The FTSE 100 was a clear outperformer on Thursday as London’s leading index enjoyed a boost from comments by the Bank of England’s governor.

While US equity indices were being dragged lower by Apple after news China is banning government officials from using iPhones, the FTSE 100 rallied on hopes the hiking cycle was near an end.

Speaking to the Treasury Select Committee of MPs, Bank of England Governor Bailey said there were signs inflation would fall dramatically by the end of the year. This would allow the BoE to stop hiking interest rates.

Hopes we could be near peak interest rates sparked a rally in UK stocks, and the FTSE 100 was trading 0.3% higher after reversing a soft start to the session.

A peak in interest rates will be a good thing for equity markets in the short term, but it raises the question of whether good news for stocks is bad news for the economy.

Questions will soon be asked about the reasons behind the fall in inflation and whether softer inflation data will result from slower economic growth. 

If this is the case, the stock market rally may prove short-lived. Nonetheless, reaching terminal interest rates will reinvigorate equity bulls in the short term.

The FTSE 100 was 0.3% higher at the time of writing, significantly outperforming the S&P 500, which was 0.6% in the red.

FTSE 100 movers

Melrose was the FTSE 100’s top gainer after 1st half revenues surged and operating profit jumped. The group is solely focused on the aerospace industry after divesting GKN automotive businesses this year.

Melrose shares gained 5% on Thursday, and Rolls Royce moved 3% higher in sympathy.

China-focused stocks were again the worst performers, with Prudential falling 2.8% and miners firmly in the red.

Shares in household pet companies CVS Group and Pets at Home fell on Thursday as the CMA launched a review into the veterinary services market.

CVS shares were down around 29% while Pets at Homes shed 9%.

CVS Group issued a statement in response to the review which touched on the inflationary pressures facing the industry:

Our purpose at CVS is to give the best possible care to animals and we continually invest in our colleagues, practices and clinical equipment to enhance the care to our clients and their patients.  The Group has always sought to ensure its prices are appropriate and reflect fair value to our clients.  Our pricing structures are set by clinicians to ensure these align with our purpose.  

As the CMA have recognised, there continues to be a significant shortage of vets in the UK and employment costs represent the most significant proportion of our cost base. Our pricing reflects this and other inflationary pressures experienced in recent years.

The CMA said they would be reviewing whether vet’s bills had grown faster than inflation and indicated they were concerned about large groups owning hundreds of practices and reducing competition. In a statement, the CMA said people may be unaware their vet is owned by a larger group owns other vets in the same area.

The CMA will provide an update on the review in early 2024.

“Being in the pets and vet space has felt like a healthy place to be in recent years. That’s been reflected in strong share prices for the likes of vet group CVS and Pets at Home which has its own veterinary arm within a broader retail and grooming offering,” said Russ Mould, investment director at AJ Bell.

“Britons love their animal companions and are willing to pay up to keep them healthy and happy.

“News that the competition authorities are looking into the rising costs and potentially anti-competitive practices in the industry has set the cat among the pigeons when it comes to the share prices of CVS and Pets at Home.

“The sell-off seen today could be an overreaction, although the CMA review looks to be wide-ranging. The problem for both businesses is the process is likely to be time-consuming and, with a further update not due until early 2024, it could weigh on both stocks for some time to come.”

Gfinity shares rose on Thursday after announcing today non-executive director David Halley has purchased 7 million ordinary shares in the company. The shares were purchased on 6th September at an average price of £0.001233 per share equating to around £8,600.

Following this share purchase, David Halley now holds a total of 81,346,667 ordinary shares in Gfinity. This represents 2.39% of the company’s total issued share capital.

Today’s director dealing follows a major Gfinity shareholder increasing their stake last week.

Tekcapital shares hit the highest levels since June on Thursday after announcing their portfolio company MicroSalt had filed a new patent focused on baked goods production.

The new patent entitled “Compositions and methods for reduced leavening time and sodium content in doughs comprising micron-sized salt particles adhered to a carrier,” marks an exciting new bow to the string of MicroSalts technology and commercial opportunities.

The global bread market is estimated to be worth some $500bn and the opportunity for MicroSalt is potentially game-changing.

Not only can MicroSalt’s technology reduce the sodium in bread and baked goods, MicroSalt believes their low-sodium salt technology can reduce baked goods production time and provide producers with cost efficiencies.

Should MicroSalt gain substantial market traction in the dough industry, the revenue opportunities will be immense.

“We are very excited about our new invention which we believe enables the production of baked goods quicker, less expensively, and with reduced sodium. The bread market is extremely compelling for us, with global volumes expected to reach 216.7bn kg by 2028,” said Rick Guiney, CEO of MicroSalt.

“Our ability to not only reduce sodium but to enable a more efficient production process could be a watershed moment in the fight against excess sodium consumption, and we have already seen a high level of interest from one of the world’s largest food companies.”

MicroSalt are currently preparing for an AIM IPO having appointed Zeus Capital as their Nominated Advisor. In a portfolio company update issued in August, Tekcapital said: “MicroSalt Ltd has been making steady progress towards its planned IPO”.

Tekcapital shares were 2% higher at the time of writing after trading at 12.38p earlier in the session – the highest level since June this year.

Global markets were assessing the implications of another round of oil production cuts by Russia and Saudi Arabia on Wednesday as oil prices rose and threatened to reignite inflationary pressures, which had started to show signs of abating.

The FTSE 100 fell with European stocks and US equity futures as investors weighed the possibility of higher inflation and more interest rate hikes from major central banks.

“If central bankers thought energy prices were an area they could relax on a bit, then the move higher through June has firmly disabused them of that notion,” said AJ Bell investment director Russ Mould.

“The extension of output cuts by Russia and Saudi Arabia through to the end of the year has helped oil prices regain the $90 per barrel mantle for the first time in 2023 and this is likely to add to inflationary pressures. It may force the likes of the Federal Reserve to keep interest rates higher for longer and this is helping to undercut the more comfortable narrative that the trajectory for rates is on the way to shifting.

“Markets are reacting negatively as we await the next decisions from the Bank of England and Fed later this month. The recent improvement in sentiment was always fragile and the cracks are now firmly on show.”

Sectors negatively aligned to interest rates were most heavily hit on Wednesday. IAG fell as input costs threatened to derail future margin expansion for the airline, and wealth managers suffered on the prospect of generally lower equity markets and erosion of disposable income. abrdn fell 2% while Schroders dipped 1.7%.

Housebuilders were dealt not only the blow of interest rate fears but also the increased pessimism around Barrat Developments’ final results.

Barratt’s completions fell heavily last year, but it was an insight into their current forward sales which was most concerning. Barratt said forward orders were down 31% on this time last year.

Barratt Developments was down 2.1% and Persimmon lost 2.3% of its value.

B&M European Value rose 1.7% a day after snapping up 51 Wilko stores and receiving a buy rating from Shore Capital.

Johnson Matthey was the top riser as the specialist chemicals company continued a rally after Standard Industries upped their stake in the company.

West Africa-focused mineral exploration company Kodal Minerals announced its final results for the year ending 31 March 2023 on Wednesday, highlighting progress at its key Bougouni Lithium Project in southern Mali.

Kodal Minerals shares dipped slightly after the announcement as traders booked short-term profits after a decent run in shares over the past week.

Today’s announcement offered very little new information and Kodal Minerals shares will still be dictated by progress in the development of their Bougouni Lithium Project.

The company has agreed a US$117.75 million funding package with China’s Hainan Mining to fully finance the development of the Bougouni Project and bring it into production.

Of the total funds, US$65 million will go towards constructing a Dense Media Separation (DMS) plant at Bougouni targeting first lithium production next year.

The low-cost DMS project has an estimated capital cost of US$65 million and is forecast to generate over US$1 billion in revenue within four years of operation, with payback coming within two months.

Initial production from the 4-year mine life project is projected at over 130,000 tonnes per annum of spodumene concentrate containing lithium.

Additional funds from Hainan will support resource expansion and a future Phase 2 expansion to increase spodumene concentrate production above 300,000tpa.

The Bougouni Lithium Project currently has a JORC compliant resource of 21Mt at 1.11% Li2O lithium oxide.

Kodal has all required permits in place and could begin project development and construction once the financing package with Hainan is completed, for which a long stop date has been set of 30 September 2023.

The long stop date was recently extended to compensate for administrative delays and Hainan completed a pre-payment of US$3.5M in August to fund engineering work.

genedrive has achieved a key regulatory milestone that will enable its new pharmacogenomic test to be introduced in the NHS to help manage treatment for stroke patients.

The UK-based point of care molecular diagnostics company announced has secured UKCA marking registration for its Genedrive CYP2C19 System, a rapid genetic test that can identify how patients will respond to the common anti-platelet drug clopidogrel that is used to help prevent secondary strokes.

genedrive shares were 17% higher on Wednesday after announcing the UKCA marking registration.

The new point of care test only requires a simple cheek swab and can provide clinicians with clinically actionable results in about one hour, allowing more effective and personalized prescription of treatment for individual stroke patients.

Poor response to clopidogrel affects up to 30% of stroke patients in the general population and up to 50% in certain ethnic groups, leading to worse health outcomes. The new rapid genetic test aims to address this issue.

In draft guidance issued in May, the UK’s National Institute for Health and Care Excellence (NICE) recommended that stroke patients should undergo CYP2C19 genetic testing before treatment. This has paved the way for adoption of genedrive’s pharmacogenomic test in the NHS.

Achieving UKCA marking now allows genedrive to start commercialising the test in the UK. The company will initially sell the test through its direct sales team.

The key next steps are to complete a UK clinical evaluation programme and secure CE marking in 2024 to enable wider commercialization in the EU.