Just as developments in China drove declines in the FTSE 100 yesterday, on Tuesday, London’s leading index bounced back on reports that Chinese authorities were finally preparing to move to stimulate the economy.

China’s recovery from the pandemic has stalled, and market participants have been hoping for action to spur growth.

“After a poor start to the week as investors grew tired of waiting for the next stimulus initiative from China to boost its economy, Asia stocks rallied on Tuesday as investors got some of the news they wanted,” said Danni Hewson, head of financial analysis at AJ Bell.

“Reports suggested Beijing will provide more support, albeit details remain thin on the ground at present. It was enough to lift the Hang Seng by 4% and send investors scrambling to own shares in real estate, basic materials, technology and financial sectors.

“Good news from China always makes its way to the UK market in a flash, with commodity producers riding high including a 4% gain from Anglo American and Rio Tinto.”

Antofagasta was the FTSE 100 topr riser adding over 5% at the time of writing. Should China successfully stimulate the economy, demand for Antofagasta’s copper will be bolstered.

The FTSE 100 was 0.17% higher at 7,691 at the time of writing.

Investors will be looking forward to rate decisions from Federal Reserve and ECB later this week and the prospect of dovish tones from two central banks enjoying lower inflation rates.

Unilever

After releasing a respectable set of first-half results, Unilever was having its best session for months. Falling volumes were more than offset by rising prices, and revenue for the first half rose 2.7% to €30.4bn. The consumer group’s beauty and wellbeing unit was the standout performer, with growth of 8.6%.

“Decent headline sales growth across the business and an improvement in operating profit, operating margin and free cash flow helped to drive a 5% spike in Unilever’s share price at the market open. That was one of its strongest sessions on the stock market in a long time, helped by quarterly sales beating estimates,” Danni Hewson said.

“But dig deeper and there are several reasons not to get carried away.

“First, group sales growth has come entirely from putting up prices, not shifting more units of products. The sign of a good business is one that can grow prices and volumes. Unilever’s group volumes actually declined in both the first and second quarter periods.

“Second, chief executive Hein Schumacher is still new in the role and it’s easy to get excited when a new leader delivers messages of optimism.”

Technology Minerals shares are struggling to get back above the company’s IPO price despite commissioning progress at their lithium battery recycling plant.

Technology Minerals has 48.25% in Recyclus Group, which is developing UK’s first industrial-scale lithium-ion battery recycling facility in Wolverhampton.

This week, Technology Minerals said the plant’s commissioning phase was on schedule, and operations were building steadily with the aim of processing 8,300 tonnes in the first year.

Despite the apparent landmark news, Technology Minerals shares have failed to rise above the 2.25p IPO price. Technology Minerals shares were comfortably above this level shortly after the IPO before crashing to lows around 1p earlier this year. The stock hasn’t convincingly traded above 2.25p for over a year.

Sellers have consistently stepped in as Technology Mineral’s share price approaches the 2.25p IPO price, and significant resistance has built in the 2p-2.4p region.

One Twitter user suggests Technology Minerals’ disappointing share price performance could be a result of “Bland/Dull” investor communications.

Indeed, one would think the UK’s first industrial-scale lithium-ion battery recycling would pique investor interest and earn the company a greater market cap than the current £32m.

There has also been little guidance on potential earnings from the plant despite Technology Minerals conducting numerous fundraises to progress their recycling plant.

Technology Minerals recorded zero revenue in the half year to 31st December, and there was no revenue forecast provided in their outlook.

Unilever shares were up over 5% in early trade on Tuesday after the consumer giant reported better-than-expected revenue due to sale price growth in the second quarter.

The company reported their second quarter trading statement alongside first-half results.

Unilever’s second-quarter revenue was €15.74bn versus analyst expectations of €15.54bn. Top-line growth was driven by 7.9% underlying sales growth in the second quarter, mitigated marginally by a 0.3% volume decline.

Robust first-half

Underlying sales grew 9.1% in the first half of 2023 for Unilever, driven by 9.4% price growth. Rising sales prices were offset slightly by a 0.2% volume decline for the first half. Unilever’s market share declined to 41% as the company reduced SKUs by 17% and saw volume drops in some markets like India tea and Brazil laundry.

However, beauty and wellbeing sales rose 9.1% led by double-digit prestige beauty and health growth. Emerging markets grew 10.6% though growth in SE Asia was muted. These were key to Unilever’s robust first half.

Developed markets rose 6.9%, with higher pricing in Europe. Turnover increased 2.7% despite currency and acquisition headwinds. Underlying operating profit was up 3.3% as gross margin rose on pricing though it remains below 2019 levels.

“These results from Unilever are solid but uninspiring,” said Charlie Huggins, Manager of the Quality Shares Portfolio at Wealth Club.

“Despite significant price increases, Unilever has managed to maintain broadly flat volumes. This is a clear positive and suggests Unilever’s brands continue to attract a loyal following. The other piece of good news is Unilever upping its full-year sales guidance to “above 5%” and reiterating that operating margins will improve slightly, despite cost pressures.

“The question is – should Unilever be doing better? The answer is almost certainly yes. Margins remain well below pre-pandemic levels and below the bonnet of that robust underlying sales growth there are problems. Only 41% of Unilever’s business is winning market share which means more than half the portfolio is losing out to competitors. And performance in Europe is exceptionally poor, with volumes falling 10% in the second quarter.”

Despite these failings, investors clearly liked Unilever’s top-line growth and shares were very well bid early on Tuesday.

The FTSE 100 was slightly stronger on Monday as a poor session in Asia overnight saw London’s leading index flutucate between gains and losses after a storming week last week.

“A weak showing from Hong Kong’s Hang Seng cast a dark cloud over the start of the new trading week, with the index falling 2.3% as investors dumped holdings in real estate, consumer cyclicals and basic materials companies,” said Danni Hewson, head of financial analysis at AJ Bell.

“China’s post-Covid economic reopening is proving to be less robust than hoped at the start of the year, and now it seems that investors are growing tired of waiting for the Chinese government to announce new stimulus measures.

“There are concerns that the Chinese housing market will remain sluggish and that has weighed on sentiment towards all things related to real estate and construction, including miners over fears that commodities demand could weaken.

“Names like Glencore and Anglo American acted like an anchor on the FTSE 100, dragging the UK index down 0.2% to 7,647. Prudential was also caught up in the negativity around China, given it is a key territory for the life insurer. It was the same story for HSBC, slipping 1.3%.

“UK housebuilders and banks gave up some of their recent gains as investors locked in some profits after one of the best weeks for the FTSE in a long time.”

Housebuilders have staged a monumental rally after UK inflation slipped and boosted chances of slower rate hikes.

FTSE 100 movers

Ocado has found its way into the headlines one way or another lately, and on Monday, a 12% gain in the food retailer meant the spotlight was firmly back on the company.

On Monday, Ocado announced litigation between Ocado and AutoStore had been settled, and action against each other was being dropped. Ocado was the FTSE 100 top gainer at the time of writing.

Tim Steiner, Chief Executive Officer of Ocado Group plc, said: 

“I am pleased that we have worked together to resolve our differences and can now continue to focus on what we do best – innovating, developing and enabling partners to access world beating technology”

Vodafone was 2.5% higher amid a bout of optimism emanating from their Q1 results.