FTSE 100 closes in the green as commodities rally

Natasha Doris
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FTSE 100 closes in the green as commodities rally

The FTSE 100 closed in the green on Friday helped higher by stronger commodities as the UK entered a period of mourning following the death of Queen Elizabeth on Thursday at the age of 96.

As the nation mourns the monarch’s death for a 10 day period, the Bank of England has postponed their next meeting and the London Stock Exchange may close for a time as part of the official grieving procedure.

“The only implications could be that they may be closing the London Stock market for a few days,” said Plurimi Wealth chief investment officer Patrick Armstrong.

“If there are days where the market is closed, that may lead to some weakness where people don’t want to hold positions into an extended period, especially given the volatility with the Federal Reserve coming up with their next hike in a couple of weeks.”

The FTSE 100 closed 1.2% higher on Friday at 7,351, and climbed 0.9% in the last week.

Miners pull FTSE 100 higher

Miners were the big performers of the day, with commodities firms topping the blue chip index as copper prices climbed on a weaker dollar and Chinese inflation came in below expectations.

Anglo American shares soared 5% to 2,935.7p, Antofagasta gained 4.2% to 1,199.7p, Croda climbed 2.7% to 6,837p, Endeavor increased 1.7% to 1,757p, Glencore rose 3.7% to 488.7p and Rio Tinto gained 2.9% to 4,863.7p.

BP and Shell shares recovered some ground after oil prices rose on supply fears, with shares increasing 2% to 452p and 1.4% to 2,303.7p, respectively. The price of benchmark Brent crude reached $91 per barrel after dropping below the $90 level earlier in the week.

Bank of England postpones interest rates decision

The Bank of England announced a postponement to its interest rates decision due to the Queen’s death.

The Bank moved its report to 22 September from its originally scheduled date on 15 September.

“In light of the period of national mourning now being observed in the United Kingdom, the September 2022 meeting of the Monetary Policy Committee has been postponed for a period of one week,” said the Bank of England in a statement.

“The Committee’s decision will be announced at 12pm on 22 September.”

Analysts are currently expecting a rates hike to 2.25% from its current level of 1.75%, which would mark the highest interest rates for the UK since December 2008.

The institution currently faces soaring inflation rates at 10.1%, with projections of 13% inflation in October this year.

Experts currently expect more aggressive rate hikes as the Bank attempts to wrestle spiking prices closer to its mandated target of 2%.

Bank of England postpones rates decision after Queen’s death

Natasha Doris
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Bank of England postpones rates decision after Queen’s death

The Bank of England postponed its interest rates decision after Queen Elizabeth’s death, rescheduling its meeting for 22 September instead.

The institution cited the “period of national mourning” as the reason for its delay.

The Bank was previously set to announce its next interest rates decision on Thursday 15 September.

“In light of the period of national mourning now being observed in the United Kingdom, the September 2022 meeting of the Monetary Policy Committee has been postponed for a period of one week,” said the Bank of England in a statement.

“The Committee’s decision will be announced at 12pm on 22 September.”

Bank of England Governor Andrew Bailey expressed his regrets following the Queen’s passing.

“It was with profound sadness that I learned of the death of Her Majesty the Queen. On behalf of everyone at the Bank I would like to pass on my deepest condolences to the Royal Family,” said Bailey in a statement.

Analysts have been predicting a rate hike to 2.25%, representing the highest level since December 2008. The last meeting saw the Bank raise rates to 1.75% in a bid to tackle soaring inflation, which currently stands at 10.1% and is expected to hit 13% in October.

The European Central Bank hiked its interest rates a whopping 0.75% at its meeting on Thursday this week, citing surging energy and food prices linked to the Ukraine war as the reason behind its aggressive move.

Meanwhile, the US Federal Reserve have been warning of aggressive rate decisions to come, with US Fed chair Jerome Powell taking a decidedly hawkish stance at the Jackson Hole convention last month.

Banks warn to expect another 0.75% ECB rate hike

Natasha Doris
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Banks warn to expect another 0.75% ECB rate hike

Major banks including Credit Suisse and Deutsche Bank warned investors to expect another 0.75% interest rate hike from the European Central Bank (ECB), following its jaw-dropping 0.75% rise on Thursday.

The ECB delivered the massive interest rates increase in a bid to fight soaring inflation across Europe, driven by spiking energy and food prices as a result of Putin’s war in Ukraine.

The Bank revised its expectations for economic growth and inflation, confirming projections of 8.1% inflation in 2022, 5.5% in 2023 and 2.3% in 2023.

“The ECB has raised rates by an unprecedented 0.75% in response to the recent surge in inflation, ratcheting up the pace of policy tightening as both the Fed and BOE have done in recent months,” said Kingswood strategist Rupert Thompson.

“It is very much prioritising getting inflation back under control even as the economy looks headed into recession later this year.”

The ECB announced it would likely issue further rate hikes at its next several meetings as it worked to fight inflation.

“It is likely to be another close call in October and we have shifted our view to expect another 75bp hike (previously: 50bp),” said Deutsche Bank analysts in a note.

“This underscores the ECB’s insensitivity to the growth headwinds and laser focus on bringing inflation down.”

Meanwhile, Credit Suisse noted the ECB’s confidence in additional rate hikes moving forward, shifting its forecast from a 0.5% hike to 0.75%, and lifted its forecast for the institution’s terminal rate to hit 2.5% from a prior expectation of 2%.

Citibank said it maintained projections of a 0.75% climb in October, followed by a 0.5% rise in December before economic weakness incentivises the Bank to pump the brakes on its aggressive rate hikes.

Expanding Gold Production in West Africa with Thor Explorations

UK Investor Magazine
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Expanding Gold Production in West Africa with Thor Explorations

We were thrilled to welcome Segun Lawson, CEO of West African Gold producer Thor Explorations, to the Podcast for an in-depth look at their recent earnings release and future plans.

Thor Explorations has successfully established the first and only commercial gold mine in Nigeria and began production at the Segilola Gold Mine in the past 12 months.

Thor previously guided on 85,000-100,000 ounces of production per year and have now narrowed this to 90,000-100,000 following strong performance at the mine.

Segun outlines what investors can expect from Thor in the future, including the expansion of the Segilola mine, and how Thor are targeting shareholder value creation.

With a market cap of circa £100m and a net profit of $6m in the first half, the expansion of the mine or an uptick in gold prices could soon make shares look very good value.

Visit Thor Explorations website for more information.

China oil demand might drop for first time in two decades

Natasha Doris
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China oil demand might drop for first time in two decades

Oil demand in China might drop for the first time in two decades, as families who would normally be boarding planes and jumping into cars for the Mid-Autumn festival remain under lockdown this year.

The festival, which takes place on 10 September, would typically see Chinese families use transport and fuel en mass. However, the world’s largest energy consumer has been under widespread lockdowns over the last couple of years, with energy usage plummeting.

The latest lockdown in Sichuan Province capital Chengdu was extended indefinitely earlier this week, and tech hub Shenzhen remains under a tiered restrictions system in line with China’s radical zero-Covid policy.

Production has fallen across the country in recent months, sending demand fears for oil and other commodities through the roof.

Analysts estimate China’s demand for fuel could drop by 380,000 bpd to 8.09 bpd in 2022. Energy Aspects analyst Sun Jianan called the contraction a “watershed moment.”

To compare, fuel demand rose by 5.6%, or 450,000 bpd, in 2021 throughout the country.

Oil imports have fallen 4.7% year-to-date, marking the first contraction for an eight-month spell since 2004.

“We believe imports will only rise substantially in early Q1 23 when China begins to source crude for the Lunar New Year, rather than our previous expectation of Q4 22,” Sun said.

Pound rises above $1.16 on sliding greenback

Natasha Doris
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Pound rises above $1.16 on sliding greenback

The Pound climbed to $1.1613 in late morning trading on Friday after falling to the lowest rate since 1985 earlier this week.

The Sterling rose on sliding dollar strength, with most major currencies making moves against the greenback’s surge in the last several days.

The currency slipped to a 37-year low of $1.1407 earlier this week on a strengthening dollar and a gloomy UK economic outlook.

Meanwhile, the Euro climbed against the dollar to $1.0079 from its close at $1.0003 on Thursday.

The European Central Bank (ECB) announced an aggressive 0.75% rate hike throughout the Eurozone, strengthening the Euro which had previously fallen below parity against the dollar as the war in Ukraine ravaged the continent.

The UK received a surge of much-needed relief in the form of Prime Minister Liz Truss’ new energy relief plan, which is set to cap energy bills at £2,500 for households.

Previously, the price cap was scheduled to rise 80% to £3,549 per year, sending the UK’s darkening economic prospects spiralling, with inflation spiking and consumer confidence hitting the lowest point on record.

Soaring food and energy prices have been the major drivers behind the pessimistic outlook across the UK and Europe, with the Pound and Euro falling against dollar strength.

“Today it’s a dollar story, and we are seeing the pound trade in line with that broader theme…” said Simon Harvey, head of FX analysis at Monex Europe.

“We’re finally seeing central banks pushing back against this stronger dollar narrative, and we’re starting to see fiscal authorities responding to the causes of it especially in Europe.”

AIM movers: Libertine powertrain deal and Tlou Energy investigated by Australian authorities

Andrew Hore
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AIM movers: Libertine powertrain deal and Tlou Energy investigated by Australian authorities

Libertine Holdings (LON: LIB) has entered a memorandum of understanding with Ashok Leyland, which will access the AIM company’s vehicle powertrain technology for its commercial vehicles and buses. The Libertine intelliGEN platform can use renewable fuels and Libertine will provide engineering services and that will help in the development of linear generators. Ashok Leyland could then licence the technology from Libertine if it proved successful. The share price rose 17.1% to 24p. Libertine joined AIM on 23 December 2021 via a placing at 20p a share.

Bayford & Co has increased its stake in Fulcrum Utility Services (LON: FCRM) from 26.7% to 29.1%. The shares were acquired for 4.8p each. At the beginning of the year, a placing and open offer raised £21.2m at 12p a share. This sparked a 37.5% jump in the share price to 6.6p.

Data and machine learning company Insig AI (LON: INSG) recovered 18.6% to 25.5p following its full year figures, but it is still well below the 67p reversal fundraising share price. There was a loss of £4.15m on revenues of £1.7m in the year to March 2022. Progress has been slow, but management believes that it can secure a number of contracts before the end of October. There could be an annual run rate of recurring revenues of £4m before the end of March 2023.

Coal mine gas and solar company Tlou Energy (LON: TLOU) is being investigated by the Australian Securities & Investments Commission (ASIC) about statements it has made in announcements on 16 February 2021 and 20 October 2021. The first announcement relates to Tlou’s claim to be progressing towards a carbon neutral power project in Botswana, while the other was a presentation on the same subject (Hydrogen Strategy (tlouenergy.com)). There is no indication of the claims that are in dispute. The share price has slumped by 16.7% to 1.5p. As well as AIM and the ASX, Tlou Energy is listed on the Botswana Stock Exchange.

Phoenix Global Resources (LON: PGR) says main shareholder Mercuria Energy acquired a further 223.7 million shares via its offer to minority shareholders at 7.5p a share. The AIM quotation will be cancelled on 15 September. The share price dropped 15.6% to 5.51p.

First half trading at litigation financer Manolete Partners (LON: MANO) has lost a case and it is reducing the valuations of its other cases. Manolete has spent £637,000 on the case and it applied for permission to appeal. On its own, the case was expected to generate a pre-tax profit of £2.3m and combined with write-downs Manolete is anticipating a £5m interim loss. That will mainly be a non-cash adjustment. The share price dived 15.5% to 213.5p.

Cenkos Securities (LON: CNKS) continues to decline following yesterday’s figures showing underlying interim profit falling from £2.9m to £1.9m due to reduced market activity. There was a further 11.8% decline to 45p.

Online musical instruments supplier Gear4Music (LON: G4M) is still finding trading tough. It has disappointed more than once in the past year and management is cautious about trading in the second quarter. The first quarter to June 2022 was relatively good and showed growth over the same period last year, However, spending in July and August was weaker than expected even if the hot weather is taken into account. September is showing signs of improvement. This has led to a lowering of guidance with pre-tax profit expected to slump from £5m to £1.1m with a possible recovery to £3.3m next year. The share price fell 11.3% to 117.5p and it has fallen by 83.7% this year.

Postal and train worker strikes postponed as country mourns Queen Elizabeth

Natasha Doris
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0
Postal and train worker strikes postponed as country mourns Queen Elizabeth

Strike action has been postponed across the UK following Queen Elizabeth’s death on Thursday. Scheduled strikes, including postal workers and train staff walkouts, were reportedly suspended as the country entered a time of mourning.

Unions representatives for Royal Mail employees commented the strike had been cancelled “out of respect for her service to the country and her family.”

Meanwhile, scheduled walkouts by RMT rail workers on 15 and 17 September were also suspended, alongside the train drivers’ union Aslef’s planned strike on 15 September.

The TSSA rail union joined the cancellation of industrial action to respect to the Queen and the official period of mourning across the country.

According to the Rail Delivery Group, train timetables would remain normal due to the cancelled industrial action.

A representative for the Rail Delivery Group, which represents train operators, added it welcomed the RMT’s move to cancel the strikes while the UK collectively grieved.

“The whole railway family is united in sending our condolences to the Royal Family,” said the RMT in a statement.

The Communication Workers Union (CWU), which represented the Royal Mail in their strike action, cancelled further walkouts on Friday.

“Following the very sad news of the passing of the Queen, and out of respect for her service to the country and her family, the union has decided to call off tomorrow’s planned strike action,” said CWU general secretary Dave Ward.

Amur Minerals advances Kun-Manie disposal, seeks fresh acquisition opportunities

Natasha Doris
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Amur Minerals advances Kun-Manie disposal, seeks fresh acquisition opportunities

Amur Minerals shares dipped 1.5% to 1.3p in early morning trading on Friday, after the mining firm reported the intended disposal of its Kun-Manie subsidiary to Russian company Bering Metals.

The deal is set to complete as a cash shell in line with Rule 15 of the AIM rules. Following its receipt of the $35 million consideration, Amur Minerals will pay a 1.8p per share dividend to shareholders within 90 days of finalisation.

The board reportedly seeks to acquire another company, which will acquire shareholder approval, and which it will need to complete within six months of its Kun-Manie disposal or be re-admitted to AIM as an investing company.

Failing that, Amur Minerals shares will be suspended from trading on AIM, after six months of which the company’s shares will be cancelled.

“The board, in considering the company’s future strategy, it will seek to identify opportunities offering the potential to deliver value creation and returns to shareholders over the medium to long-term in the form of capital and/or dividends,” said non-executive chairman Robert Schafer said in statement.

Amur Minerals confirmed cash reserves of $5.3 million from $6.7 million at the start of 2022. The group remains debt free, and received £300,000 from the issue of share capital upon the execution of warrants.

The company highlighted administration expenses for HY1 2022 of $1.7 million against $1.1 million the last year, linked to a rise in legal fees related to its Kun-Manie disposal and claim against the group.

Meanwhile, Amur Minerals noted a currency translation loss of $8.5 million against $400,000 due to the strengthening of the Russian rouble to the US dollar.

The mining group mentioned $300,000 in expenditure on exploration compared to $400,000.

London Security operating profits fall to £10.9m as company absorbs inflationary pressures

Natasha Doris
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0
London Security operating profits fall to £10.9m as company absorbs inflationary pressures

London Security shares fell 13.3% to 2,730p in early morning trading on Friday, on the back of an operating profit decrease to £10.9 million in HY1 2022 from £12.3 million the year before.

The firm attributed its sliding profits to inflationary pressures linked to the Ukraine war and recovery from the Covid-19 pandemic, sparking price increases.

London Security said it passed some costs onto its customers while absorbing the rest, resulting in its operating profit drop.

The company noted the impact of adverse business confidence, marked by a “reduced willingness to invest by our customers.”

The group reported revenues of £88.6 million compared to £82.7 million the last year.

London Security also noted cash of £35.3 million at 30 June 2022, representing a decline of £400,000 from its cash balance of £35.7 million at 31 December 2021.

The company drew attention to its five-year multi-currency facility, entered in 2023 and scheduled to end in 2023, comprised of £3.15 million and €8.40 million.

London Security confirmed it capped interest rates at 1.5% SONIA on the Sterling loan and 0.25% EURIBOR on the Euro loan from the facility, to limit the firm’s exposure to rising interest rates.

The group highlighted its acquisition of four companies on the continent across HY1 2022, along with expansion further into Germany, Austria and the UK through its acquisition of service contracts to be integrated into its present subsidiaries.

London Security reiterated its strategy to grow via acquisition, with acquisitions currently sought throughout Europe at the upper end of the price spectrum in a move to procure strong returns.

The company noted a healthy balance sheet, strong cash reserves and a decent previous track record of cash production, positioning it to weather the macroeconomic storm and manage economic decline.

London Security paid a final FY 2021 dividend to shareholders of 42p on 8 July 2022.

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