FTSE 100 makes a positive start as inflation worries ease; miners lead the early charge

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  • The FTSE 100 edges up 11 points
  • Sterling rises by more than a cent against the greenback
  • Greggs shares selling like hot cakes after trading update

11.45am: Stocks and drugs and sausage rolls


Considering sterling is up by more than a cent against the US dollar, the FTSE 100 has done well to eke out an 11 point gain at 7,140.


Sterling is trading at US$1.3986, up by 1.14 cents against the dollar, after the Scottish Nationalist Party failing to gain an overall majority in last week’s elections in Scotland, which some observers have suggested makes another referendum on Scottish independence less likely, or at least less imminent.


As well as sterling being stronger, the US dollar is out of favour on foreign exchange markets after Friday’s jobs numbers for April.


“The pound continued its upsurge on Monday as it climbed further above the 1.40 handle,” said Fawad Razaqzada at ThinkMarkets.


“Sterling has been boosted by optimism over the UK economy amid the big drop in Covid cases and deaths thanks to the lock-downs and vaccination success, with investors also ignoring the prospects for a second Scottish independence referendum. There were only 2 Covid-19 related deaths reported on Sunday and UK PM Johnson was expected to make a statement later, on further reopening plans. Meanwhile, Scottish National Party failed to win an outright majority in the country’s devolved parliament over the weekend; however, backing from the pro-independence Green party will enable it to push for a second referendum – something which the UK government has repeatedly said it won’t allow,” Razaqzada said.


“Investors don’t seem too concerned either as the pound climbed to a high of $1.4090 when this report was being written. Still, it is worth watching the situation closely as it could become the next big talking point in the parliament in the months ahead. Insofar as this week is concerned, pound traders will need to keep a close eye on UK GDP and other key data due on Wednesday, while the BoE’s Governor Andrew Bailey will be speaking on Tuesday,” he added.


On the corporate front, it is time to wheel out the trusty “Greggs is on a roll” after Greggs PLC (LON:GRG) shares rose 13% to 2,642p after a full-fat trading update.


“The reopening of non-essential retail has got people out of the house and Greggs has benefited from increased traffic and temporarily reduced competition from cafes and restaurants,” said Russ Mould, the investment director at AJ Bell.


“A greater number of people returning to the office will also have helped, as workers nip out at lunchtime for a sandwich and a coffee,” Mould added.


Among the small caps, Shield Therapeutics PLC (LON:ST) caught they eye, rising 9.4% to 52.5p after it appointed two new independent directors: Fabiana Lacerca-Allen and Anders Lundstrom.


Lacerca-Allen is chief compliance officer at San Francisco-based Aimmune Therapeutics, while Lundstrom is chief commercial officer at Banner Life Sciences, which is launching a new treatment for Multiple Sclerosis.


11.0am: IAG lower after “green list” announcement underwhelms


London’s leading shares are just about firmer on balance, thanks in large part to mining stocks and steel-maker Evraz PLC (LON:EVR).


The FTSE 100 was up 5 points (0.1%) at 7,135.


“The reopening trade continues to show itself in the commodities space, with base metals on the rise. China’s benchmark iron ore rallied 10% to a record high, and copper also reached a fresh record high. Strength in the commodity market inevitably feeds back down into the materials and cyclical sectors, including the miners. Rio Tinto trades at an all-time high while Anglo American and BHP Billiton trade at the highest level since before the pandemic,” said Sophie Griffiths at OANDA.


“The boom in commodity prices supports the rotation in value that has been very much in focus over the past few months,” she added.


British Airways owner International Consolidated Airlines Group SA (LON:IAG) was 1.4% lower at 210.15p as the market expressed its viewpoint on the UK government’s “green list” of travel destinations.


“While initial confusion over Grant Shapps’s decision to only name three of the twelve ‘green’ travel locations, it was soon justified when realising that just four of those 12 nations do not require quarantine upon arrival. Thus, airlines are once again on the back foot, with the hopes of a sudden surge in demand being dampened by government policy for now. Instead, airlines are having to ramp up flights to the likes of Portugal, while hoping that the list will increase as we progress through the summer,” said Joshua Mahony at IG.


9.40am: Buy a second house instead if you want to make money


The Halifax Price Index indicated UK house prices rose 1.4% in April, taking the annual increase in house prices to a five-year high of 8.2%.


The April rise follows a 1.1% increase in March, which in turn followed a zero-change month in February.


“The marked rise in house prices in April reported by Halifax ties in with stronger data from Nationwide. Nationwide reported that house prices rose 2.1% month-on-month in April, to record the largest monthly increase since February 2004. This followed a dip of 0.3% month-on-month in March. House prices had previously bounced back 0.7% month-on-month in February after a dip of 0.1% month-on-month in January, which had been the first monthly fall in house prices since last June. The year-on-year change in house prices rebounded to a four-month high of 7.1% in April after moderating to 5.7% in March from 6.9% in February and a peak of 7.3% in December, which had been the highest since November 2014,” said Howard Archer, the chief economic advisor to the EY ITEM Club.


“The housing market had been coming off the boil early in 2021 after gaining substantial momentum during the second half of 2020. The Bank of England reported that mortgage approvals for house purchases fell back to an eight-month low of 82,735 in March from 87,385 in February, 96,645 in January, 100,546 in December and 103,126 in November, which had been the highest level since August 2007. Approvals had previously risen for six successive months through to November’s more-than 13-year high from a record low of 9,486 in May 2020,” he added.


“The Chancellor announced new supportive measures for the housing market in the Budget at the start of March and latest survey evidence suggests that this has given the housing market renewed life,” Archer added.


The FTSE 100 was virtually unchanged after a solid start.


Berekeley Group Holdings PLC (LON:BKG), up 1.9% at 4,841p, was the best performing stock of the housebuilders.




8.30am: Miners lead the advance


The FTSE 100 made a tentative, but positive start to proceedings as the immediate threat from inflation evaporated with the release of Friday’s worse-than-expected employment figures.


“In an example of bad news being good news, the lower figure calmed the inflation and interest rate fears which had been overshadowing the markets’ recent progress,” said Richard Hunter, head of markets at Interactive Investor.


“Indeed, there may be evidence of a labour supply shortage in addition to blocks in the supply chain, both of which indicate that the strength of the recovery is encountering pressure points as it may be outpacing the availability of materials and workers.”


That said, the commodity traders of Asia didn’t seem to get the memo.


Regional prices for items such as rebar, the reinforced steel bar beloved by the Chinese construction industry, iron ore and copper were indicative of a super-hot recovery.


On the equity market here in the UK, the miners led the charge.


Anglo American (LON:AAL) topped the Footsie risers with a 3.3% gain followed by majors BHP (LON:BHP), Rio Tinto (LON:RIO) and Antofagasta (LON:ANTO), the Chilean copper digger. Prices were up between 2.6% and 3%.


International travel concerns grounded stock in the airlines with easyJet (LON:EZJ) off 3.7%, followed by Wizz Air (LON:WIZZ) and BA owner IAG (LON:IAG).


Proactive news headlines


Samarkand Global PLC (LON:SMK) said one of the leading delivery companies in China, SF Holding, has made a strategic investment of GBP3.15mln, through a placing of 2.7mln new Samarkand shares, as part of an effort to develop the firm’s international expansion and technology strategy.


Open Orphan PLC (LON:ORPH) said its hVIVO operation has won a GBP3mln contract to create a challenge virus that will be used to test vaccines and antivirals against new Covid variants.


Iconic Labs PLC (LON:ICON) is branching out into the drone business through a deal with shareholder Ott Ventures. Iconic is set to take a controlling stake in unmanned drone specialist, Sting Industries, through a combination of convertible notes, warrants, cash and a finance facility.


Powerhouse Energy Group PLC (LON:PHE) said its relationship with Hydrogen Utopia International could be extended beyond Poland to include Greece and Hungary, as part of a new agreement.


W Resources PLC (LON:WRES), owner of the La Parrilla tungsten and tin mine, said it received a long-awaited grant from the Junta de Extremadura government. The grant, initially awarded in March 2018 for the sum of EUR5.3mln (GBP4.6mln) has, subject to one amendment, been paid and total proceeds of EUR5.2mln have been received as settlement in full.


Oriole Resources PLC (LON:ORR) has commenced a regional mapping and stream sediment sampling programme at the Central Licence project in Cameroon. This licence covers a continuous land package of 3,592 square kilometres. To date, a total of 180 samples have been collected of a planned 1,360 sample programme. Results are expected in the second half of 2021.


Red Rock Resources PLC (LON:RRR) is exchanging its shares in Elephant Oil Ltd for shares in Elephant Oil Corp. Elephant Oil Corp is a newly incorporated entity based in the USA which has stated that it intends to raise pre-IPO capital of approximately US$2mln, followed by a larger offering and admission to trading on NASDAQ in September of this year.


European Metals Holdings Ltd (LON:EMH)(ASX:EMH) has adopted a set of environmental, social and governance protocols, following the recommendations of the World Economic Forum in Switzerland. The company will establish an ESG committee at board level, to be chaired by Ambassador Lincoln Bloomfield, who has considerable experience in this area.


Eden Research PLC (LON:EDEN) said its commercial collaborator, Eastman Chemical Company, has received authorisation from Italian regulators to sell its Cedroz pesticide in the country. Cedroz is derived from plant terpenes and designed to control root knot nematodes, pests that cause severe damage to crops in fields and greenhouses.


Panther Metals PLC (LON:PALM) said it achieved the first stage in the process of pursuing a listing of its Australian assets on the Australian Securities Exchange with the completion of a pre-IPO seed financing raising AU$300,000 (GBP167,000).


Union Jack Oil PLC (LON:UJO) told investors it has hired consultant Gaffney, Cline & Associates to produce a Competent Person’s Report for the PEDL183 which is host to the West Newton discoveries.


Polarean Imaging PLC (LON:POLX) shares jumped after the company announced a new order from an existing customer, the University of British Columbia.


Argentex Group PLC (LON:AGFX) said co-chief executive officer Carl Jani has returned to duty after a leave of absence for health reasons.


Growing pharma services group Ergomed PLC (LON:ERGO) has appointed Mark Enyedy as its new independent director.


Shield Therapeutics PLC (LON:STX) has appointed two new independent directors. They are Fabiana Lacerca-Allen and Anders Lundstrom.


Helium One Global Ltd (LON:HE1) announced that it has received notices to exercise warrants over a total of 3,891,115 ordinary shares, for which funds of GBP308,278.27 have been received by the company.


Jersey Oil & Gas (LON:JOG) was notified on 7 May 2021 that non-executive chairman Marcus Stanton sold 6,060 ordinary shares and simultaneously acquired the same number in an ISA account at the same price, with his total shareholding of 106,060 shares remaining unchanged.


Jersey was also notified that on the same day, Leslie Thomas, a non-executive director, bought 25,000 ordinary shares at a price of 159.25p per share, representing approximately 0.08% of the total issued share capital.


Over the next 24 months, investors expect there to be an increased focus on how metals are sourced and mined in a responsible and sustainable way, according to a new survey from Global Palladium Fund, where NTree International Ltd is leading the distribution and rollout of a range of metal exchange-traded commodities.


Just over 60% of small and medium-sized businesses (SMEs) are positive in their outlook for the next two years, according to a survey from MBH Corporation.


6.50 am: Footsie expected to open in the green


The FTSE 100 appears likely to open in the green, taking its cue from Asia’s main bourses.


Perversely, Friday’s lacklustre US employment data appeared to provide the buy signal with the economic hiccup easing inflationary fears haunting international markets.


On the commodities market, the price of a barrel of West Texas crude edged up to US$65 a barrel following a cyber attack on the software controlling one of America’s most important oil pipelines.


Shanghai Steel rebar futures opened 10% higher, iron ore was 7.7% higher, while copper gained 2%.


“So, while the US Non-Farm Payrolls post-mortems continue, as far as Asia is concerned, the global recovery is Thunderbirds Are Go,” said Jeffrey Halley, analyst at the forex group ONANDA.


Closer to home, Scottish National Party secured a resounding victory in the polls.


However, it was still not enough to win an overall majority at Holyrood.


The pound rose strongly against international currencies as the forex markets decided that independence had become harder for Nicola Sturgeon and her team to win.


Looking ahead, and it is expected to be another busy week for corporate news – both here at home and in the US.


Upcoming are figures from BT Group (LON:BT.A), Burberry (LON:BRBY), Greggs (LON:GRG), TUI (LON:TUI) and Disney (NYSE:DIS).


Around the markets


  • Pound US$1.404 (+0.43%)
  • Bitcoin US$59,118.40 (+1.43%)
  • Gold US$1,834.00 (+0.15%)
  • Brent crude US$68.69 (+0.41%)

6.50am: Early Markets – Asia / Australia


Stocks in the Asia-Pacific region were mixed on Monday as iron ore futures in Singapore jumped more than 10% to hit a fresh record high of US$226 a tonne while gold climbed to a three-month high of US$1840 an ounce.


The Hang Seng index in Hong Kong dipped 0.45% while the Shanghai Composite in China slipped 0.37%.


In Japan, the Nikkei 225 rose 0.47% and South Korea’s Kospi jumped 1.59%.


Shares in Australia advanced, with the S&P/ASX 200 trading 0.95% higher near its record high.


READ OUR ASX REPORT HERE


Proactive Australia news:


Brookside Energy Ltd (ASX:BRK) (OTCMKTS:RDFEF) has passed a major milestone with Jewell Well in the SWISH Area of Interest (AOI) of Oklahoma’s world-class Anadarko Basin successfully spudded on the evening of May 8, 2021, by Latshaw Rig 14 after completion of rig-up and equipment testing.


Rimfire Pacific Mining NL (ASX:RIM) has drilled a diamond hole at the Transit prospect in central NSW to follow up an intersection of 61 metres at 10 g/t gold from 60 metres returned in a reverse circulation (RC) hole.


Kingston Resources Ltd (ASX:KSN) (FRA:RZZ) has received encouraging new gold and silver results from an ongoing 8,000-metre resource drilling program at Kulumalia, at the southern end of the main Umuna orebody of its flagship 3.6 million ounce Misima Gold Project in PNG.


Pantoro Limited’s (ASX:PNR) (FRA:RKN) ongoing drilling at Scotia Mining Centre within the Norseman Gold Project has returned several deep high-grade intersections from inside and outside of the inferred mineral resource envelope.


Matsa Resources Limited (ASX:MAT) (FRA:KB2) samples have revealed extensive gold anomalism with a peak value of 10.95 g/t gold at Devon Prospect within Lake Carey Gold Project in Western Australia.


Twenty Seven Co Ltd (ASX:TSC) has closed its partially-underwritten renounceable rights issue strongly oversubscribed, raising around $2.7 million.


Perpetual Resources Ltd (ASX:PEC) has signed a memorandum of understanding (MoU) with a supplier of end product inputs to a range of high-end glass producers in China for the purchase of 400,000 tonnes per annum of high-grade silica sand from the Beharra Project in Western Australia.


Comet Resources Ltd (ASX:CRL) has received a drilling permit for the Santa Teresa Gold Project in Baja California, Mexico, paving the way for the start of a proposed 2,000-metre diamond drilling program later this quarter.


Castillo Copper Ltd (ASX:CCZ) (LON:CCZ) (FRA:7OR) is set to begin its aggressive 2021 exploration program at Mt Oxide Copper Project in northwest Queensland coinciding with a “massive global transformation” in the copper market.

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