The FTSE 100 closed slightly down on Friday, but still positive on the week. US jobs data on Friday added choppiness to what had been a gradually improving week for London’s leading index.

The FTSE 100 closed down 2 points at 7,556 on Friday, gaining around 1% on the week.

The index was dragged from pillar to post earlier this week by developments in China. Unrest over the weekend put the FTSE 100 on the back foot, before reports Chinese authorities were considering an easing of lockdown rules helped lift the index. The news saw the index hits the highest levels since August.

Equity traders had further reason for optimism on Wednesday as attention shifted to Jerome Powell’s speech and hints the Fed would soon start to slow the pace of rate hikes. 

US jobs

However, with the jobs number today suggesting strength in the US economy, the Fed will find it difficult to justify pulling back in the short term and stopped the equity rally in its tracks.

US Non-Farm payrolls rose 263,000 in November versus expectations of just 200,000. Wages surged 5.1% higher year-on-year.

“Whilst the headline news is good for the US economy, the view is that the Federal Reserve will continue to raise rates until the labour market starts to crack and clearly there are no signs of that. The markets therefore reacted on the basis that rates will continue to rise reversing the changes seen following Chairman Powell’s speech earlier in the week,” said Toby Sturgeon, Global Head of Fiduciary Investment Services at ZEDRA.

Power Metal Resources announced the results of a series of tests on their Uranium assets on Friday, some of which contained extremely high-grade samples.

Power Metals is exploring the Thibault Lake, Clearwater and Tait Hill properties in the Athabasca Basin area in Saskatchewan, Canada.

Highlights from their recent activities in the region include two rock samples of 4.7% and 2.4% U₃O₈ recovered from Thibault Lake assay results, and sampling at Clearwater revealed the presence of 1,120 ppm (0.112%) U₃O₈.

“We are particularly excited by our Athabasca uranium portfolio, with twelve properties covering some 841km² of footprint in this highly sought-after region for uranium exploration.  Two of our properties, Reitenbach and E-12 are in the process of disposal as previously announced, and we continue to attract interest across the remainder of the portfolio and have established data rooms for each property to enable us to efficiently engage with third parties,” said Paul Johnson, Chief Executive Officer of Power Metal Resources.

Notwithstanding this, we intend to retain a number of the properties and to conduct proactive exploration across them.  Today we have announced positive exploration findings from our latest, Summer 2022 phase I work programme covering three properties, and we will be launching additional ground exploration in 2023.

In the meantime, the commercialisation work in respect of our uranium portfolio continues, including both disposal activities and the search for new uranium focused projects to add into the Power Metal business.”

Statistics analysed by AJ Bell suggest December is historically the best performing month of the year and chances of a seasonal rally in the FTSE 100 are high.

A Santa Rally is always referred to by commentators as we move towards the end of the year, and for good reason. Since the FTSE 100 was established in 1984, the index has returned over 2% on average in December.

Indeed, the majority of December trading periods since 1984 have produced positive returns.

“If you want to know why markets talk about the Santa Rally, that’s why – because the numbers back it up. Thursday got the month off to a slow start but investors can be forgiven for hoping for a little seasonal cheer after the FTSE 100 has spent all year huffing and puffing to a rise of around 2% (albeit with dividends and in some cases buybacks on top),” said Russ Mould, AJ Bell investment director.

AJ Bell analysts compiled data on the best performing Decembers and compared to the following year’s performance. There have been very few negative Decembers since the FTSE 100’s inception in 1984 and all but one negative December was followed by a positive return in the following year.

Although a negative December is usually followed by a positive year, there is no real indiction of what will happen in the next year based on December’s performance.

“The Santa Rally is not certain to offer anything more than festive cheer because it does not seem to be a reliable indicator for the following year,” Russ Mould said.

CORA GOLD (AIM: Cora) 4.4p Mkt Cap £13m has for most of 2022 been steadily moving from speculative exploration to producing gold, but the price is only just off its year’s low. The recent ‘grown-up’ news flow was Optimised Project Economics (OPE).

This technical report follows the announcement of Maiden Reserves and completion of a Definitive Feasibility Study  for its flagship Sanankoro Gold project  in southern Mali. There are a lot of numbers in the OPE, based on a gold price of US$1,750/oz) and Maiden Probable Reserve of 422koz @ 1.3 g/t Au. 

This extrapolates to a 53% IRR, a 1.22year payback and $234m Free cash flow for the life of the mine. There is significant potential 3x upside from Exploration Targets estimated to contain between 26.0 Mt and 35.2 Mt with a grade range of 0.58 – 1.21 g/t Au for a potential 1,370koz Au. This could be a 1-2m oz mine and so worth considerably more than its current market cap. Its long-term backers Lionhead confirmed continued support and is in discussions for a term sheet for up to US$30m for project financing which should further the progress. 

The FTSE 100’s housebuilders took a slowing UK housing market in their stride on Thursday with Persimmon, Barratt Developments, and Taylor Wimpey all rising on the day.

Housebuilding shares gained despite UK house prices falling 1.4% in the month to October as the pressures of a cost of living crisis and fallout from the mini-budget hit activity.

The FTSE 100’s housebuilders are down heavily this year after much of the bad news on UK housing was largely priced in before the market started to deteriorate.

“Housebuilder shares, already heavily beaten down this year, were higher on the Nationwide data and even estate agents like LSL Property Services and Foxtons were only a smidge lower. This shows how the market has already priced in a lot of bad news regarding the property market,” said AJ Bell investment director Russ Mould.

A Fed pivot?

The FTSE 100 started the day on the front following comments from the Federal Reserve chair that raised hopes the US central bank was considering slowing the pace of rate hikes.

After a year of sharp interest rate hikes, the Federal Reserve could be about to amend the trajectory of their rates hikes which current sees a terminal rate of 5% in 2023.

The prospect of easier monetary conditions will be welcomed by the markets who are facing a slowing global economy.

The S&P 500 was up around 3% overnight and the FTSE 100 was trading at 7,580 at the time of writing.

Mixed commodities

Commodity shares were mixed as investors attempted to gauge news flow in China and whether the authorities could be about to end their zero-covid policy.

The FTSE 100 miners were weaker after a strong couple of weeks, and Shell and BP fell on lower oil prices.