FTSE 100 driven higher by miners as precious metals prices soar

The price of gold is up 20% (US$37.40) at US$1,932.50 an ounce this morning while the price of silver has soared 3.8%.

  • FTSE 100 index jumps 177 points
  • Gold and silver prices surge
  • easyJet lower after broker downgrade

10.40am: Banks and housebuilders left behind

Mining shares continue to drive London’s blue-chip benchmark higher.

The price of gold is up 20% (US$37.40) at US$1,932.50 an ounce this morning while the price of silver has soared 3.8%.

Not surprisingly, that has proved a boon to precious metals miners (), which is up 9.4% at 1,235.5p and the best performer in a buoyant mining sector.

As a result, the FTSE 100 is up 177 points at 6,637, despite UK-focused banks and housebuilders getting the cold-shoulder in this post-Brexit New Year.

PLC () is off 3.4% at 162p while PLC () is down 2.5% at 35.53p. In the housebuilding sector, PLC (), off 1.4% at 163.5p, is the weakest performer.

“With Brexit finally here, there are precious few signs of initial difficulties allaying some of the fears over what the eventual exit could look like. While there is typically plenty of speculation over what Brexit could look like, the deals focus on goods over services means that it may take some time to truly gauge how much of an impact this break up will have upon the economic growth prospects,” said Joshua Mahony at .

“Commodity prices are enjoying a lucrative start to the year, with precious metal gains being followed up by similarly impressive upside for energy prices. Dollar weakness has been seen throughout the FX market as traders prepare for a year of economic recovery; however, while the likes of gold and silver are often seen as havens, they often perform best in the years following a crisis as highlighted by the 2009-11 bull-run.”

The roll-out of vaccines, rather than the alarmingly rapid increase of coronavirus infections, seems to be driving the share price performance of package tours operator (), which is up 9.6% at 502.6p.

The same generosity of spirit is not being extended to no-frills airline easyJet PLC (), which is 0.9% lower at 822.2p after Citigroup issued a “sell” note, abandoning its previously neutral stance. The price target was cut to 650p from 750p.

The same broker upgraded British Airways owner International Consolidated Airlines () to ‘buy’ with the price target cranking up to 195p from 150p; the shares currently trade at around 162.65p, up 1.9%.

9.55am: Manufacturing PMI rises as companies stockpiled ahead of Brexit

The seasonally adjusted IHS Markit/CIPS Purchasing Managers’ Index (PMI) rose to a three-year high of 57.5 in December, up from 55.6 in November.

The level of the PMI was mainly boosted by a marked lengthening of suppliers’ delivery times and a substantial increase in stocks of purchases as part of preparations before the end of the Brexit transition period, according to IHS Markit.

“Customers, especially those based in the EU, brought forward purchases, boosting sales temporarily. It seems likely that this boost will reverse in the opening months of 2021, making for a weak start to the year. Note also that the December PMI data were collected prior to the border closures, which will have led to further logistics and production disruptions for many companies,” said Rob Dobson, a director at IHS Markit, which compiles the survey.

“Worryingly, the manufacturing sector was already beset by near-record supply-chain delays even prior to the closure of -Calais shipping. Manufacturers reported freight delays – especially at ports – plus shortages of certain raw materials and a lack of supplier capacity. Vendor lead times, a bellwether of supply-chain pressures, lengthened in December to a similar extent to during the first wave of the pandemic,” he added,

Duncan Brock, the group director at the Chartered Institute of Procurement & Supply (CIPS) said: “both UK and European firms stockpiled goods and materials at a fair lick in an attempt to sideline further disruption this winter”.

“This rush to secure supplies meant already stressed supply chains paid the price with some of the longest delays in the near 30-year survey history. Bunged up ports caused backlogs to rise to levels not seen for a decade and optimism for the year ahead dropped to a six-month low as the challenges for manufacturers just kept coming.

“After a severely turbulent year, UK makers still have a great deal to worry about. Job numbers continue to fall, and material shortages have resulted in the highest cost inflation since 2018. The sector is holding its breath until the terms of the new deal are fully understood and whether new business can be sustained in the same way in a post-Brexit marketplace,” Brock added.

9.20am: Onwards and upwards

The FTSE 100 has flown out of the traps on the first day of trading of the New Year.

London’s index of leading shares was up 136 points (2.1%) at 6,596, with (), up 26% at 1,425.5p, leading the advance after it rebuffed a bid approach from its partner in the US, (NYSE:MGM).

“Global stock markets enter 2021 at or near all-time highs despite ongoing uncertainty around the pace of recovery from the pandemic and the threat of fresh lockdowns lasting well into the spring. Despite the anxiety around when we get back to normal, the major fears of last year have receded and liquidity remains strong,” said Neil Wilson at markets.com.

“There is a general risk-on mood and vaccine positivity could be a factor – the UK approved the use of the Oxford University/Astra Zeneca vaccine, with half a million doses ready today. It will allow a faster easing of restrictions, but the country looks likely to endure tougher restrictions in the meantime. We could also say that the lack of chaos/Armageddon/doomsday from Brexit is also a factor. Indeed after a fairly muted response in the FX markets to news of the deal on Christmas Eve, following the UK’s leaving the EU properly on Hogmanay, sterling has headed higher,” he noted.

(LON:FEG), the company formerly known as Wolseley, has agreed to sell Wolseley UK, its UK based heating and plumbing distribution business, to Clayton, Dubilier & Rice, a global private investment firm for net cash consideration of around £308mln.

The news got a cool reception with the shares defying the general trend, sliding 0.4% to 8,852p.

8.45am: Let’s hope this is the 2021 way

The FTSE 100 opened the first session of the new trading year with a roar – and in doing so regained the losses posted in the final session of 2020.

The index of UK blue-chips opened 130 points to the good on Monday morning at 6,591.41.

Coronavirus vaccine hopes far outweighed the prospect of further lockdown restrictions with the /Oxford inoculation roll-out starting later Monday.

On the currency markets, the pound reacted positively to the Christmas Eve Brexit deal, which has helped calm nerves, though the major star was Bitcoin. It soared to a new high of US$34,000 per coin on Sunday, representing a 75% jump in the last month and a 360% advance in the past year.

Turning to the London Stock Exchange, Entain () was the most notable feature as the Ladbrokes and Coral bookmakers owner advanced 26% after an £8.1bn bid approach from MGM Resorts.

Following in its wake were the miners, led by the precious metals groups Polymetal () and Fresnillo (), which were up 5.5% and 4.9% respectively.

Glencore (), Anglo American () and BHP () mustered gains of 3.5%-4.1% amid hopes for a vaccine-led economic bounce-back, which some analysts expect will spark a mini natural resources boom.

There was some early but mild profit-taking in the banking and house building sectors, which both are perceived beneficiaries from an orderly Brexit.

There are also some question marks around the settlement for the financial services sector, which will have to wait for the EU to grant a form of recognition known as equivalence.

NatWest () led the fallers with a 2% decline, while Lloyds () was off 1.8%.

Proactive news headines:

 () () said top-line data will be available later this month from its recently-completed clinical trial in coronavirus (COVID-19) patients that received its nasally-administered monoclonal antibody, Foralumab. Anecdotal feedback from the Brazil study, carried out in collaboration with the Harvard Medical School and Santa Casa de Misericórdia de Santos Hospital, was “positive and suggests that the treatment was well-tolerated”, the company said. Tiziana added that the scientific approaches used “could potentially be effective against SARs, MERS, and all variants of coronaviruses”.

 () has announced the first pour of gold and silver at its Mineral Jackpot property. The company produced a doré bar as a pilot exercise using material from test spoil heaps on the Mineral Jackpot property, which is in Mineral County, Nevada. The success of the trial proves the concept of being able to extract gold and silver from up to 12,000 tons of material available from 38 spoil heaps on the property, Great Western said.

Sirius Real Estate Limited () said it has completed transactions for three business parks in Germany totalling €26mln (£23.3mln) which it said will generate a total of €1.9mln (£1.7mln) of annualised net operating income. The FTSE 250 firm said the acquisitions comprise two previously announced purchases in Norderstedt, Hamburg for €9.1mln and in Nuremberg for €13.7mln, as well as a new acquisition for €3.2mln immediately adjacent to its existing Mannheim II business park. Sirius said the acquisitions have been acquired at an “attractive” blended net initial yield excluding costs of direct vacancy of 7.2% and will provide a mix of around two-thirds production and storage space and one-third out-of-town office space.

Zephyr Energy PLC () has told investors that the drill crew for its State 16-2 well in Utah has been operating around the clock since the December spud and progress to date is fully in line with expectations. The company also noted that following the spud it subsequently received the third US$600,000 tranche of the US$2mln grant funds allocated by the US Department of Energy. A final tranche of US$200,000 is due once drilling operations are complete. Zephyr highlighted that its strategic goal for 2021 is to establish production and positive cash flow, either with its existing assets or through acquisition.

 PLC () has updated on exploration work at the Ditau project in Botswana. Ditau, which includes two prospecting licences held in a joint venture with  (), is prospective for rare earths. The group said the first stage of orientation work at Ditau is now complete, including geophysical and geochemical surveys.

i3 Energy PLC () said it has relinquished UKCS licence P.1987 in the North Sea., cutting its licence fees outlay. The licence was relinquished at the end of its two-year second term; to move into the third term of the licence an approved field development plan would have been required. Licence P.1987, which encompasses UK Block 13/23d contains contingent resources that have been evaluated as sub-commercial by i3 and in an ‘independent competent person’ report and as such do not represent a viable commercial development, the company said.

() has announced the US$850,000 settlement of a dispute with TGS-Nopec Geophysical Company (TGS), Previously, TGS claimed uplift payments from Jersey Oil and Gas totalling US$1.05mln, though this was challenged by the company. Since then, hearings took place in Norwegian courts and, based on legal advice, a settlement was subsequently negotiated.

 PLC () has said it is fast-tracking the expansion of primary graphite output from its Vatomina and Sahamamy projects in Madagascar. The company is on track to commission Vatomina in the second quarter of 2021 and to build production to 6,000 tonnes per year. This will take capacity across both projects to 9,000 tonnes per year of flake graphite output.

 () said it has spent around A$146,000 on increasing its stake in  to around 17.72%. The investor in natural resources bought 1.23mln shares in the Aussie-listed gold explorer at an average price of around A$0.1193 a share. Southern Gold has a substantial portfolio of high-grade gold projects in South Korea that are largely greenfield epithermal gold-silver targets in the south-west of the country, Metal Tiger told investors.

 () has provided an update on historical development cost reimbursement negotiations with China Machinery Engineering Corporation for work on the integrated Ncondezi 300MW coal-fired power project and coal mine in Tete, Mozambique. “It is with great pleasure that we update investors on the positive progress regarding agreement of project historical development costs to be reimbursed to the company at financial close,” said Ncondezi chief executive Hanno Pengilly in a statement. “Following an extensive third-party audit review of the company’s historical costs over a 10 year period, and following successful negotiations with CMEC, Ncondezi has been able to demonstrate US$26.7mln of historical expenditure on the project.”

 () has agreed to sell its interest in the Welch project, Texas, in a cash deal worth US$420,000, after a prior deal failed to close. The new deal is with Steadfast Energy Partners LLC and Silver Dollar Energy Investments LLC. This transaction is expected to close on January 15, 2021. The company pointed out that project ranking in its recent strategic review prioritised assets with lower operating costs.

 () has agreed with Moydow Holdings Ltd to extend the date for completion of the sale of the Kalaka gold project to Moydow, to January 14, 2021. While substantial progress has been made, the extension of time is required due to the limited progress over the holiday period. On July 22, 2020, Panthera announced that it had entered into a conditional sale and purchase agreement to divest its interests in the Labola gold project in southwest Burkina Faso and the Kalaka gold project in southwest Mali to Moydow. 

 () said that following a placing in December it has redeemed all remaining convertible secured loan notes and convertible unsecured loan stock and has also fully repaid the mezzanine loan facility from RiverFort and YA II. The AIM-listed firm said there were no conversions of the loan notes and that the repayment of the debts, totalling around £2.6mln, will strengthen its balance sheet and also result in an annual saving of around £0.3mln in interest and fees, which it said was a “major objective” of the recent £5mln placing that was completed on December 22, 2020.

 (), a world-leading gasification technology solutions company for sustainable waste-to-energy projects, announced that it has agreed an unsecured term loan facility of £1.25mln with Altair Group Investment Limited, a substantial shareholder in the company. The loan facility is for a term of 12 months and the principal and any accrued interest are repayable in full on December 31, 2021, but the company can repay the loan early without penalty. The facility is unsecured and has a coupon of 6% per annum, payable quarterly in arrears. It will be used to pay all sums due to Riverfort Global Opportunities PCC Ltd and YA II PN, Ltd in full and final settlement of amounts owed to them, releasing and discharging any secured assets and obligations under any previous agreements with those lenders.

 PLC (), a UK-based owner and developer of esports teams announced that it has appointed Tennyson Securities as its joint broker. Tennyson Securities is the new home of the primary team that recently left Mirabaud Securities, providing continuity of Guild’s broking relationships. Tennyson Securities will work alongside Zeus Capital.

 (), a multi-divisional new media and technology business, advised that at its annual general meeting held on December 31, 2020, all resolutions were duly passed on a poll vote, with the exception of resolutions 8, empowering the directors’ to disapply statutory pre-emption rights, and 9, the purchase by the company of its own shares.

. () (CVE:MKA has announced that, with the objective of minimising dilution to shareholders, Talaxis Limited has agreed to amend the terms of a warrant held by it. Under this amendment Talaxis has agreed to a cashless exercise of the warrant for 1,000,000 common shares in lieu of payment for 12,000,000 shares at 6.6p each. The warrant was due to expire on December 31, 2020. This amendment significantly reduces the dilution to other Mkango shareholders and avoids the company issuing 12,000,000 shares at a significant discount to the current market price. Following the issuance of the shares, Talaxis will increase its ownership of Mkango from 14,285,715 shares to 15,285,715 shares post-warrant exercise, representing an increase from 10.7% to 11.3% of the issued and outstanding shares. The group also said that Shaun Treacy, a non-executive director of Mkango, has exercised warrants for 1,200,000 new shares at a price of 6.6p each, for total proceeds to Mkango of £79,200 (US$107,000). Following the warrant exercise, Treacy will own a 1.4% interest in Mkango. After these two transactions, there are no further warrants outstanding. William Dawes, chief executive of Mkango commented: “The cashless warrant exercise agreed with Talaxis minimises potential dilution to other Mkango shareholders as the Company enters a transformational period of growth, with anticipated 2021 news flow including results from the ongoing feasibility study for the Songwe Hill rare earths project and the recently completed rutile exploration programme in Malawi, and developments in relation to Maginito and its interest in UK rare earth magnet recycler, HyProMag. Furthermore, the warrant exercise by non-executive director, Shaun Treacy, demonstrates confidence in the Company and the market outlook. With the growing global demand for critical materials related to electric vehicles and wind power, Mkango is uniquely positioned in the rare earths sector, where we anticipate increasing market focus and corporate activity.”

 (LON: FARN), the clinical-stage biopharmaceutical company has announced that Dr Markku Jalkanen, the group’s chief executive officer will present in a pre-recorded presentation at the virtual H.C. Wainwright BioConnect Conference that will be available on-demand starting Monday, January 11, 2021, at 6.00am ET. An audio webcast of the presentations will be available in the Investors section on Faron’s website at https://www.faron.com/investors 

6.50am: Happier new year

The first day of the new trading year looks set to be subdued – in contrast to the final session of 2020, which saw a 1.4% drop in the FTSE 100 index.

The index of UK blue-chips looks set to open 14 points higher at 6,474.52.

In Asia on Monday, the mood was one of optimism with the main markets there buoyed by coronavirus vaccine hopes.

The Nikkei 225, for example, hit a 30-year high, while Korea’s Kospi climbed 2%. China, by contrast, delivered a relatively restrained performance with a 0.8% gain.

Here in the UK, the worries likely to haunt the Footsie relate to a prolonged, stricter and economically punitive lockdown.

“We are entirely reconciled to do what it takes to get the virus under control. That may involve tougher measures in the weeks ahead,” Prime Minister Boris Johnson told the BBC’s Andrew Marr on Sunday.

The Daily Mail, meanwhile, is calling the roll-out of the new /Oxford inoculation Operation Hope.

A total of 530,000 doses will be available at 100 hospitals for those people in the most vulnerable groups.

Health secretary Matt Hancock said: “This is a pivotal moment in our fight against this awful virus and I hope it provides renewed hope to everybody that the end of this pandemic is in sight.”

On currency markets, it has been an epic start to the year for Bitcoin with the cryptocurrency setting a new record above US$34,000 over the weekend.

Demand has been driven by corporates pursuing alternative asset allocation strategies, diversification by major institutional holders and the emergence of dedicated funds.

Although the corporate diary is bare today, the year always begins with a flurry of updates from retailers and 2021 is no different with trading statements expected from Next (), Morrisons () tomorrow, and from Greggs () on Wednesday.

, meanwhile, will provide some insight into the health of the housebuilders and their prospects post-Brexit on Friday.

Around the markets:

  • Pound US$1.3682 (up 0.1%)
  • Bticoin US$32,768.92 (-3.1%)
  • Gold US$1,925.80 (+1.6%)
  • Brent Crude US$56.62 (+0.8%)

6.45am: Early Markets: Asia / Australia

Shares in Asia-Pacific were mostly higher on the first trading day of 2021. Mainland Chinese stocks surged with the Shanghai composite gaining 1.03%.

Proactive Australia news:

() has surged on news that the company’s largest shareholder and offtake partner, China’s Sichuan Yahua Industrial Group, has signed a deal to supply battery-grade lithium hydroxide to US electric vehicle manufacturer () over the next five years.

() () () is eagerly awaiting assay results from Big One Deposit of the Mt Oxide Copper Project in northwest Queensland that are expected to provide an entree for a “transformative” year in 2021.

() (OTCMKTS:ARTTF) (FRA:ATY) has made a strong start to 2021 with on-ground exploration activities at Carlow Castle Gold-Copper-Cobalt Project and detailed planning for a multi-rig program at the Paterson Central Gold-Copper Project.

() () (FRA:4W0) has executed a joint venture agreement with Canadian company Robinhood Gold Corp (RGC) covering the Mineral Creek Gold Project in British Columbia, Canada.

() (FRA:DDF) has entered into a short-term facility for the advance of $1.22 million which provides immediate funds equivalent to the company’s forecast research and development (R&D) tax incentive offset for the majority of the 2020 calendar year.

() has lodged an invention patent application with China’s patent authority (SIPO) for its disinfectant tracing solution.

() (FRA:R1R) has received further assays in follow-up drilling at Eleanora Lode of its Hillgrove Gold Mine in northern NSW, including the highest grade to date of 1-metre at 57.2 g/t gold and 1.6% antimony from 188 metres.
() () (FRA:C8U) has received a key access approval to additional exploration areas at its 100%-owned Julimar Nickel-Copper-Platinum Group Element (PGE) Project, around 70 kilometres northeast of Perth in Western Australia.

() is pleased to have received final authorisation allowing it to begin drilling for copper at the Murdie Project in South Australia.

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