Rumours on social media were the driving force behind gains in the FTSE 100 today with cyclical sectors rallying on hopes the Chinese economy would soon reopen and boost the global economy.

Social media posts suggested the Chinese had created a committee dedicated to seeing China through the end of the pandemic and reopening their economy.

Miners were the standout sector on Tuesday with Rio Tinto, Glencore, Anglo American and Antofagasta all gaining in excess of 4%.

A reopening of the Chinese economy would spur demand for natural resources and support mining revenues after a period of intermittent lockdowns in the world’s second largest economy.

China has been responsible for a large proportion of global over the past 15 years and any hints at expanding economic activity ignites interest in risk assets.

Ocado

While the miners were the standout sector on Tuesday, the standout company in terms of performance is undoubtedly Ocado, gaining over 30% on the day.

As we recently explained, Ocado’s strength is in their Ocado solutions business and today’s signing of a partnership with Lotte Shopping further demonstrates the scalability of the business. Lotte operates supermarkets and department stores in South Korea with annual revenue of £9.5bn.

The partnership will see Lotte build six of Ocado’s Customer Fulfilment Centres utilising the Ocado Smart Platform by 2028. Ocado shares were 36.6% higher at 646p at the time of writing.

UK House Prices

A day after Zoopla said the housing market may not suffer as much a previously thought, the Nationwide House Price Index indicated house prices were indeed starting to slow.

“The UK property market is in sharp focus again, hit with yet another picture of sharply weakening demand. Although prices still rose 7.2% year on year in October, it was the smallest increase since April 2021, and a rapid slowdown from the 9.5% rise in September,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.

“The picture on a monthly basis is even more stark with prices falling 0.9% in October, the largest drop since the depths of the pandemic in June 2020.”

The latest Trading Update from Westminster Group (LON:WSG) the managed services and security business indicates a slowing down.

For the year to the end of December the group has seen slippage in a multi-million Technology project that has caused guidance to be somewhat lower than had been anticipated a couple of months ago.

That coincides with a number of contracts that were being progressed for commitment being delayed in their signing.

However, not all is gloom and doom

The big MENA project is expected to be awarded before the end of the year, meaning that any revenue will now be pushed into next year.

The level of enquiries has continued to be very healthy, while the management expects to have enough cash at hand to see it through to the end of 2023.

If any new large contracts are committed next year, then they will be financed appropriately.

Encouragingly the group’s international revenues are in US$.

Analyst’s opinion – shares are a Buy up to 6p

Even though guidance has been reduced, brokers analysts Colin Smith and Lauren Baker Iguaz, at Arden Partners, retain their Buy recommendation on the group’s shares.

They are looking for 6p a share as their price aim.

For the current year end they see £9.1m (£7.1m) sales and an adjusted pre-tax loss of just £0.9m (£1.9m), easing earnings from a 0.6p loss to just 0.3p loss for this year.

Going into the coming year the brokers have £17.1m of sales estimated, to produce £1.2m of profits, worth 0.4p per share in earnings.

Conclusion – shares could easily double in 2023

That revenue increase actually shows very clearly the effect of additional sales to the group’s bottom line.

With the management sounding confident of more business wins over the next year the scalability of its numbers shine through very clearly.

The £5m group’s shares eased 0.42p on the Update, to just 1.48p, at which level I still consider that patient investors will be well rewarded within the next year.

BP shares slipped on Tuesday after the oil major said third quarter profits benefited from higher oil and gas prices than in the same period last year. However, profits were slightly weaker than the second quarter this year.

BP’s Non-GAAP $2.59 EPS beat analyst estimates by 64 cents as net debt fell and the oil giant announced a $2.5 billion buyback. 

BP has demonstrated the war in Ukraine is still the root of exceptional profits with higher oil prices supporting revenues.

Although profit is around three times higher than the same period last year, BP’s underlying replacement cost profit has slipped from $8.5bn in the second quarter to $8.1bn in the third quarter. 

Shares in BP were around 1% lower at the time of writing, trading at 474p.

“This quarter’s results reflect us continuing to perform while transforming. We remain focused on helping to solve the energy trilemma – secure, affordable and lower carbon energy,” said Bernard Looney, BP Chief executive officer.

“We are providing the oil and gas the world needs today – while at the same time – investing to accelerate the energy transition. Our agreement on Archaea Energy is the most recent step in our strategic transformation of bp.”

Cleaner Energy Investment

BP’s revenue will be earned predominantly in oil for the foreseeable future, however the company has continued to make significant investments in cleaner forms of fuel.

BP is finalising a US biogas deal and is divesting upstream businesses.

A drive into low carbon energy is well underway with the rollout of EV charging points and the completion of an acquisition of a green hydrogen plant in Australia.

Green hydrogen is seen as the most sustainable form of hydrogen as the process is powered by renewable energy and produces nearly zero carbon.

BP have submitted a bid to government for the HyGreen Teesside green hydrogen plant which will be one of the UK’s largest green hydrogen facilities and is targeting production of an initial 80 megawatts (MW) of hydrogen by 2025.

The FTSE 100 surged on Monday in a broad based rally led by IAG and the UK banks as markets braced for a busy week of central bank action.

International Consolidated Airlines was the FTSE 100’s top riser on reports they could be eyeing easyJet as a takeover target. IAG shares were up over 5% at the time of writing.

“Reports that EasyJet could be a takeover target for International Consolidated Airlines make perfect sense,” said AJ Bell investment director Russ Mould.

“The pandemic has created concerns about the future of business travel, with companies globally realising they don’t need to hold so many meetings in different locations. It’s far easier, cheaper and more environmentally friendly to hold many conversations over Teams or Zoom than get on a plane.”

The Times reported IAG could target easyJet and Portuguese TAP Air Portugal to add to their portfolio of airlines which includes Iberia and British Airways.

UK Bank Windfall Tax

A week after UK banks reported Q3 earnings, Natwest and Lloyds were back under the microscope as investors weighed the potential of a surcharge on UK banks in the upcoming Autumn Statement.

Speculation had grown Sunak and Hunt would again raid banking profits, but reports over the weekend suggested the windfall tax could be less than previously thought.

NatWest and Lloyds were up 4.6% and 2% respectively with NatWest bouncing back from a terrible session on Friday.

Centrica upgrades

Centrica was among the best performers after the utilities company received favourable upgrades from analysts at Jefferies, Barclays and Citigroup.

Barclays analysts were the most optimistic on Centrica share price with a price target of 144p. Centrica shares were 5$% higher at 76p at the time of writing.

Central Banks

Central banks are back in focus this week with markets preparing for the Federal Reserve set to meet on Wednesday and the Bank of England issuing there latest interest decision on Thursday.

Economists are predicting the Bank of England will hike rates 75 bps to 3%.