The FTSE 100 was higher in thin trade on Monday after a strong session in Asia translated into a positive start for miners and other cyclical sectors.

The FTSE 100 was 0.3% higher at 7,556 at the time of writing.

The spluttering nature of China’s pandemic recovery has been a cause of concern for markets that have historically relied on China to drag the global economy higher with domestic 6%-8% growth rates.

Chinese growth of 4.5% in Q1 is a far cry from pre-pandemic levels, and investors are increasingly looking to the Chinese authorities for any hints of stimulus.

On Monday, expectations of further China stimulus and a slight easing in US inflation data were the core drivers in European stocks.

“Asian stocks took their cue from Friday’s rally on Wall Street, prompted by data showing core inflation in the US is easing, perhaps reducing the need for too many more rate hikes across the Atlantic,” said AJ Bell investment director Russ Mould.

“There is also improved sentiment towards the Chinese economy, reflected in strong gains for miners on the FTSE 100 on Monday. Now some of the disappointment about a slower than expected post-Covid recovery has eased, the focus is turning to potential financial stimulus and support which could have positive implications for metals and energy demand.”

While equities ticked higher on Monday, the general mood in markets will likely see stocks trade headline to headline as inflation and central bank action drives sentiment.

FTSE 100 movers

At the time of writing on Monday, the FTSE 100’s top five risers on the day were all commodities companies.

Anglo American was the top riser, closely followed by Glencore, BP, Rio Tinto and Antofagasta. Should China act to stimulate its economy further, natural resource demand will be buoyed and support mining and fossil fuel production profits.

AstraZeneca was the FTSE 100’s top faller after releasing lung cancer therapy trial results. While the results showed improvement in survival rates compared to alternatives, the results were not statistically significant.

Premier African Minerals and Kodal Minerals have been tipped as two of AIM’s foremost battery metals companies well-placed to supply lithium to the burgeoning electric vehicle manufacturing industry.

Indeed, their lithium assets are potentially world-class. Premier African Minerals’ Zulu lithium project contains 20.1Mt @ 1.06% Li2O & 51.05ppm Ta2O5 at a 0.5% Li2O cut-off.

Kodal Minerals’ Bougouni Project has a resource of 21.3Mt at 1.11% Li2O, with 11.6Mt at 1.13% Li2O in the Indicated category and 9.7Mt at 1.08% Li2O in the Inferred category.

These significant resources caught the attention of Chinese partners, who have agreed to provide funding to develop their mines and bring them into production.

Both companies have secured the interest of major Chinese lithium players, and both Premier African Minerals and Kodal Minerals have so far let their partners down.

Kodal Minerals have failed to arrange the required conditions set out by their partner Hainan Mining to satisfy the criteria for issuing $100 million in funding for the Bougouni project.

Premier African Minerals is embroiled in a dispute with Canmax about their lithium offtake agreement terms. Canmax made a $34m prepayment for lithium and has issued a termination notice after Premier Minerals missed production milestones.

Both Premier African Minerals and Kodal Minerals need to up their game not only for their current shareholders but for the sake of the wider UK junior natural resource sector.

These two London-listed junior minerals companies have achieved a feat many won’t – identify a commercially viable resource and secure funding for production.

Should the two companies be unable to deliver on their potential, some investors will lose faith in the sector.

Corporate improvements

Kodal Minerals’ communications strategy has been woeful, leading to a 50% drop in the share price from their recent highs. Releases have been vague and left investors in the dark.

Premier African Minerals made a poor choice of mine construction contractor resulting in their offtake partner terminating their agreement. They are now locked into a dispute around the repayment of the prepayment amount. They may bring in a new funding partner, but Canmax won’t go quietly.

In both cases, their investors have suffered.

Thankfully, the disappointing series of events above ground doesn’t impact what the companies have below ground.

There is, however, a risk the value investors extract from their respective resources is diminished by poor management decisions.

Renalytix has received FDA authorisation for their KidneyIntelX.dkd kidney prognostic test which will open the doors to further clinical testing and insurance coverage.

The device utilises AI to provide care management for people with kidney disease brought on by diabetes.

“Meeting the rigorous safety, clinical and analytical validation, and scientific data requirements of an FDA review, from Breakthrough Device designation to De Novo marketing authorization, is a landmark event for health care providers and patients with diabetic kidney disease,” said James McCullough, CEO of Renalytix. 

“With this approval, a new class, Prognostic Test for Assessment of Chronic Kidney Disease Progression, has been established by the FDA, providing a roadmap for future expansion of KidneyIntelX into new indications and products.” 

Caspian Sunrise’s ability to generate revenue has been severely disrupted by the Ukraine conflict to the extent they are pausing their dividend until the end of the year.

Caspian are required to transport their oil through Russian pipelines, and although they are not subject to sanctions, there is now a discount attached to their product.

The company say they are missing out on $18 million revenue each year as a result.

The company said in a statement:

“Accordingly, and with reluctance, the board has decided to suspend further dividend payments until either the end of the year or following a significant increase in production from Wells 141, 142 or 802 or the receipt of the $22.5 million proceeds from the sale of 50% of the Caspian Explorer.”