FTSE 100 rises on commodities gains after China ends lockdowns

Natasha Doris
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FTSE 100 rises on commodities gains after China ends lockdowns

The FTSE 100 was up 1.4% to 7,644.6 in late morning trading on Monday following a welcome rally in commodities shares.

The mining sector gained on easing lockdown restrictions in China, as the country’s reopening boosted demand across the industry after the celebrations of Jubilee weekend.

“Appropriately following a platinum-themed celebration, the move higher was powered by the mining sector as investors look for a rebound in demand for metals now China is relaxing its Covid restrictions,” said AJ Bell investment director Russ Mould.

Anglo American shares climbed 3.2% to 3,976p, Antofagasta gained 2.3% to 1,530p, Croda shares increased 2.1% to 6,906p, Endeavor shares flew 4% to 1,876p, Fresnillo shares were up 2.7% to 790.3p, Glencore shares saw a boost of 2.5% to 537p and Rio Tinto shares rose 2.7% to 5,918p.

There may be danger on the horizon with the coming release of the US inflation figures later in the week, after the US markets experienced volatility following positive job numbers on Friday last week.

The update sent skittish movements across the Atlantic on apprehension the US Federal Reserve might be incentivised to speed up monetary policy tightening through additional interest rate hikes.

In Friday, the NASDAQ was down 2.4% to 12,012.7 and the S&P 500 was down 1.6% to 4,108.5 with futures pointing to a rebound on Monday.

“In the current through the looking glass environment the apparent ‘good’ news of better-than-expected US jobs numbers was taken badly by the market as it was seen as a potential catalyst for the US Federal Reserve to go harder and faster on interest rates,” said Mould.

“It showed just how nervy sentiment remains despite a recent stabilisation in the markets.”

The Hang Seng enjoyed gains of 2.7% to 21,653.9 as Asia-focused companies rose on the swell of optimism from Asian markets, with Prudential shares up 4.9% to 1,068p and Scottish Mortgage Investment Trust rising 1.4% to 807.3p.

Melrose Industries shares flew 4.4% to 139.3p in light of its $650 million sale of its Ergotron business to funds managed by the Sterling Group.

The Ergotron business was the final component of its Nortek Air Management sale to Madison Industries for £2.6 billion in April 2021.

“The sale of Ergotron is the final step in our Nortek ownership cycle, capping what has been a very successful acquisition for Melrose shareholders,” said Melrose CEO Simon Peckham.

CRH shares increased 2.4% to 3,313p after it acquired residential fencing and railing solutions company Barrette Outdoor Living for $1.9 billion.

“Barrette is an excellent addition to CRH. Our Architectural Products business has been one of our fastest growing businesses in recent years and the acquisition of Barrette complements and enhances our existing offering of sustainable outdoor living solutions in North America,” said CRH CEO Albert Manifold.

AstraZeneca shares dipped 1% to 10,325p despite the pharmaceutical group’s jointly-developed breast cancer drug Enhertu displaying an improved overall survival rate in its phase three trial and its leukaemia treatment Calquence demonstrating a sustained survival upside in another phase three trial.

Clontarf Energy fails to strike oil at Sasanof-1 well

Natasha Doris
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0
Clontarf Energy fails to strike oil at Sasanof-1 well

Clotarf Energy shares plummeted 70.1% to 0.1p in late morning trading on Monday after the oil exploration group confirmed its failure to intersect commercial hydrocarbons at its Sasanof-1 exploration well located 207 km northwest of Onslow, Western Australia.

The well was drilled to a total depth of 2,390 metres by the company’s Valaris MS-1 rig, with zero reported incidents.

Clontarf Energy confirmed that the well would be plugged and abandoned permanently, according to its plans, followed by the start of de-mobilisation activities.

The firm is currently exploring other opportunities, with a 49% joint-venture to explore and develop new salt lakes for lithium resources in Bolivia under discussion.

The policy is still under review since the country has not yet exported any battery-grade lithium.

Clontarf Energy also signed a Memorandum of Understanding (MoU) on the Sedimentary Basin in Chad, and noted an export pipeline from the country with available capacity. The negotiations have been subject to a few issues including political uncertainty in the Sahel and funding.

The company is further waiting on the ratification of a signed Ghana Tano 2A Petroleum Agreement, with progress still pending following negotiations with the new government in May 2017 to confirm details of the agreement.

Pound sterling rises despite Boris Johnson confidence vote

Natasha Doris
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0
Pound sterling rises despite Boris Johnson confidence vote

The Pound sterling rose higher on Monday morning, despite the upcoming confidence vote against Prime Minister Boris Johnson which is scheduled between 6pm and 8pm tonight.

The Pound exchange rate compared to the Euro was trading a third of a percentage point higher at 1.1679 and the Pound against the Dollar was trading 0.4% higher at 1.2540.

The confidence vote against Johnson follows the Partygate scandal, which saw 16 events attended by Members of Parliament detailed in a report by Sue Gray between May 2020 and April 2021 which violated Covid-19 rules.

A total of 83 attendees of the events were issued fines for breaking the Covid-19 regulations, including Johnson and Chancellor Rishi Sunak.

The report noted “failures of leadership and judgement in No 10 and the Cabinet Office”, which is the backdrop of today’s confidence vote.

The vote was called after 54 letters from Conservative MPs were submitted to Tory backbench committee chair Graham Brady requesting Johnson’s removal from office.

A minimum of 180 Conservative MPs would be required to vote against Johnson to kick him out as Prime Minister.

If he manages to evade eviction later today, he will be protected from an additional vote for the coming year.

Lloyds share price: a safe harbour from inflationary shocks?

Natasha Doris
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0
Lloyds share price: a safe harbour from inflationary shocks?

The Lloyds share price is down 8% year-to-date, so how does a discerning investor choose whether to go in on the banking mainstay for their portfolio?

Lloyds’ shares are currently trading at a PE ratio of 5.9, which is could be perceived to offer value compared to its fellow banks, with HSBC at 9.5 and NatWest Group at 9.7.

The banking group also boasts a forward PE ratio of 7, indicating positive analyst profit forecasts for the year ahead, given the volatile macroeconomic conditions geared up to intensify for the rest of 2022.

Lloyds’ has a dividend yield of 4.4%, with a dividend cover of 3.9, cinching the company’s reputation as more than capable of dealing out and growing its dividend, with adequate room to spare if the market capsizes amid geopolitical tensions.

Financial Results

Lloyds reported strong results for Q1 2022, with a post-tax profit of £1.2 billion against £420 million in Q4 2021 and a 12% year-on-year net income growth to £4.1 billion.

As a result of its promising Q1 2022 results, Lloyds actually enhanced its guidance for its banking net interest margin and return on tangible equity, with the former projected to be above 270 basis points and the latter estimated beyond 11%.

The bank also said it expected operating costs of £8.8 billion and risk-weighted assets beyond £210 billion by the close of 2022.

Lloyds has also shored up its financial balance for provisions against increased risks tied to inflation, with an additional £100 million added to its reserves in Q1 2022 to protect from inflation shocks, predominantly in its Retail book, which is considered more vulnerable to disposable income falls on the climbing cost of living.

Consensus

Lloyds’ has reported a strong performance over the last quarter, with climbing revenues they may be helped by higher interest rates, notwithstanding the shocks of inflation growth in 2022.

In addition, the stock appears undervalued compared to peers, and more than adequately covers its dividend payments and looks set for growth in the coming months.

There are far worse bets to place than Lloyds’, however time will tell how well the bank has shored up its defences against the looming cost of living crisis as inflation looks set to hit 10% by autumn this year.

CRH acquires Barrette Outdoor Living for $1.9bn

Natasha Doris
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3
CRH acquires Barrette Outdoor Living for $1.9bn

CRH shares gained 2.4% to 3,314p in early morning trading on Monday, following the group’s reported acquisition of Barrette Outdoor Living for $1.9 billion.

The company reached an agreement with TorQuest Partners and Caisse de dépôt et placement du Québec (CDPQ) to purchase the residential fencing and railing solutions firm for approximately ten times its EBITDA pre-synergies.

CRH noted that Barrette reported a pre-tax profit of $79 million and gross assets of $1.2 billion for the year ended on 1 January 2022.

The deal is set to be financed through existing financial resources and is scheduled to close in HY2 2022, subject to regulatory approval.

The agreement follows the recent divestment of CRH’s Building Envelope business, and falls in line with the group’s strategy to create shareholder value with active portfolio management and the optimised reallocation of capital.

“Barrette is an excellent addition to CRH. Our Architectural Products business has been one of our fastest growing businesses in recent years and the acquisition of Barrette complements and enhances our existing offering of sustainable outdoor living solutions in North America,” said CRH CEO Albert Manifold.

“It also demonstrates the continued execution of our integrated solutions strategy to create further value for our customers, our business and our shareholders.”

“We welcome the Barrette team to CRH and look forward to working with them on the next phase of our growth and development.”

Edinburgh Worldwide Investment Trust NAV per share falls 34.1% in HY1 2022

Natasha Doris
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2
Edinburgh Worldwide Investment Trust NAV per share falls 34.1% in HY1 2022

Edinburgh Worldwide Investment Trust shares increased 3.2% to 181.7p in early morning trading on Monday, despite a NAV per share fall of 34.1% against the comparative index decline of 6.8% in HY1 2022.

The trust, which is managed by £240 billion management fund Ballie Gifford, reported a share price drop of 38.5% as the company noted the challenging backdrop of the stock markets over the last six months.

However, the firm commented that its NAV per share value rose by 80.7% over the past five years against a comparative index growth of 40.7%, alongside a share price climb of 79.1%.

Edinburgh Worldwide investment trust announced that 19 of its stocks generated positive absolute returns, however 35 stocks dropped over 50% over the term.

The NAV return per share amounted to minus 0.23p compared to minus 0.31p year-on-year, with no interim dividend payment recommended.

The group mentioned that 5550,000 shares were issued over the six months, with 3,525,695 bought back and held in treasury and 3,192,854 additional shares bought back and held in treasury since the end of HY1 to 31 May 2022.

Portfolio Acquisitions

The firm acquired six new holdings over the HY1 term, which it funded primarily through reductions to Tesla and its exit from nerve repair firm AxoGen, with four listed companies and two private companies.

Its positions in Schrödinger and AbCellera reportedly reflected the growing use of software to fine-tune drug developments, boosting efficiency in time and finances.

The trust added that it contributed to the IPO for Expensify as an important provider of expense management software for the underserved small and medium-sized business market, and on the back of its potential to evolve in functionality with improvements to its billing, invoicing and payroll segments.

Edinburgh Worldwide also invested in fertility benefits group Progyny, which works to improve economic access to fertility services for US corporate employees. The firm reported high growth potential, and market data which suggested the company’s fertility outcomes were notably higher than industry averages.

Its stake in DNA Script was reportedly due to the group’s offering of enzymatic DNA-synthesis for the expanding synthetic-biology business, alongside its commercialisation of an enzymatic DNA printer, representing a foothold for increased commercial traction.

The company further invested in BillionToOne, which aims to increase the accuracy, efficiency and accessibility of molecular diagnostics. The trust noted its interest in the firm’s progress so far.

Former AIM company to join FTSE 100 index

Andrew Hore
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Former AIM company to join FTSE 100 index

The latest FTSE 100 index shake up means that Royal Mail (LON: RMG) and ITV (LON: ITV) are being chucked out and one of the companies replacing them floated on AIM exactly 23 years before the day of the announcement of the index changes. The changes take effect on 20 June.
Centrica, the owner of British Gas, is returning to the FTSE 100. The share price had been on a downward trend since 2014, but the trend has reversed in the past two years. Centrica recently completed the $1.1bn disposal of Spirit Energy’s Norwegian oil and gas assets to Sval Energi. The decommission liabilities of £800, wil...

FTSE 100 down amid growth concerns and falling oil prices

Natasha Doris
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0
FTSE 100 down amid growth concerns and falling oil prices

The FTSE 100 was down 0.9% and closed at 7,532.9 on Wednesday as the price of oil fell below the $120 mark, with Brent Crude trading at $117 per barrel as OPEC signalled a possible end to its ties with Russia, sparking hopes that the organisation could start increasing production.

The outcome of OPEC’s decision tomorrow could dent energy stocks after the boost beyond $120 per barrel earlier this week.

Shell and BP shares dropped 0.6% to 2,362p and 0.5% to 431.8p as the oil giants took the hit of lowered prices.

The other side of the Atlantic saw a poor slate of returns in the US markets, with the NASDAQ down 0.4% to 12,081.3 and the S&P 500 dropping 0.6% to 4,132.1.

The US is scheduled to report its latest jobs reading on Friday, and depending on the direction the markets take in light of the data, UK markets could wake up to a nasty shock as inflation concerns loom on the horizon.

“By the time investors have returned after the festivities they could be facing a big hangover depending on the turn Wall Street takes over the next few days and the latest US jobs reading due on Friday. Inflationary concerns look set to continue to dominate the market mood.” said AJ Bell investment director Russ Mould.

Nationwide highlighted a “surprising amount of momentum” in the housing market, following a 0.9% monthly climb in prices in May.

“May saw a slight slowing in the rate of annual house price growth to 11.2%, from 12.1% in April – the tenth successive monthly increase, which kept annual price growth in double digits.” said Nationwide chief economist Robert Gardner.

However, Nationwide confirmed an anticipated slowdown in the housing market as the year progressed, with the cost of living and 9% inflation estimated to dampen demand for homebuyers.

“We continue to expect the housing market to slow as the year progresses. Household finances are likely to remain under pressure with inflation set to reach double digits in the coming quarters,” said Garnder.

Housing stocks gained on the report, with Reckitt Benckiser climbing 0.4% to 6,166p and Berkeley Group rising 0.9% to 4,238p.

Credit card borrowing surges at fastest annual rate in 17 years

Natasha Doris
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1
Credit card borrowing surges at fastest annual rate in 17 years

Credit card borrowing surged at its fastest annual rate in 17 years, the Bank of England reported on Tuesday.

The Bank of England highlighted that consumers borrowed an extra £1.4 billion in consumer credit, with £700 million of new lending added on credit cards as the cost of living crisis continued to swallow consumer wallets whole.

“Brits borrowed another £1.4bn in April to help keep themselves afloat during the cost of living crisis,” said AJ Bell head of personal finance Laura Suter.

“It marks the third consecutive month where borrowing has been higher than £1bn. Another £700m was borrowed on credit cards in April, an 11.6% rise in consumer credit – its highest level in more than 16 years, since November 2005.”

The institution mentioned that large non-financial businesses’ borrowing from banks grew to £2.7 billion in April compared to £1.8 billion in March, alongside repayments from small and medium-sized businesses of £500 million in bank loans.

Private non-financial companies redeemed approximately £1.9 billion in net finance from capital markets.

The Bank added that the net flow of sterling money decreased to £1.5 billion in April from £24.4 billion in March, while households’ holdings of money saw net flows of £5.7 billion in April against £6.6 billion in March.

Meanwhile, the net flow of sterling lending to the private sector or companies decreased to minus £3.4 billion in April, compared to £21.1 billion month-on-month.

However, UK consumers were also saving at a higher level than before the pandemic, with £5.7 billion saved by households in April and £600 million with NS&I, representing a 15% growth against the pre-Covid-19 average.

“What the figures show is a divided nation, with many households still managing to save cash despite prices rising around them,” said Suter.

“It’s a far cry from the bumper savings the nation was making during lockdown, but with the prospect of tougher times ahead lots of households have tightened their belts and saved some cash in their emergency funds.”

Inflation is far beyond the Bank of England’s aim of 2%, with the figure currently at 9% and estimated to hit 10% in October. The cost of living looks set to rise, which will make saving even harder for struggling families and will most likely see the rate of credit card borrowing continue to climb.

Silverbullet Data widens pre-tax loss to £8.5m as 4D sales record slow start

Natasha Doris
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0
Silverbullet Data widens pre-tax loss to £8.5m as 4D sales record slow start

Silverbullet Data Services Group shares tumbled 28.5% to 100p in late afternoon trading on Wednesday, following a widened reported pre-tax loss of £8.5 million in FY 2020 compared to £5.2 million in FY 2021.

The group announced a gross profit climb to £2.7 million against £1.9 million in the previous year, alongside a revenue increase to £3.8 million from £2.7 million.

Silverbullet Data also noted a loss per share of 0.73p against 0.75p year-on-year, and did not issue a dividend payout for the period.

The company secured 26 new services clients across the year, including ITV, Venture Crowd and Edyn. It also consolidated its existing services clients due to additional contract wins with Channel 4, Heineken and Dolce & Gabbana.

The group confirmed progress in its 4D contextual outcomes engine, including the delivery of a YouTube video solution. However, 4D revenue saw a slower start than anticipated as a result of Google’s delay in phasing out its third party cookies by 12 months.

Silverbullet reported that it had completed a £4.5 million fundraise to drive 4D product sales growth and boost its balance sheet FY 2022.

“2021 was a transformational year for Silverbullet, with the completion of our IPO in June 2021. The Company has delivered strong performance in marketing services and is continuing to gain traction with our 4D offering,” said Silverbullet Data CEO Ian James.

“We are operating in a very exciting and relevant space. The value of 1st party data to clients and benefits of 4D, our contextual outcomes engine designed for a world without third-party cookies, gives us confidence that our prospects are very encouraging.

“Trading for 2022 has started well, with new customer wins and extensions of existing contracts, as well as the new joint venture with Making Science which will create new improved solutions for the privacy-first era. I look forward to the remainder of 2022 with optimism and we will be updating the market on progress in due course.”

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