Last week we felt that the index could attempt a move back up to fresh all time highs, so the continued strength in recent days has been as expected.

Recent consumer sentiment on the US stock market is at multi year highs and the VIX is at multi year lows, so this must mean everything is looking hunky-dory, right?

Well, unfortunately when these indicators are at “positive” extremes like this they are often useful contrarian indicators. Essentially if all is so good, who is left to buy. This does leave the index as looking vulnerable to some minor weakness in the days ahead.

It is important to state that this “weakness” is relative and is only a weakness when compared to the strong gains posted in the past 6 months. But a move back towards the internal support line, black line on chart, currently around 5100 would seem probable as needed to keep the buyers interested going forward.

This is not an opportunity to open shorts on the index in our opinion, as the trend is so bullish, but it could be an opportunity to take profits and lighten up on certain risk-on segments, as the index does look vulnerable to a minor pullback next week.

The FTSE 100 dipped on Friday after a poor session in the US translated into a weaker start for European stocks.

A lack of fresh catalysts and no major corporate stories culminated in a quiet session for UK stocks. The FTSE 100 traded down marginally at 8,410 shortly before midday.

“After notching up new record intraday highs yesterday, US markets ran out of steam towards the end of the session and left Wall Street limping towards the finish line,” said Russ Mould, investment director at AJ Bell.

“A sea of red at the market close left US markets below where they started and that negativity set the tone for European markets on Friday. The FTSE 100 struggled to find direction while key indices in France and Germany slipped.

“Asia was in a better mood, helped by Chinese industrial production figures coming in significantly ahead of expectations, although there was a big miss for retail sales in the country – hardly a surprise on the latter given negative signals from the likes of Apple and Burberry in their recent updates about consumer spending in that part of Asia.”

The better sounds from China helped the mining sector to rise, with Rio Tinto among the few gainers.

A steady yet convincing rally is underway in housebuilders as markets gear up for rate cuts. Barratt Developments added to recent gains as shares ticked 1% higher.

XL Media revenue fell sharply in 2023 as the advertising group’s North American declined heavily.

Group revenue for the year sank to $50m from $70m, a decline of 70%. The decline in revenue game despite expanding its footprint to additional states during the period.

The poor sales performance ultimately hit profits and adjusted EBITDA dropped 36%.

The company disposed of a number of website during the year and will focus on costs going forward as the top line disappoints.

“Following the announcement of the sale of the Europe Sports and Gaming business on 1 April 2024, we are focused on driving organic revenues in the North America market, while continuing both to expand our footprint in preparation for new state launches when they happen, while also right sizing the Group’s cost base for 2025,” said David King, Chief Executive Officer of XLMedia.

Land Securities shares fell on Friday after the Real Estate Investment Trust said it would wipe around £625m off the value of its property portfolio as it contends with higher interest rates.

Despite the write-down, the company revealed positive trends across central London rents, which may have helped limit Friday’s share price losses.

Land Securities shares were down 1.6% at the time of writing.

“Real estate specialist, Land Securities Group, has reported a pre-tax loss of £341m as it writes down the value of its property portfolio. There has been a negative step change in market conditions and investor sentiment, which has led to a significant valuation deficit,” said Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown.

“For all the challenges, the group sees brighter spots on the horizon. The group’s said property valuations should move up from here, but this won’t be enough to boost earnings per share above last year’s levels”

The company has been hit hard by the higher interest rate environment over the past year but with the outlook for rates now more stable, the company may be past the worst of it. Land Securities said they were encouraged by improving investor sentiment around property which they attribute to the outlook for rates.

That said, trends in working from home may continue to drag on valuations of their West London office portfolio.

“High rates and inflation have been Landsec’s worst enemy in recent times and this is demonstrated by another hefty loss for the year, albeit a smaller one than expected,” said Adam Vettese, analyst at investment platform eToro.

“This is in addition to the burden of the pandemic hangover threatening to decimate office rent due to the increase of hybrid working. The firm has had to battle these challenges by optimising their portfolio, disposing non-performing assets such as their hotel portfolio which managed to give the coffers a £400m boost.

“The firm will be hoping that this week’s softer than expected inflation print in the US gets us one step closer to kicking off rate cuts which can’t come soon enough as refinancing of cheaper debt acquired pre-2022 remains a hurdle to overcome.”

Cornish Metals shares surged on Friday after the company released a statement saying they saw no reason for recent selling.

The company said there were no operational developments that would warrant the share price decline and reiterated the key findings of a recent assessment of after-tax Net Present Value $20m and Internal Rate of Return of 29.8%.

Cornish Metals shares were 15% higher at the time of writing on Friday.

“The Company is unaware of any reason for the selling pressure on the Cornish Metals share price this week. We believe the PEA reported on April 30, 2024 is robust and represents a strong foundation for further evaluation of the South Crofty tin project,” said Ken Armstrong, Interim CEO of Cornish Metals.

“South Crofty is fully permitted for mining through to 2071 and has planning permission in place to construct a process plant and other surface facilities on Company owned land adjacent to New Cook’s Kitchen shaft. South Crofty is a strategic high-grade tin asset that is well positioned to take advantage of the strong demand for tin, which we believe due to its critical nature and continued supply uncertainty, is likely to continue to trade above the PEA tin price assumption of US$31,000 per tonne.”

With the significant backing of the Oman-based Eclipse Investments, the £65m capitalised Aminex (LON:AEX) appears to be looking forward to reporting ‘decisive’ news in 2024. 

The Dublin-based company is engaged in the exploration, appraisal, development, and production of oil and gas assets, reserves, and resources.  

The company operates through Producing Oil and Gas Properties, Exploration Activities, and Oilfield Services segments and has demonstrated an ability to find, appraise and develop fields successfully from initial concept through to production.  

Encouraged By The Government 

Tanzania has been the focus of Aminex’s oil and gas activities with a long-standing belief that the area has been under-explored for hydrocarbons and shows potential for oil generation and subsurface entrapment. 

Its properties include the Kiliwani South (63.83% operated interest), Ruvuma PSA (25% non-operated interest), and Nyuni Area PSA (100% operated interest) exploration licenses which are located primarily in Tanzania. 

The company has a partnership with ARA Petroleum, which is providing it with the technical and financial capacity to realise the full potential of the Ruvuma PSA, including the ongoing appraisal and development of the Ntorya gas discovery situated within the licence area. 

The last year or so has seen Aminex achieve a number of potentially beneficial ‘milestones’ including the processing of 3D seismic data from the largest onshore seismic campaign in East Africa covering 338km² around Ntorya. 

Aminex has a 25% non-operated interest and is carried up to a maximum $140m gross capex ($35m net), which should cover all net capex through to the commencement of commercial gas production from the Ntorya gas field.   

Recent Financing 

The company’s largest shareholder, Eclipse Investments, with 27.39% of the equity, has agreed a funding facility for $3m, ensuring Aminex has sufficient working capital available after 2024 and until the commencement of revenues from Ntorya gas sales. 

Eclipse Investments llc 

Through innovative asset management Eclipse Investments, which has delivered superior returns over the years. has controlling interests and partnerships in leading companies that are involved across the Energy, Chemical Manufacturing, Electrical Equipment Manufacturing & Product Integration, and Fast-Moving Consumer Goods sectors.  

The investment vehicle, which is owned 100% by the highly respected The Zubair Corporation from Oman, concentrates on assets beyond Oman and now holds investments in entities operating in the UAE, UK, Norway, Saudi Arabia, Turkey, Tanzania, and India. 

Broker’s View 

David Mirzai at WH Ireland recently commented that the previously reported pipeline delays have shifted the timeline to first gas, the Tanzanian Government clearly attaches great importance to the role the Ntorya gas project will play in improving domestic energy security. 

He noted that Aminex’s share price surged last month after the Tanzanian Energy Minister reportedly told journalists that a development licence would shortly be issued for the Rovuma PSA partners, upon receipt of which he would expect the operator to contract a rig to undertake the drilling of the CH-1 appraisal well.  

Aminex has a 25% non-operated interest and is carried up to a maximum $140m gross capex ($35m net), which should cover all net capex through to the commencement of commercial gas production from the Ntorya gas field.   

Analyst Dragan Trajkov at Shard Capital reckons that recent announcements have further strengthened his investment thesis and despite some recent market recognition, he expects that in the next 12 months the group’s shares will continue to move towards his company’s ‘fair value’ range, especially if progress from the field continues to support first gas in mid-2025. 

Shard Capital’s ‘fair value’ is 2.0p to 2.5p, looking for up to 60% price growth in due course from the current 1.55p. 

My View 

Between now and the company’s London AGM on Thursday 27^th June there could well be a continuation of the recent price climb but do expect some occasional corrections along the way offering cheaper buying opportunities.