah Streeter head of money and markets, Hargreaves Lansdown.

“Although sales are holding up Stateside, with the company expecting robust momentum to continue, it’s a very different outlook for the UK.  Ashtead has flagged softening market conditions and dropped its annual UK rental revenue growth significantly from 10-13% to 6-9%.” 

Ashtead has been one of the FTSE 100’s best-performing stocks over the past decade and has consistently produced very respectable growth.

While Ashtead delivered 19% revenue in the first quarter, it missed some analyst expectations and shares fell on Tuesday. Ashtead shares were down 1% at the time of writing on Tuesday but are 14% year-to-date having staged a rally over the summer months.

Over the past ten years, Ashtead has been the second-best FTSE 100 performer gaining 725%. Persimmon is the top performer with a 1,380% gain.

Ashtead’s success has been a result of strong growth in the US where revenue grew 22% in Q1 2023. Group revenue rose 19%.

Ashtead continued to be supported by US infrastructure projects but strikes across the film industry hit their media-focused operations.

“With Ashtead having a long history of doing well, investors are naturally going to expect a superior performance every single quarter. When expectations are elevated, the construction equipment provider will ultimately disappoint the market unless everything is firing on all cylinders. That’s exactly what we have seen following its latest results, which contain pockets of bad news,” said AJ Bell investment director Russ Mould.

“The impact of rising interest rates is starting to bite. Adjusted pre-tax profit ‘only’ grew by 11% in its first quarter, with Ashtead saying the lower rate of growth was down to borrowing more money and having a higher cost of servicing those debts.

“Ashtead normally benefits from the vibrant TV and film industry in Canada, renting equipment for productions that can go on for weeks or months. The writers’ and actors’ strikes have therefore been problematic for its business as productions have been shut down and earnings visibility is now uncertain.

“Furthermore, the UK operations continue to be weak. While they are only a tiny contributor to group profit, the fact it can’t seem to lift them out of a rut has led some people to suggest that Ashtead may be losing its magic touch. Margins are falling, higher rental rates haven’t been enough to offset inflation on its cost base, and it hasn’t got a repeat of the lucrative work from the Department of Health which helped its earnings last year.

“Despite the pockets of bad news, Ashtead still delivered a record performance overall, with the type of revenue and profit growth that most companies can only dream about.”

DS Smith said it had a strong start to the trading year despite challenging economic conditions in a concise update released on Tuesday.

The packaging specialist indicated that although inflation pressures persist, they were fighting back with pricing and cost control strategies.

“Selling cardboard boxes might not be the most exciting business model in the world, but DS Smith’s resilience in tough conditions continues to hold it in good stead,” said Matt Britzman, analyst at Hargreaves Lansdown.

“There wasn’t much to go off from today’s short trading update, investors and analysts will have to wait for this morning’s call to delve a little deeper, but everything looks to be progressing as planned. There was positive news on volumes, which saw some weakness last year as demand in the group’s end markets came under pressure from the cost-of-living crisis. That pressure still exists, but de-stocking from its customers is easing which should improve the volume picture as the year progresses.

“Being a key supplier of packaging to giants like Amazon and Tesco puts DS Smith right at the heart of the evolving e-commerce trend. Economic woes mean the valuation’s moved down to levels that look pretty attractive, chuck in a decent yield and what’s not to like?”

Blackbird shares were down heavily on Tuesday after the cloud video editing platform released a disappointing set of first-half results. Revenue fell 36% during the period and EBITDA losses accelerated to £1.5m from a loss of £385k last year.

Blackbird was canned by a major client during the period which had a material impact on their revenue generation. Post-period revenue has continued to decline.

Compounding their problems, Blackbird’s costs have soared while revenue dumps meaning losses are spiralling.

The company has reacted to the poor performance by reducing headcount in sales and marketing to focus on product development.

“The recent cyclical and structural changes in the Media and Entertainment industry (M&E) have been considerable and impacted the professional Media and Entertainment part of our business, most prominently our deal with A+E Networks, which, as previously announced, was terminated at the end of June 2023,” said Ian McDonough, CEO of Blackbird.

“In anticipation of market shifts, we successfully raised money in 2021 to build a product for the Creator space. Therefore, we have reduced headcount in our UK sales and marketing team in order to maximise return on resources by investing in software developers and product specialists.”

Blackbird shares were down 32% at the time of writing.

The FTSE 100 gained on Monday as investors positioned for the Federal Reserve to pause hiking rates at their next meeting after last week’s jobs report indicated that the US employment market was slowing.

The FTSE 100 was 0.4% higher at 7,494 at the time of writing in a broad rally spearheaded by cyclical stocks. US markets were closed for the Labor Day holiday on Monday.

“Investors are growing warm to the idea that the Federal Reserve might not rush to raise interest rates again at its next meeting. An increase in unemployment for August and lower than expected wage growth suggest the Fed may sit on its hands and make no change to rates,” said Russ Mould, investment director at AJ Bell.

“Judging by the messages from US corporates regarding a slowdown in trading, it does feel like we could be at a turning point for monetary policy. Nonetheless, it is impossible to say for certain what the Fed will do, given these are only data points from a brief period of time.

“Any sign that interest rates might have peaked is good news, in theory, as it implies consumers and businesses may now have seen the worst when it comes to pressures from an appreciating cost of borrowing. However, existing pressures from current rate levels are still troublesome. One must also consider that any lack of further rate rises might be down to a weakening economy, so it is not a simple ‘no rate hikes = better times’ scenario.”

Improving news coming out of China helped propel mining shares higher after authorities took additional steps to help stimulate the struggling property market.

“Sentiment across Asian markets improved after the weekend vote by creditors in favour of restructuring a bond repayment by troubled Chinese property developer Country Garden,” said Russ Mould.

“Chinese authorities also lowered downpayment requirements for first and second-time home buyers, thereby providing yet another stimulus initiative to drive greater economic growth.”

UK housebuilders gained as investors dared to think a pause in US rates could be a precursor to the Bank of England keeping rates around current levels.

Persimmon was up 0.6%, and Taylor Wimpey added 0.4%.

Tekcapital shares were higher on Monday as appreciation for their portfolio companies’ progress was starting to be reflected in shares.

Although Tekcapital remains heavily undervalued compared to the sum of the parts of their portfolio companies, Tekcapital shares have begun to tick higher as investors look forward to key events that could unlock further shareholder value.

In a recent update, Tekcapital said food technology company MicroSalt “has been making steady progress towards its planned IPO” and was in “advanced discussions with commercial partners including key players in the snack food industry”.

The potential IPO and traction with ‘key players’ in the food industry could lead to a step change in MicroSalt’s value and drive a substantial re-rate in Tekcapital shares. One may argue this isn’t adequately reflected in shares.

Belluscura has recently demonstrated Tekcapital’s ability to identify technologies with a broad addressable market after announcing two separate deals that represent significant revenues for Belluscura.

Having founded Belluscura, conducted early funding, and subsequently listing Belluscura on London’s AIM, Tekcapital retains an 11% stake in the medical device company, which recently announced a landmark $55m royalty agreement with a Chinese partner.

Tekcapital issued a separate update on Guident in August and alluded to the testing of their regenerative shock absorbers with a Teir-1 tire organisation and progress in developing their autonomous vehicle safety technology.

Both of Guident’s technologies target multibillion-dollar industries, and commercial traction could result in a valuation that dwarfs the current $20m recorded on Tekcapital’s balance sheet.

Finishing with Innovative Eyewear, we recently spoke with CEO Harrison Gross, who spoke of excitement around licensing deals with Reebok, Eddie Bauer and Nautica launching in the coming months. Innovative Eyewear has developed the world’s first ChatGPT-enabled smart eyewear and hopes to capitalise on its first-mover advantage through partnerships with leading fashion and lifestyle brands.

Advanced Medical Solutions Group shares tanked on Monday after announcing the removal of key royalty revenue from their profit forecasts for the year ending 31 December 2023.

The company stated that due to uncertainty around the revenue outlook for products licensed from AMS, it believes it is prudent to remove royalty income from Organogenesis Inc. in its entirety from Q4 2023 guidance onwards.

Advanced Medical Solutions (LON:AMS) shares were down over 30% at the time of writing on Monday.

This removal of this royalty revenue is expected to significantly impact AMS’s adjusted pre-tax profit. For the 2023 full year, AMS anticipates the lower royalty will reduce its profit by £2 million. Additionally, in fiscal years 2024 and 2025, eliminating the royalty is forecast to cut pre-tax profit by £4 million annually. A similar pro-rata reduction is projected through September 2026 until the conclusion of the licensing agreement.

The update comes after AMS’s first half was affected by decreased royalties from the patent deal with Organogenesis. Recently, Organogenesis reported US reimbursement changes that have created uncertainty around revenues for key products using AMS patents.

With Organogenesis withdrawing its own guidance and AMS having minimal visibility into its sales, AMS stated it cannot quantify the financial impact at this stage. The combined impact is expected to lower AMS’s 2023 revenues to approximately £124-127 million and adjusted pre-tax profit to about £25-27 million.

AMS said its confidence remains intact, and guidance beyond 2023 is unchanged except for the Organogenesis royalty adjustment. Further details will be shared when AMS announces interim results on 20 September.

CleanTech Lithium shares rose on Monday after announcing progress at their Direct Lithium Extraction (DLE) pilot plant in Chile.

However, there may be some disappointment with the reaction in CTL shares as far as the news failed to drive a retest of key resistance levels. 

CleanTech Lithium shares were 5% higher at 55.75p at the time of writing as an early rally began to fade.

Shares in the lithium explorer look akin to a coiled spring. The good news is building, waiting for a specific catalyst to see the CleanTech Lithium share price pop above 60p.

What this catalyst is remains to be seen. The company has enjoyed resource upgrades and today progress on their Direct Lithium Extraction plant, but there isn’t the enthusiasm for the stock to test the 60p level.

Recent upgrades to the Francisco Basin and Laguna Verde projects disappointingly couldn’t get shares convincingly through crucial resistance levels. CleanTech Lithium has world-class lithium resources across three projects located in the Chilean salt flats, which one may argue isn’t reflected in the current price.

Nonetheless, should 60p persistently fail to be broken, there may be a trading opportunity in CleanTech shares. 

Some traders, no doubt, will be eyeing a retest of the 37p level for an entry. This has held consistently, and the stock has naturally undulated down and back off this level on many occasions.