The defensive nature of the FTSE 100 was evident on Wednesday as the index gained for a second straight day, despite volatility in US markets.

Most FTSE 100 constituents were positive at the time of writing with the index gaining 0.5% to 7,592.

“The FTSE 100 shrugged off a sell-off in US tech stocks overnight to trade a smidge higher on Wednesday morning in the latest reminder of the big differences between the UK’s flagship index and its counterparts across the Atlantic,” said AJ Bell investment director Russ Mould.

“The resilience of the FTSE 100 was impressive given it was able to withstand material falls for index heavyweights BP and Shell on lower oil prices. Investors are increasingly concerned about the current Covid situation in China where a relaxation of restrictions is leading to a surge in cases.”

“Thanks to less effective vaccines and a population with much less natural immunity, China is some way behind the West in its recovery from the pandemic and this has implications for global growth and global supply chains.”

Investor Repositioning

The specific concerns around China were evident in the FTSE 100’s miners on Wednesday with Anglo America, Rio Tinto, Antofagasta and Glencore all trading negatively.

It is notable for the commodity-dominated FTSE 100 index to rise when most of the commodity shares were down on the day.

This suggests some repositioning from the commodity sector to more UK-focused domestic stocks. The index was supported by mining companies late last year as investors bought into the sector ahead of a Chinese reopening.

Now China that has eased most COVID restrictions, this trade is being faded and investors are seeking out value in consumer companies and UK-focused equities.

Ocado was the top gainer, up 8%, while Sainsburys and B&M European Value were both up over 5%.

Construction companies and the housebuilders were also gaining bargain hunter interest despite a downbeat property outlook for 2023.

The FTSE 100 started 2023 with a bang as the index rose above 7,600 in early trade, before falling back as the session progressed.

London-listed shares shrugged off pessimistic IMF comments on the health of the global economy suggesting most major economies could face a slowdown in the coming 12 months.

“UK shares kicked off the New Year with a bang despite gloomy predictions from the head of the IMF that one third of the global economy will be hit by recession this year,” said Russ Mould, investment director at AJ Bell.

“Kristalina Georgieva told CBS that the US, EU and China are all slowing simultaneously. This is unpleasant to hear but isn’t a shock to markets given the multitude of headwinds that gathered pace last year, namely high inflation and rising interest rates and the negative impact they have on business and consumer spending.”

The FTSE 100 was up 1.3% at 7,548 at the time of writing on Tuesday with 88 of the FTSE’s 100 constituents gaining.

Ocado had a choppy finish to 2022 and was again the top riser on Tuesday as the retail technology company bounced off a support level building at 620p.

The FTSE 100’s commodity companies helped lift the index as miners and oil companies rallied. Banks were also strong performers ahead of year that promises a period of higher rates.

“Mining and banks were also in demand on the UK stock market, suggesting that investors were split into two camps – one happy to take on additional risks and buy commodity producers in the belief that any global economic downturn will only be short lived, and the other opting for a more cautious approach. Banks have perked up on the stock market in recent months as investors bet that they will benefit from interest rates staying higher for longer,” Russ Mould said.

Rolls Royce was 5% higher at 97p after analysts at Jefferies raised the stock to a buy with a 125p price target.

Cadence Minerals have announced the completion of the pre-feasibility study (PFS) at their flagship Amapa Iron ore project in Brazil. The completion of the PFS marks a major milestone in the journey towards the production of high-grade iron ore at the project which now has a $949m NPV.

The PFS included the Maiden Ore Reserve of 195.8mt at 39.34% Fe and an IRR of 35%. The Amapa project is now expected to produce 5.28 million dry metric tonnes of iron ore per annum.

The PFS forecasted Free on Board (FOB) cash cost of $35.53/dmt at the port of Santana and Cost and Freight (CFR) cash costs $64.23/dmt in China. Iron Ore at 62% Fe is currently trading above $111 in China having touched highs in excess of $230 in 2021.

Cadence Minerals have a 30% stake in the Amapa project.

Having achieved a favourable PFS, DEV Mineração S/A – the owner and operator of the Amapa iron ore project – will now push on with advancing operations at Amapa and pursue mine life expansion at adjacent exploration targets. This will open the door to a Feasibility study and production at the project.

Amapa benefits from excellent infrastructure which will help manage initial capital expenditure currently forecast to be $399m. There are existing facilities including a processing plant, railway and port access set for rehabilitation ready for production at the project.

“The Project benefits from integrated infrastructure under the owner’s control, a well-established processing route, low capital intensity and a quality product with an international reputation,” said Cadence Minerals CEO, Kiran Morzaria.

“Along with a skilled workforce, proximity to operational infrastructure and the potential to increase the mineral resource means that Amapá remains an incredibly attractive investment opportunity.”

Cadence Minerals is a mining and minerals investment company with a diverse portfolio of assets that spans critical minerals and base metals.

Cadence has a number of lithium projects heading towards liquidity events in 2023.

Bidstack shares have had a disastrous start to the new year after the in-game advertising technology company revealed a souring relationship with their partner, Azerion.

A deal with Azerion struck in 2021 was supposed to deliver $30m in sales from Bidstack’s in-game advertising inventory over a 2-year period.

However, Bidstack have today announced Azerion have withheld payments Bidstack feel are due to them, and Azerion are seeking to terminate the agreement. Concerns about the health of the relationship arose in October when Bidstack said they received a non-disclosed email from Azerion but there was ‘no litigation with Azerion’.

Today, Bidstack said they are now pursuing legal action to recover sums they feel are owed to them as part of the agreement.

Bidstack had called the ‘landmark’ commercial Azerion deal ‘ground-breaking’ in their 2021 full year results and just eight months later the agreement lays in tatters, along with the Bidstack share price.

Bidstack shares were down 28% to 1.98p at the time of writing and had a market cap of just £25m – considerably less than the cash it has raised from investors to fund the development of their in-game advertising platform.

The company conducted their latest raise in October, securing £10m.

Bidstack have failed to capitalise on their first mover advantages in the in-game advertising space with multiple advertising agencies and platforms now getting in on the action.

Bidstack recorded just £2m revenue in the first half of 2022.