The FTSE 100 failed to hold onto early gains on Tuesday as a commodities-driven rally faded as the session progressed.

Optimism around additional Chinese stimulus helped the FTSE 100 trade as much as 0.5% higher in early trade. However, the gains proved unsustainable, and the index swung to a 0.25% loss in the afternoon.

Miners Rio Tinto, Anglo American and Glencore received a boost from reports that Chinese authorities were preparing a fresh wave of stimulus to help a spluttering economic recovery. This boost had disappeared by Tuesday afternoon.

“Beijing’s number two, Premier Li Qiang, pointed to higher growth in the second quarter than the first and said the country would bring through policies to boost domestic demand,” said AJ Bell investment director Russ Mould.

“The pace of China’s Covid recovery has disappointed many but probably reflects the different nature of its pandemic experience.

“Households did not benefit from the same levels of support seen in the West and therefore hopes for a wave of ‘revenge spending’ in China were probably always going to be forlorn with an economic rebound likely to be more gradual.”

FTSE 100 movers

Ocado was the FTSE 100’s top riser a day after a fund chaired by former Chancellor Osborne took a 5% stake in the food technology company. Speculation Amazon were lining up a bid for the company would also be providing support for the price.

JD Sports was at the bottom of the FTSE 100 after saying growth had moderated in recent months. The sportswear group has enjoyed very respectable growth rates despite the economic backdrop. It appears JD Sports is not completely immune from cost pressures and shares were down over 5%.

“Terms like ‘softening in trade’ and ‘moderation in growth’ in JD Sports’ latest update go to show that even the most successful retail businesses can go through bad patches,” said Russ Mould.

“The trainers and athleisure seller recently got the market excited that it expects to exceed £1 billion in pre-tax profit this financial year, and it is sticking with that guidance despite pockets of weakness in its business.”

Telecom Plus shares jumped on Tuesday after the multi-utility company released record profits for the year ended 31st March 2023.

Telecom Plus revenue surged to £2,475.m from £967.4m in the year prior as customers flocked to their fixed-price energy tariffs obtainable through a package of energy, broadband and mobile services. Telecom Plus said they were the cheapest option for fixed-price energy tariffs over the period.

Revenue burgeoned as Telecom Plus customer numbers grew 22% to 886,579, and energy prices charged to customers grew.

Implementing loyalty schemes such as their cash back card helped customer retention and provided customers with additional savings.

Andrew Lindsay & Stuart Burnett, Co-CEOs, commented:

“This has been an outstanding year for the company: the fundamental strengths of our business model have reasserted themselves and delivered a strong outcome for all our stakeholders – particularly for our customers who benefitted from the lowest energy prices in the country throughout the year, saving over £30m on their bills.”

The strong top line drove sharp gains in Adjusted pre-tax profit, which rose 55% to £96.2 million.

Telecom Plus will return its surging profits to customers through an 80p full-year dividend, a welcome increase on the 57p paid last year.

Telecom Plus shares were over 10% when writing on Tuesday.

JD Sports shares were weaker on Tuesday after the sportswear giant said they saw a ‘moderation in the growth’ as trade normalised.

The company said they were experiencing softening in their North American business after a period of strong growth. The North American business accounted for 31% of group revenue in the 2023 full year.

JD Sports are still confident of achieving headline profit before tax of £1.04 billion in the full year to 3rd February 2024.

While the market was disappointed with the moderation of growth rates, the company continues laying the foundations for future growth with 32 net new JD stores in the first four months of the year and is on track for 150 new stores for the full year.

“JD Sports has put in a solid performance showing the benefit of having a big footprint in diverse geographies. Although its US earnings veered off track in June, revenues ran ahead of expectations in other markets,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“A moderating of sales in May in all regions was expected with sales slowing to 8% but it means the group is still on track to meet its full year profits expectations. Brand power is still a powerful force, and even as belts are tightened elsewhere, the desire for the latest must-have trainers or kit isn’t showing signs of slowing down dramatically.”

JD Sports shares were trading down around 5% at the time of writing.

FTSE 100 stocks dodged a bullet on Monday as a Russian mutiny was wrapped up in 24 hours over the weekend, avoiding any major gyrations in equities.

The FTSE 100 was down 0.25% at the time of writing on Monday while the German DAX dipped 0.2%.

“The uprising in Russia could have sent shockwaves across equity and commodity markets but an apparent U-turn has meant only marginal volatility rather than a full-blown correction,” said Russ Mould, investment director at AJ Bell.

“Brent Crude had fallen by more than 4% over the past five days on fears about global economic weakness and how that would negatively impact demand. However, the oil price jumped 0.8% to $74.41 per barrel on Monday as markets contemplated a new period of uncertainty for supply.

“With more twists and turns to the Wagner mutiny than a theme park rollercoaster, markets aren’t ready to accept the drama is over, even though the rebel fighters have been stood down.”

FTSE 100 movers

Moves in individual FTSE 100 constituents were relatively moderate on Monday, with the top movers driven by broker ratings.

Lloyds was the FTSE 100’s top faller after being cut to underweight by analysts at JP Morgan. They gave Lloyds a 42p price target. Lloyds shares were down 1.8% to 41.5p at the time of writing.

JP Morgan also slashed their target on NatWest and Barclays to 260p and 180p, respectively.

Barclays raised their Whitbread price target to 4,200p from 4,075p, helping the leisure group’s shares 2% higher to 3,334p.

Premier African Minerals shares were in freefall on Monday as the Zimbabwe-focused lithium miner issued an update on their Offtake and Prepayment Agreement with Canmax.

Premier African Minerals have missed certain production deadlines and are now in the hands of Canmax, who have the ability to terminate the agreement and request funds be returned. This would be disastrous for Premier African Minerals, who are supposedly working with Canmax on possible alternatives.

According to the update released by Premier African Minerals on Monday, Canmax is taking full advantage of its position by proposing unfavourable terms to avoid termination.

Premier African Minerals outlined two suggestions proposed by Canmax; converting the prepayment amount into convertible debt or issuing equity in their Zulu lithium project, and the sale of all offtake to Canmax at fixed prices.

The amendments would severely erode shareholder value, and Premier African Minerals said the proposed terms are unacceptable.

Premier African Minerals shares were down 33% at the time of writing and had been much lower earlier in the session.

“The issues at Zulu have been acknowledged by the plant contractor to be beyond the control of Premier, and could not have been foreseen by Premier. Whilst I am deeply upset and committed to finding an equitable way forward with Canmax, that solution should strive to be fair and reasonable and in the best interests of all Premier shareholders as whole,” said George Roach, Premier African Minerals CEO.

“Whilst my focus is squarely on resolution of the plant issues during this period of FM and production at Zulu, I will diligently strive to resolve the issues with Canmax and will actively pursue alternative strategies.”

Tekcapital has issued an update on the commercial progress at MicroSalt as the food technology company gears up for its London IPO.

MicroSalt appointed Zeus Capital as their NOMAD last year and Tekcapital has alluded to their portfolio company listing in 2023. A specific date is yet to be confirmed.

Tekcapital owns 97% of the share capital of MicroSalt Ltd and 78% of MicroSalt Inc, its U.S. subsidiary.

MicroSalt Expands US Retail Network

MicroSalt has bolstered its US footprint with placements in 51 Fine Fare stores, 8 Trade Fair stores and 72 Big Y stores. The placements were facilitated through MicroSalt’s agreement with US Salt.

“We are proud of our partnership with US Salt to build product distribution as it underscores the retail need for full flavor, low-sodium products. Excess sodium consumption is one of the leading contributors to hypertension, and partnerships like this are the best way to provide consumers with great tasting products with less sodium,” said Rick Guiney, CEO of MicroSalt.