FTSE 100 flat ahead of key UK inflation data
The FTSE 100 was broadly flat on Monday as investors readied for UK inflation data later this week and the resultant implications for the Bank of England.
The FTSE 100 was up 4 points to 7,761 at the time of writing.
“Despite the UK stock market having ground to a halt in recent weeks, there is no reason to panic. Year-to-date the FTSE 100 is up 4.4%. Annualised that would equate to an approximate 10% return, and if you add on 3% dividend yield, you’re looking at a potential 13% total return which is slightly better than one might expect from UK equities in a normal year. So far, so good,” said Russ Mould, investment director at AJ Bell.
Mould continued to explain corporate updates are starting to slow after weeks of final results and Q1 updates, and the focus will shift to economic data points and central bank commentary.
“The week ahead is fairly quiet when it comes to corporates updating on trading, with only a few names in the retail, tech and utilities space standing out. That means market sentiment is likely to be driven by political and economic events, including any update on the US debt ceiling talks, UK inflation data and the minutes from the latest Federal Reserve interest rate meeting on Wednesday, as well as insight into durable goods orders and personal spending in the US at the end of the week.”
This week could mark a step change in UK inflation data, with economists predicting that UK CPI in April will fall below 10%.
“We are expecting the pace of the cooling in UK inflation to quicken markedly in April, from 10.1% to 8.3%, and this will likely help those amongst the Bank of England’s rate setting committee breath a sigh of relief,” said Joshua Raymond, Director at online investment platform XTB.com.
“Whilst this would be the lowest rate of UK inflation since April 2022, it’s unlikely to drastically change the outlook for UK rates in the coming months, where the market is still forecasting around two separate hikes of 0.25%, yet that could change if we see UK inflation fall faster than expected to 8% or below.”
NatWest
NatWest shares were 1% higher after the UK government further sold down their stake in the bank. The government sold a £1.26bn stake in NatWest to reduce their total holding from 41.4% to approximately 38.6%.
“The UK government has sold another chunk of shares in NatWest but the fact it is still left holding 38.6% means there continues to be a big overhang for the stock, which is likely to remain the case for some time given the slow pace of selling down,” said Russ Mould.
“After all, it’s been 15 years since the bank was bailed out by the government and the latter still owns more than a third of the company.”
JD Sports was the FTSE 100’s top riser, gaining 2.7%, as bargain hunters stepped in to pick up shares after a sharp selloff on Friday.
Bargain hunters also showed interest in Ocado and Burberry after recent declines in the stocks. Ocado is the FTSE 100’s worst performer this year after shedding approximately of its value.
Chill Brands UK distribution deal
Fully listed Chill Brands (LON: CHLL) is the best performer on the London Stock Exchange today with a 27.1% jump in the share price to 11.375p. The CBD products supplier has signed a deal with The Vaping Group to launch nicotine-free vapour products.
UK sales of Chill Zero vapour products are expected to start in the summer. The Vaping Group has access to specialist and independent convenience stores in the UK. The UK vaping market is expected to grow to £4.5bn in 2027.
The Vaping Group will then help to launch the products in other European markets. The products are already being sold in the US and on the Chill.com ecommerce platform.
At the beginning of April, Chill Brands raised £1m at 4p a share. It also issued £1.6m worth of loan notes convertible at 8p a share and offering a coupon of 12%.
AIM movers: Norman Broadbent grows revenues and Barryroe project rejected by Irish government
Executive search and recruitment firm Norman Broadbent (LON: NBB) grew first quarter 2023 revenues by two-thirds to £2.92m and net fee income rose by a similar proportion to £2.43m. Contracted revenues are £2.57m. The 2022 accounts should be published this month. The share price improved 11.9% to 5.875p.
Atome Energy (LON: ATOM) says it will be producing fertiliser at its hydrogen production facility in Paraguay. This will be the first industrial scale production of green fertiliser. There will be additional costs initially, but revenues will be higher with production expected to reach 250,000 tonnes per annum. The project should start production in 2025. Baker Hughes has taken a 6.6% stake in Atome Energy at a 3% premium to the previous market price. The share price rose 10.1% to 103.5p.
Zinc Media (LON: ZIN) has secured a deal with Idris Elba’s production company to produce PAID IN FULL: The Battle for Payback for the BBC and CBC. The programme will examine the exploitation of black artists in the music industry. The share price is 7.14% ahead at 112.5p.
Oncimmune Holdings (LON: ONC) is selling its IVD EarlyCDT Lung blood test antibody technology to US biotech Freenome for £13m. Part of the proceeds will pay down around 50% of the company’s debt and the rest will be refinanced. This enables Oncimmune to focus on the ImmunoINSIGHTS autoantibody profiling service business, where revenues are expected to double this year. The share price is 7.05% higher at 39.5p, which is still not far above the all-time low.
Lansdowne Oil & Gas (LON: LOGP) and Barryroe Offshore Energy (LON: BEY) shares have fallen because the energy minister in Ireland, who is leader of the Green party, is not willing to grant the Barryroe lease undertaking on the grounds of financial capability. Barryroe Offshore Energy had announced it had secured the required funding and there are plans to go to international arbitration. Barryroe Offshore Energy is currently raising €20m from a placing and one-for-six open offer at €0.015 a share. This had already been delayed. The Barryroe Offshre Energy share price has slumped 48.7% to 0.95p, so it is well below the open offer price. Lansdowne Oil & Gas has already invested $20m in the project and the shares dived 52.9% to 0.2p.
Petro Matad (LON: MATD) is suffering from delays to the Heron oil and gas project in Mongolia. This relates to land access. The Velociraptor-1 exploration well on Block V is due to be drilled in June and it will cost $2m. The share price is 18.7% lower at 5p.
Gold explorer ECR Minerals (LON: ECR) says the results from drilling at three licences in Victoria, Australia are relatively disappointing. ECR Minerals is more optimistic about its interests in Queensland, where the field season is starting. The share price fell 19.1% to 0.425p.
Dechra Pharmaceuticals shares sink as wholesalers de-stock
Dechra Pharmaceuticals shares were down heavily on Monday after the specialist veterinary pharmaceutical group said wholesalers were going through a period of de-stocking which would hit profits this year.
De-stocking has caused volatile trading conditions for Dechra, who now see operating profits below the £186m guided for in February. Dechra noted stock management trends in the US were also evident in the UK.
Dechra made concerning comments about the health of trade in the rest of Europe: “The market appears to be slowing in response to the changing macro-economic environment and country specific dynamics.”
Despite wholesaler activity causing challenging conditions for Dechra between January and April, the company said end demand from veterinary practitioners remained strong.
Dechra Pharmaceuticals shares were trading down 9.8% at the time of writing.
Aquis weekly movers: Asimilar to concentrate on Aquis quotation
Asimilar Group (LON: ASLR) is leaving AIM on 26 May and retaining the Aquis quotation. The Aquis share price rose by one-quarter to 0.75p. Chirs Akers increased his stake in the technology investment company from 10.3% to 11.1%.
Equipmake Holdings (LON: EQIP) has signed a licensing agreement with Sona Comstar, covering some of its range of drive motors and powertrains for their use in electric cars, buses and other vehicles in India and other south Asian countries. The two companies may jointly address other markets. Equipmake receives a one-off licence fee plus royalties. Production will commence in 2025. The share price increased 5.56% to 9.5p.
DXS International (LON: DXSP) says full year revenues will be slightly higher at £3.3m and there was a very small profit after tax. That is likely to be after a research and development tax credit, so there could be a pre-tax loss. Management believes that revenues can be increased substantially in the medium-term. Cash has been raised to market the newly developed software products. DXS International has raised £500,000 at 4p a share, while £131,000 of debt has been swapped for shares at the same price. The share price slumped 17.6% to 3.5p.
Technology investment company SuperSeed Capital (LON: WWW) had net assets of 101p a share at the end of 2022. Last year’s flotation enabled the company says there are opportunities in the software sector. The company’s fund performed well, but there are unlikely to be significant increases in investment valuations this year. However, revenues from the existing portfolio are expected to double. The share price declined 12.1% to 72.5p.
Macaulay Capital (LON: MCAP) had net assets of £1.44m, including cash of £1.19m, at the end of 2022. There was a cash outflow of £428,000. The first investment was in cakes and cereal bars maker Devonvale. There was a subsequent investment in precision engineer Camloc Motion Control. The initial investment of £700,000 will be reduced to £200,000 by selling to third parties. There are other investment opportunities. The share price fell 11.8% to 22.5p.
Ananda Developments (LON: ANA) has filed four patent applications. The cannabinoid-based medicines developer has appointed SP Angel as corporate adviser. The share price slipped 5.6% to 0.59p.
Coinsilium Group Ltd (LON: COIN) has completed the £116,500 cash and shares acquisition of the Tokenomi Web3 advisory service business, which has seven blockchain clients and a pipeline of ten more. The share price declined 3.57% to 1.35p.
Guanajuato Silver (LON: GSVR) reported drilling results from San Ignacio and Topia. Drilling at the former has shown an extension of the existing high grade area. There are also narrow veins with high grades at the Topia mine. The share price fell 3.08% to 31.5p.
AIM weekly movers: Egdon Resources agrees bid
Egdon Resources (LON: EDR) is recommending a 4.5p a share cash bid from Petrichor Partners. This values the UK-focused oil and gas company at £26.6m. The share price jumped 89.1% to 4.35p, which is the highest it has been for six months, making it the largest riser on the week. Petrichor is owned by HEYCO, which provides services and capital to oil and gas projects in the US and Europe.
Some better news for IOG (LON: IOG). The control event at the Blythe H2 well in the North Sea has been successfully isolated. The first gas from this well should be produced by the end of June. The share price rebounded 35.4% to 7.04p – the highest price since February.
Xeros Technology Group (LON: XSG) has signed a ten-year technology licence and distribution agreement with KRM Tekstil Boya, which will distribute denim processing equipment. Denim processing uses lots of water and energy and this will be reduced by this equipment. Xeros will receive a royalty on each machine sold and will supply XOrbs for the machine. The launch will be later this year. The share price is 25.8% higher at 3.9p.
ImmuPharma (LON: IMM) says that there was positive feedback from a consultation with the US FDA. This will help with the design of the phase 2/3 clinical study of the P140 treatment in chronic idiopathic demyelinating polyneuropathy. The trial could begin in the second half of 2023 and a Lupus trial could also start later in the year. The share price recovered 23.5% to 3.21p.
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Fallers
Mirada (LON: MIRA) has set out plans to cancel its AIM quotations. The IPTV technology provider has been quoted for more than two decades, but a large shareholder with a 87.2% stake has limited liquidity and investor interest in the shares. The major lender to Mirada is also related to the main shareholder. This means that the cancellation will happen, and the shares will then be traded by JP Jenkins. That should save costs of $470,000/year. The share price dived 84.2% to 3p. This is the lowest the share price has ever fallen to.
Antibody discovery company Fusion Antibodies (LON: FAB) has raised £1.56m at 5p a share and a REX retail offer could raise more. The offer closes on 22 May. The share price slumped 79.3% to 7.75p. The cash and cost saving measures will provide enough funds to enable Fusion Antibodies to offer its Integrated Therapeutic Antibody Service, as well as further developing the OptiMAL therapeutic antibody discovery platform.
Tower Resources (LON: TRP) is raising £2.3m at 0.05p a share. This will fund the preparation of drilling of the NJOM-3 well in Cameroon. It will also fund work on interests in Namibia and South Africa. The share price slumped 57.1% to 0.0515p – a new all-time low.
Purplebricks (LON: PURP) is selling its business and assets to Strike Ltd for £1 and cancelling its AIM quotation. That should leave £5.5m in cash in Purplebricks. The cash remaining after costs, which could be £2m, will be distributed to shareholders, but that won’t happen until early next year. At 0.77p, down 48.1%, Purplebricks is valued at £2.4m.
FTSE 100 rallies as sentiment improves
The FTSE 100 was gaining momentum on Friday as the index benefitted from improving sentiment in global equities.
The FTSE 100 was 0.55% higher at the time of writing while the S&P crept 0.2% higher after a strong session overnight.
Global equities began a move to the upside yesterday as interest rate markets priced in a pause in US rate hikes.
“The markets continue in a holding pattern with the FTSE 100 stuck in a tight range between 7,700 and 7,800 as investors await key economic data which could set equities on a path up or down,” said AJ Bell investment director Russ Mould.
“Today was a positive day for UK stocks despite warnings overnight from a Federal Reserve official that the end to the rate-hiking cycle might not come as soon as Wall Street hopes.
“Investors will be hunting for clues on the direction of monetary policy from Fed chair Jerome Powell when he addresses a conference in Washington later on Friday.”
The fallout from Powell’s speech may have ramifications for the start of European trade on Monday.
FTSE 100 movers
The top movers were driven by mean reversion on Friday as stocks with sharp swings yesterday moved to cover a degree of their fluctuations.
BT was the FTSE 100’s top riser a day after sinking following the release of their final results. BT shares were 3% higher at the of writing.
Conversely, JD Sports, down over 6%, was the top faller after gaining on the back of results yesterday.
However, Burberry suffered another day of selling after warning they would face unfavourable economic conditions for the rest of the year. Burberry was another 3.8% weaker at the time of writing.