Chemring shares jumped on Tuesday after the defensive and aerospace company’s order book swelled. The Group benefited from increased defence spending in reaction to European geopolitical events.

Chemring’s order intake rose 81% to £338.2m with solid demand for Countermeasures & Energetics and Sensors & Information.

The Group’s cybersecurity business Roke enjoyed a 44% increase in revenue to £78m, and order intake up 41% to £82m.

Revenue fell in the first half due to contract delays, but the company is set for a solid second half.

Michael Ord, Chemring Group Chief Executive, commented:

“It has been a period of heightened activity across the Group as we adapt to changing customer spending priorities. In response to increased global uncertainty and competition, demand for both technology-driven solutions and a resurgent demand for traditional defence capabilities, has resulted in record H1 order intake and an order book at its highest level for over a decade.”

Chemrings shares were over 8% higher at the time of writing.

“While profits fell in its latest half-year results due to contract delays, investors seem to like the fact that Chemring is one of many companies experiencing stronger prospects thanks to the Russia-Ukraine war encouraging governments around the world to spend more on defence,” said Russ Mould, investment director at AJ Bell.

“It is also worth noting that Chemring’s cybersecurity arm Roke continues to see fast revenue growth as companies and governments boost their digital defences.”

The FTSE 100 started the week with a spring in its step after OPEC+ cut production and sent oil prices higher.

The FTSE 100 was 0.47% higher at the time of writing and built on gains at the end of last week.

As expected, OPEC+ cut production over the weekend in an effort to support oil prices. The cartel will cut production by a reported 1.4m barrels of oil per day.

“Saudi Arabia’s pledge to cut output suggests it wants to see an oil price above $80 per barrel and that it is concerned about the demand implications of a global economic downturn. The FTSE 100 was up 0.5% in early trading, extending the gains seen on Friday after the non-farm payrolls data from the US,” said AJ Bell investment director Russ Mould.

With the move to cut production largely signposted, the gains in oil were contained.

Oil prices started the European session considerably higher before falling back. Although OPEC’s decision will bring supply out of the market, there are ongoing concerns global demand could decline towards the end of the year.

FTSE 100 movers

BP and Shell added a material number of points to the FTSE 100 as investors reacted to OPEC+ cuts. Both oil majors are off the highest levels of 2023 after tracking underlying energy prices lower. Investors in oil majors will welcome the OPEC+ decision to cut production.

Vodafone was over 3% higher as the beaten-down telecom stock picked up from the worst levels for some years.

Abrdn was the FTSE 100s top gainer as the investment manager kicked off a share repurchase programme.

Miners were weaker after a storming session on Friday.

Reports that Chinese authorities were considering measures to help stimulate their domestic property market lifted global risk sentiment last week.

After a dismal week’s performance, London’s leading index finished the week on a high, with China-exposed stocks among the top gainers.

Should China unleash a wave of support for its property market, these stocks will likely be the biggest FTSE 100 winners and provide shareholders with outperformance compared to the benchmark.

The FTSE 100 is heavily exposed to China, and not holding these stocks in a UK equity portfolio could mean the index leaves you in the dust.

Miners

Support for the Chinese property market will likely increase demand for natural resources. The FTSE 100’s mining companies will directly benefit from any subsequent rise in commodity prices.

Companies such as Rio Tinto, Anglo American, Glencore and Antofagasta supply a significant part of the world’s iron ore and copper – crucial materials for construction.

The sector is trading near the lowest levels of the year and is primed for a recovery should Chinese stimulus be delivered.

Prudential

After the divestment of M&G Investments, Prudential is almost entirely focused on Asia and China. Hong Kong accounted for most of Prudential’s income in 2022, and the company is targeting mainland China as a core area of growth in the future.

The company also has operations in Singapore, Malaysia and a number of growth markets in the region.

Prudential shares rallied over 5% last week when reports of possible Chinese stimulus first broke.

Standard Chartered

Standard Chartered also earns a significant proportion of its revenue in Hong Kong. Of their $16,255m income earned in 2022, $11,213m was earned in Asia. Hong Kong and Singapore were the largest contributors.

Standard Chartered recently received approval for a new securities business in mainland China that a stronger Chinese economy will support.

BP & Shell

Although the two companies are not as directly exposed to China as other companies covered in this article, BP & Shell will enjoy the benefits of Chinese stimulus. A more robust Chinese economy will help support oil prices and the oil major’s earnings.

SEED Innovations are trading near all-time lows after a string of uninspiring updates by portfolio companies eroded the value of the company.

SEED Innovations shares were trading at 1.71p at the time of writing. The stock is down 34% in 2023 and 89% over the past five years.

SEED Innovations was previously known as FastForward Innovations before changing its name in 2021.

The cannabis-focused company has released a number of updates on portfolio companies in recent weeks, none of which have sparked a sustainable bid in the stock.

SEED shares were little moved last week despite portfolio company Little Green Pharma’s revenue jumping 89% to A$19.9m. SEED Innovation holds a 2.45% stake in Little Green Pharma.

Another portfolio company, AQUIS-listed Yooma Wellness had its shares suspended recently after failing to make annual filings.

Ed McDermott, SEED’s CEO, commented at the time:

“It is disappointing to see Yooma’s shares suspended from trading on the CSE and Aquis today. Whilst Yooma expects to make its Annual Filings as described above, this follows the widely reported very poor operational performance in recent months.”

SEED recorded a 1.18x return on investment in South West Brands as the brand agreed on a sale to OTO International Ltd. SEED invested £500,000 and made a £90,000 profit.