US inflation gauge sees sharp rise on speedy recovery

Liam Roche
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US inflation gauge sees sharp rise on speedy recovery

Fed says price rise is temporary despite biggest year-on-year rise since the 1990s

The US inflation gauge, a measure followed by the Federal Reserve to monitor price levels, showed the largest year-on-year rise since the 90s in April.

The news has created further speculation about inflationary pressures.

The personal consumption expenditure index, which avoids using more volatile energy and food prices, is up by 3.1% in April year-on-year.

Compared to a 1.9% increase in March, it is a sharp rise, and also surpassed the consensus forecast by 0.2%.

Month-by-month, the personal consumption expenditure index rose by 0.7% in April and 0.4% the month before.

This puts the core price index significantly beyond the Federal Reserve’s target of 2%.

The Fed has reasserted its view that the figures show a short-term trend, including the stimulus packages and supply-chain bottlenecks.

Fiona Cincotta, senior financial markets analyst at City Index, says the Federal Reserve is expected to view the jump in PCE prices as temporary, rather than being spurred to raise interest rates.

“Core PCE, the Fed’s preferred measure of inflation, jumped to 3.1% YoY in April, up from 1.8% in March and ahead of the 2.9% forecast.”

“The futures were already trading higher ahead of the release and barely reacted to the high inflation numbers.”

“Fed officials have been consistently reassuring the market that they are willing to look through a period of high inflation, which they consider to be temporary. This was particularly the case after CPI hit a 13 year high of 4.2%.”

“This strong rise in PCE inflation could make it more difficult for the Fed to defend its dovish policy, but for now the market doesn’t appear concerned. High growth tech stocks which are usually dragged lower by fears of the Fed moving early have held onto gains. The US Dollar also remains elevated.”

Energy prices surged by 24.8% year-on-year while food prices increased 0.9% over the year.

Burberry Share Price: growth in China despite prior backlash

Liam Roche
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Burberry Share Price: growth in China despite prior backlash

Burberry Share Price

If not for a backlash from China over alleged human rights abuses, the Burberry share price (LON:BRBY) could be a lot closer to its all-time-high of 2,329p, reached in January 2020. Nonetheless, the Burberry share price has rebounded impressively despite the unusual challenges of the past year and beyond. Since 16 March 2020, it is up by 72.6%, while it has gained 19.8% since the beginning of the year. The Burberry share price has moved up by nearly 2% at the time of writing, buoyed by Chinese demand. However, investors will remain curious about its prospects in a key market, as well as its wider performance.

Results

The Burberry share price dived, as seen above, following the release of its financial results. Like any other retailer, Burberry was disrupted as stores were closed down across the world.

Regardless, Burberry reinstated its dividend to its level prior to the pandemic, as the luxury fashion group said its revenues were slowly beginning to recover. The dividend is set to be priced at 42.5p per share, which means the yield stands at just over 2%.

Despite its suggestion that the luxury fashion brand will perform well during the second half of this year, Burberry’s overall sales fell to £2.3bn, a drop of 11%, for the year to March. Furthermore, while Burberry’s Q4 revenues rose by 32%, they were down by 5% compared to the same period in 2019.

On the other hand, rivals, including Hermès and LVMH, posted revenues that returned to pre-pandemic levels.

Burberry warned that its profit margins will take a hit due to planned investment. This does not bode well for investors with a shorter-term outlook, while it could bolster the company’s already solid foundations over the longer-term.

China

The middle class is growing at a rapid rate in China, which means the country is of high importance to Burberry.

Compared to two years ago, Burberry’s Q4 sales were up in China by more than 53%. Having said that, it remains unclear what the future holds for Burberry in the country. Julie Brown, the FTSE 100 fashion brand’s head of operations and finance, omitted details over the brand’s results after March, when it was disrupted by the Chinese boycott of a number of major western brands.

Marco Gobbetti, chief executive, told analysts on call that the impact from the boycott “has been relatively limited”, the Financial Times reported.

As the Burberry share price moved up today, led by the Chinese recovery, the company’s long-term outlook may be bullish. But that could be dependent on the company staying on the right side of the authorities.

ESG Investing with Will Goodhart, Chief Executive, CFA Society of the UK

UK Investor Magazine
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ESG Investing with Will Goodhart, Chief Executive, CFA Society of the UK

The UK Investor Magazine Podcast is joined by Will Goodhart, Chief Executive, CFA Society of the UK, for in depth discussion around ESG Investing.

CFA Society of the UK is the local member society of CFA Institute, the global association of investment professionals, and represents 12,000 investment professionals in the UK.

ESG Investing has exploded in popularity over the past two years and we begin by looking at what sparked this, before moving onto whether momentum in ESG themed investing can continue.

There is attention paid to the need for all investing to become ESG investing, not only because of the positive outcomes of doing so, but the long term alpha ESG investing will provide.

With Green Energy investing and climate change undoubtedly the most pressing issue for the world currently, we explore subjects such as diversity and governance and their role in responsible investing.

We finish by breaking the E,S and the G in Environment, Social and Governance and which of the three are set for the greatest level of interest among the investment community over the next five years.

Rolls-Royce unveils £90m indoor engine test lab

Liam Roche
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Rolls-Royce unveils £90m indoor engine test lab

Rolls-Royce testbeds will simulate flying conditions at high altitude

Rolls-Royce has confirmed that it opened a new indoor testbed at the cost of £90m, which took three years to construct.

The new equipment, that goes by the name of Testbed 80, will measure the performance of the FTSE 100 aviation company’s engines for long-haul passenger aeroplanes.

It will also develop the newest generation of UltraFan engines, evaluate the impact of sustainable fuels and aid the development of electric and hybrid systems for future planes.

Warren East, Rolls-Royce chief executive, commented: “Testbed 80 is the largest facility of its type in the world. It is not only big — it is also smart, and features the most advanced testing technology we have ever used.”

“This incredible piece of infrastructure is a very visible sign of our commitment to this site and secures the future of Derby as the home of large-engine development, continuing a history that began in the late 1960s with the RB211 [forerunner of the current family of Trent engines].”

The purpose of testbeds are to simulate flying conditions at high altitude and test the performance of engines under normal circumstances and in the event of a hazard.

Because it is located in a residential area in Derby, the facility must be sound-proofed, so as not to disturb residents.

Opening the site, Kwasi Kwarteng, the business secretary, said: “This testbed shows the UK remains a global leader in aeroengine technology [and] will create high skilled, well-paid jobs for decades to come.

“The innovation of great British companies such as Rolls-Royce and the entire aerospace sector are central to our plans to build back better from the pandemic and end our contribution to climate change by 2050.”

At lunchtime on Friday the Rolls-Royce share price (LON:RR) is up by 1.33% to 108.48p. Since the beginning of the year the Rolls-Royce share price is down by 2.45%

Increase in UK coronavirus cases puts reopening in doubt

Liam Roche
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Increase in UK coronavirus cases puts reopening in doubt

Johnson thinks restrictions will be lifted but adds that “we may need to wait”

Up to 75% of all new Covid-19 infections involve the Indian variant according to UK health secretary Matt Hancock.

Hancock confirmed that cases were on the rise across the UK, as more than 3,500 new cases were identified on Wednesday.

There are increasing doubts over the probability of the government lifting all restrictions as initially targeted on June 21.

Prime minister Boris Johnson said on Thursday that he suspects restrictions will be lifted, judging by the data, but added that “we may need to wait”.

Data from Public Health England is showing different case across across various regions of the UK.

Focused and rapid testing is being carried out in the areas most affected by the new variant, according to Hancock. Over 17,000 vaccines have been distributed in Bolton over the past week.

Dr Jenny Harries, chief executive of the UK Health Security Agency, addressed the briefing, saying that a lot of the outbreaks were centred around “focal points”, such as schools or faith buildings.

Harries added: “The cases actually do look as though they are starting to plateau out but the spill-over into community transmission in local areas is an important one.”

Increasing cases numbers were not “generally translating into increased cases of hospitalisation and definitely not into deaths,” she said.

“So the key message there is… if we can hold it while the vaccination programme gets rolled out, we stand a much better chance of getting through this session.”

Joshua Mahony, Senior Market Analyst at IG, discussed rising Covid cases delaying reopening plans:

“Joe Biden is expected to announce an impressive $6 trillion budget today, but much of that may never come to fruition. France has dropped into recession after a downward revision to Q1 growth. UK reopening plans could be hampered by the rise in the Indian Covid variant.”

“European markets are on the rise in early trade today, with traders anticipating the announcement of a huge spending plan from Joe Biden today. Plans for a $6 trillion budget will bring many winners, although it makes sense to take any of today’s announcements with a pinch of salt.”

“Despite Biden enjoying a slim majority across congress, the ability to get his original plan across the line is doubtful. Thus while markets will likely enjoy an optimistic end to the week, it could be just a matter of time before we see a heavy dose of reality over just how much of that $6 trillion will see the light of day.”

FTSE 100 edges higher led by China-focused stocks

Liam Roche
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FTSE 100 edges higher led by China-focused stocks

The FTSE 100 is up by 0.25% on Friday, or by 14.9 points, to 7,034.57, led by China-focused stocks. HSBC, Burberry and Prudential all have major operations in China and made solid gains as the week draws to a close.

The Chinese economy remains on the path to recovery, despite some hiccups along the way. Albeit below expectations, retail sales in China rose by 17.7% in April compared to the month before as the country continues on its path to recovery. While online sales of consumer goods jumped by 23.1% during the first four months of the year compared to the year before. Urban unemployment fell to 5.1% in April, down from 5.3% in March.

Burberry has previously posted strong results from mainland China despite facing a backlash from authorities over its accusations of abuses in Xinjiang.

Burberry said its full-price sales rose 63% in the last quarter driven by mainland China, Korea and the United States.

“UK stocks have spent much of the past week trading sideways with a lack of real catalysts to push them firmly in either an upwards or downwards direction and today’s modest move higher for the FTSE 100 is very much in that vein,” says AJ Bell investment director Russ Mould.

“While the pound is at its highest level in three years against the dollar at $1.42, while the FTSE 250 and FTSE Small Cap indices, which have more of a domestic focus, have outperformed both the more globally-orientated FTSE 100 and some other major stock markets around the world, notably the technology-heavy Nasdaq index which had previously been on a supercharged run,” Mould added.

Whether this trend can be sustained may come down to the battle between vaccines and variants and if the UK can stick to a road map which would see nearly all coronavirus restrictions lifted in a little over three weeks’ time.

FTSE 100 Top Movers

Barratt Developments (2.68%), Taylor Wimpey (2.53%) and SSE (2.40%) are heading up the FTSE 100 at the midway stage of the morning session.

At the other end, Polymetal International (-2.77%), Antofagasta (-2.47%) and Sage Group (-1.8%), are keeping the index in check.

Curve secures nearly £10m in largest ever equity raise on Crowdcube

Liam Roche
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Curve secures nearly £10m in largest ever equity raise on Crowdcube

Curve fundraise easily surpassed the £6m raised during its 2019 crowdfund

Curve, the mobile payments app, has closed the largest ever equity raise on Crowdcube, smashing a number of records in the process.

The raise finished at 3pm on Thursday, hitting close to £10m in funding from a total of 11,795 investors.

Curve was the fastest company in history to raise £6m on Crowdtube, achieving the marker in under three hours as it went live on 25 May.

The fundraise easily surpassed the £6m raised during its 2019 crowdfund.

The recent campaign was aimed at ensuring Curve customers as well as retail investors follow in the path of some of technology’s leading institutional investors.

More than 4,000 retail investors took part in the first 60 minutes of the crowdfund, smashing Curve’s initial target of £1m within just 10 minutes of the round opening.

The funds raised this week follow the £132m Curve has raised in cash and capital commitments to-date to support its rapid growth, including the capital secured in the super app’s recent successful Series C, led by IDC Ventures, Fuel Venture Capital and Vulcan Capital. 

Curve will use the funds raised by crowdfunding and its recent Series C round to execute its ambitious growth strategy, focussed on its international expansion and product innovation. This strategy includes the rollout of its award-winning Curve OS platform in the US, broadening its European reach, and the forthcoming launch of Curve Credit in the UK, and in Europe.

Shachar Bialick, Founder and CEO of Curve, said: “Ever since our last crowdfund in 2019, our customers have been requesting another opportunity to take a share in Curve. So we launched this campaign to give the public a chance to join us as we embark on the next stage of our exciting journey, when we reveal Curve Credit to the world and launch in the US.”

“We’ve been blown away by the level of interest we’ve seen over the past three days, and I’m so excited to welcome nearly 12,000 investors on board.” 

EQTEC to raise funds to speed up rate of growth

Liam Roche
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EQTEC to raise funds to speed up rate of growth

EQTEC finance director Gerry Madden set to retire this year

EQTEC (LON:EQT), the gas company, will raise up to £15m via a share placing and subscription at 1.5p per share.

The AIM-listed company said the funds raised by the share issue will be allocated to supporting sustainable growth, entering new markets and enhancing the company’s capacity.

EQTEC outlined plans to take part in a settlement and termination agreement with Syngas Technology Engineering, whose owner is a director in the EQTEC board.

Syngas will be entitled to ongoing royalties on sales of EQTEC’s gasifier technology until the firm has received a max of €2.88m.

As of now Syngas has received €436,000 as part of the arrangement.

EQTEC has also confirmed that the company’s finance director Gerry Madden will retire. The firm has begun the process of finding a replacement, while Madden agreed to stay on during the transition process.

David Palumbo, CEO of EQTEC commented: “Gerry has been with EQTEC for 14 years, since its predecessor company was a developer of clean energy projects. He has been a steadfast custodian of the business through multiple stages of its development and he leaves it in the best position of its history. Gerry was Finance Director at the initial admission of the Company in 2008 and served as CEO between 2011 and 2018, after which he resumed the role of Finance Director and Company Secretary.”

“He steered the Group through its start-up days, the credit crunch of 2008, the ensuing recession and on to the successful acquisition and integration of EQTEC Iberia. We thank Gerry for his loyalty, care and attention to the Group over the longest tenure of anyone in the company. In the future, we will look forward to receiving his advice and in wishing him a well-deserved retirement.”

The EQTEC share price is down by 7.4% to 1.56p per share at early morning trading.

Panthera Resources begins drilling in Burkina Faso

Liam Roche
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0
Panthera Resources begins drilling in Burkina Faso

Pantthera Resources share price up by over 6%

Panthera Resources (LON:PAT), the gold development company, confirmed on Friday that its planned 5,000m drilling programme has commenced as the Labola (Wuo Land) Project in Burkina Faso.

Drilling will primarily support a maiden resource estimate, while several exploration targets will also be drill tested.

Assay results are expected by Q3 of 2021.

Panthera also said its drilling will test a subset of results found by High River Gold Mines and Tauras Gold between 2008 and 2012. The drilling amounted to 65,556m in 541 holes, Panthera added.

Additionally, the drill programme will look at the coarse gold component of the mineralisation via the leach technique “LeachWell” to see if historical assay results may have underreported gold grades.

Other work at Labola in support of the maiden resource will include: re-logging, quality control, satellite and terrain models and identifying artisanal workings and how much material they have moved.

The area contains numerous artisanal workings over at least 14,000m strike, said Panthera, which appear to be targeting high-grade shoots within individual quartz veins.

The Panthera resources share price is up 6.67% 14.40p per share.

The company confirmed recently that it would not extend a term sheet with Galaxy Gold Mines Pvt Ltd following the recent change in the Indian mining law.

Panthera Resources, incorporated in the UK and Wales in 2017, is focused on exploration and development of its gold projects in India and West Africa and the optimisation of other mineral properties.

Bitcoin creeps back to $40,000

Liam Roche
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Bitcoin creeps back to $40,000

Bitcoin remains up by 38.2% since the turn of the year

Bitcoin, after another chaotic month, has made its way above $40,000, as it seems to be recovering somewhat after a sell-off over the weekend.

At the time of writing, one bitcoin is valued at $40,188.8, 2.26% up in the last 24 hours.

That is having dropped below $38,000 during the same period of time.

Since the beginning of 2021 bitcoin is up by 38.2%.

Recent downturns came thick and fast as a range of factors, including announcements by the Iranian and Chinese governments, as well as tweets by Elon Musk, undermined the cryptocurrency’s value.

“Bitcoin’s energy consumption, and in particular, the percentage of power coming from renewable energies, has been the source of a lot of fear, uncertainty, and doubt lately, so seeing mining companies volunteering to report publicly on this is a good thing, as long as they don’t try to force any changes to the protocol without first reaching broad consensus across the entire network,” said Mati Greenspan, CEO and founder of Quantumeconomics.io.

Earlier this week news emerged that an “irresponsible” advert had been banned in the UK as it encouraged inexperienced buyers to come to the market.

A poster visible across London’s public transport network by crypto exchange Luno said: “If you’re seeing Bitcoin on the underground, it’s time to buy”.

The Advertising Standards Authority (ASA) said the advert was misleading and omitted important information regarding the potential risks involved in buying bitcoin.

“We understood that Bitcoin investment was complex, volatile and could expose investors to losses,” the ASA said. “That stood in contrast to the ad. The audience it addressed, the general public, were likely to be inexperienced in their understanding of cryptocurrencies.”

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