- FTSE 100 flat at 8,203
- Carlsberg to buy Britvic
- Chancellor Reeves lays out housebuilding plans
3.55pm: Stocks to close flat
The FTSE 100 index looks set to close flat this Monday after trading in the green for most of the day.
Despite a few notable movers including British Airways owner International Consolidated Airlines Group plc and Rolls-Royce Group plc, commodities-linked stocks ultimately dragged the index lower.
Fresnillo, Anglo American, Rio Tinto and the oil supermajors all fell in response to a dip in commodities prices.
It was all about politics today, with the Labour chancellor Rachel Reeves kicking off her term by reinstating the mandatory housebuilding quota and reaffirming her party’s support for onshore wind farm projects.
Meanwhile, France is coming to terms with a shock election result that saw the left-wing alliance gain the most seats while coming short of a majority- a hung parliament is now on the cards.
As markets wrap up, the FTSE 100 was last seen trading flat at 8,203.
3.16pm: Bitcoin struggles
Bitcoin is struggling to pick itself off the floor after falling to a five-month low last week.
The world’s largest cryptocurrency flopped below $54,000 on Friday and while Saturday saw some recovery, the market went bearish again on Sunday.
The BTC/USD pair managed to claw back 2.3% worth of losses today, but at $57,050, it remains nearly 9% lower week on week.
As previously flagged here at Proactive, the bitcoin market is at risk of substantial selling pressure owing to the commencement of Mt Gox repayments.
The bankruptcy estate of Mt Gox, which was a prominent bitcoin exchange before going bust a decade ago, owns as much as $8 billion worth of bitcoin.
Reactionary traders may be betting on a headwind from these redemptions, leading to exits in the short term.
Metro Bank offloading £3bln mortgage book - Sky
High-street challenger Metro Bank has revived plans to offload its multibillion-dollar mortgage book after a deal with Barclays PLC (LSE:BARC) fell apart last December.
According to a Sky News report, which did not mention who the potential buyers are, Metro’s mortgage book is worth at least £3 billion, but could be worth up to £4 billion.
Metro’s star has fallen since becoming the first British high-street lender to open its door in over 100 years in 2010.
The bank was given a £925 million funding lifeline in October 2023 amid a sharp decline in its share price and heavy post-pandemic losses.
Since then, Metro has managed to turn its first pre-tax profit in five years, though it came at a price of a large-scale cost-cutting programme and headcount reductions.
Metro Bank shares added 2.2% following the Sky News report, but the stock is still down 70% year on year.
1.32pm: US markets to open flattish
The US stock market is expected to open flattish this Monday.
Futures contracts for the Dow Jones Industrial Average predict a 0.1% gain, while the Nasdaq 100 (which smashed a new all-time high last week) and the broader S&P 500 index are not tipped to move from Friday’s closing prices.
There will be little on the macroeconomic calendar to push the needle barring the latest consumer inflation expectations print for June.
The big story on the company news front is Paramount Global (NASDAQ:PARA)’s agreed-upon merger with Skydance to make a $28 billion mega media conglomerate.
Shari Redstone will sell her family's controlling stake in Paramount as part of the deal.
Meanwhile, crisis-struck aircraft manufacturer Boeing Co (NYSE:BA, ETR:BCO) has agreed to pay a $243.6 million fine and plead guilty to fraud in a deal with US federal prosecutors in order to avoid a criminal trial.
The guilty plea relates to a criminal fraud conspiracy charge after the US Department of Justice (DoJ) found the company violated a deal that had protected it from prosecution after two fatal crashes of its 737 Max jets in 2018 and 2019 that killed all 346 people aboard.
Back in London, the FTSE 100 is currently up 16 points to 8,220
1.05pm: Scrapping onshore wind ban presents ‘unique opportunity’ for retail investors
Newly appointed Labour chancellor Rachel Reeves’ scrapping of the “absurd” ban on onshore wind farms should be welcomed by Britain’s retail investors, according to Tara Irwin, ESG analyst at Hargreaves Lansdown.
The Chancellor’s announcement included a proposal to incorporate onshore wind projects into the nationally significant infrastructure projects regime.
“This change will streamline decision-making processes, enhance project approval efficiency, and attract substantial private sector investment,” stated Irwin.
She added: “For retail investors, this presents a unique opportunity to participate in the burgeoning green energy market, with the potential for robust financial returns and portfolio diversification.
“Labour has provided the market indicators for the industry to expand and establish. Retail investors have a unique opportunity to support the UK's journey towards a zero-carbon electricity system while enjoying the financial benefits of an industry set for growth.
“The end of the onshore wind ban marks a significant milestone in this journey, promising lower energy bills, enhanced energy security, and a greener future for all.”
12.45pm: BoE’s Haskel fires hawkish rates warning
Monetary Policy Committee member Jonathan Haskel delivered some hawkish comments on inflation and interest rates during a Monday speech at King’s College London.
"The labour market continues to be tight, and I worry it is still impaired," Haskel warned.
He added: "I would rather hold rates until there is more certainty that underlying inflationary pressures have subsided sustainably”.
His comments come on the same day that a new survey conducted by the Recruitment and Employment Confederation suggested that starting salaries for new permanent roles are increasing at the fastest rate since last October.
Haskel joined six other MPC members in voting to maintain the bank rate at 5.25% in June, while two other members voted to reduce the rate to a flat 5%.
The net vote is scheduled for 21 August.
Haskel also denied that the BoE was behind the curve in tempering the post-pandemic inflation surge.
“The initial burst of inflation was due to the economy being hit by a succession of external shocks, unforeseen by even the most informed market participants,” he stated.
12.12pm: Labour to restore mandatory housebuilding targets
Keir Starmer’s Labour party will restore mandatory housing targets, newly instated chancellor Rachel Reeves has stated in her debut speech.
Reeves, who became the UK’s first female chancellor following Labour’s sweeping victory over the Conservatives, said Labour will launch a task force "to accelerate stalled housing sites in our country".
She reiterated Labour’s manifesto pledge of building 1.5 million new homes over the next five years.
Former prime minister Rishi Sunak scrapped plans for compulsory housebuilding targets in 2022 following a Tory backbench rebellion.
The move was labelled as “extremely damaging” by the Home Builders Federation.
"It'll be up to local communities to decide where the housing is built, but it has to be built,” Reeves today stated.
Brownfield and ‘grey belt’ land will be flagged for development. Labour classifies grey belt land as “poor-quality scrubland, mothballed on the outskirts of town”.
Reeves also said Labour will scrap the “absurd” ban on new onshore wind farms in England.
11.55am: French election signals end to pro-growth reforms
Analysts at Berenberg have warned of a growth fallout from the shock outcome of this weekend’s French elections.
The left and centrist factions of France’s political class combined to deliver a major blow to Marine Le Pen’s populist National Rally party, with the prospect of a hung parliament now emerging.
To the surprise of nearly everyone, a loose alliance of leftist parties under the New Popular Front won the most seats in the election, but with no single party gaining an absolute majority, political deadlock seems inevitable.
This is not the absolute worst outcome, reckon Berenberg analysts- that would have been an absolute majority for the hard-right National Rally. But the outcome nonetheless raises fiscal problems and a likely reversal of Macron’s pro-growth reforms.
“Although French voters did not grant a majority to either the (National Rally) or the spendthrift left, the election result is still negative for France in two important respects,” wrote Berenberg.
“First, it spells the end of Macron’s pro-growth reforms. Instead, the centrists will almost certainly have to accept some reform reversals (eg a potential softening of Macron’s crucial pension reform) and possibly progressive tax hikes demanded by the left in order to pass a budget.
“Second, it threatens to exacerbate France’s fiscal problems. After a deficit of 5.5% of GDP last year and a similar shortfall this year in the absence of any corrective action, France will struggle to pass a 2025 budget that complies with EU fiscal rules.”
France is also at risk of credit deratings, inflation and a “less favourable reputation among global investors”, warned Berenberg.
11.27am: Major Keywords Studios shareholder savages ‘opportunistic’ takeover bid
Octopus Investments, the second-largest shareholder of high-profile video game services provider Keywords Studios PLC (AIM:KWS, OTC:KYYWF), has called the 2,450p takeover bid from EQT an “opportunistic” move by the Swedish private equity firm.
EQT and Keywords agreed to the £2.1 billion bid last week but while it represents a 67% premium to the share price when the initial approach was made public in May, Octopus is unimpressed by this valuation.
In comments published by The Telegraph, senior fund manager Chris McVey said: “We are extremely disappointed that the board has recommended the 2,450p cash offer which we consider to be opportunistic and in no way reflective of the true value that has been created, nor of the prospects for significant future growth.”
Keyword holds lucrative contracts with some of the studios in the world, including Fortnite developer Epic Games, for which Keywords provides complex localisation services.
Regardless of Octopus’ objections, the deal appears to be a goer.
Don Robert, Keywords chair, said last week: “On balance, the board believes that this offer represents a good opportunity for Keywords Studios shareholders to realise value for their investment in cash upfront at a significant premium to the undisturbed share price.”
11.04am: Commodities continue to weigh on index
Big-cap mining firms including Fresnillo, Anglo American, Rio Tinto, Antofagasta and Glencore continue to weigh on the FTSE 100 index today, which appear to be following a downward revision in commodity prices.
The Bloomberg Commodity Index, which tracks futures contracts on gold, silver, oil, gas and industrial metals, shows a 0.75% dip from Friday’s close.
Oil supermajors BP plc and Shell PLC (LSE:SHEL, NYSE:SHEL) are also down, although the broader FTSE 100 index remains 24 points higher.
9.50am: Endeavour Mining returns to FTSE 100 after Smurfit Kappa goes standard
Endeavour Mining PLC (LSE:EDV, TSX:EDV, OTCQX:EDVMF) is officially back in the FTSE 100 set after being removed from the blue-chip index just four months ago.
The upgrade comes as packaging company Smurfit Kappa Group plc (LSE:SKG) leaves the FTSE 100 following a merger with US company WestRock.
As part of the merger, Smurfit has opted to move its listing from the premium segment to the standard segment, which disqualifies it from holding a position in the FTSE Russell indexes.
Smurfit has also removed its listing from the Euronext Dublin bourse in favour of a listing on the New York Stock Exchange.
Endeavour was taken off the FTSE 100 in place of easyJet during the March reshuffle.
9.10am: The morning so far
Britvic PLC (LSE:BVIC) delivered probably the biggest news story of the morning after agreeing to be taken over by Danish beer giant Carlsberg in a £3.3 billion deal.
Carlsberg intends to create “a single integrated beverage company” in the UK following the acquisition.
The Danish brewer believes the combined brewing and soft drink powerhouse will deliver up to £100 million in cost savings over the five post-merger years.
The FTSE 100 blue-chip index has flip flopped from a 17-point dip to a five-point gain at the time of writing.
Mining stocks are stifling the index, with Anglo American PLC (LSE:AAL), Rio Tinto plc, Fresnillo PLC (LSE:FRES) and Antofagasta plc among the biggest fallers.
Top risers include Smurfit Kappa Group plc (LSE:SKG), British Airways owner International Consolidated Airlines Group plc and B&M.
In the unlosted space, British fintech giant Revolut founder Nick Storonsky is set to receive an astronomical windfall from an upcoming $500 million share sale.
According to Sky, Storonsky is seeking to offload stock valued in the “tens or even hundreds of millions of dollars” from the planned secondary share sale.
In Europe, France’s benchmark index the CAC 40 initially opened lower but has since shifted to a 0.4% intraday gain.
The Euronext Paris bourse is digesting the country’s potential political deadlock after France’s left wingers emerged with a surprisingly strong election result that kept Marine Le Pen’s populist National Rally from claiming victory.
France is facing a hung parliament following this surprise election result.
8.54am: Britvic shares higher, but are they high enough?
Wimbledon was once an annual highlight for FTSE 250-listed soft drinks maker Britvic, as its cornerstone squash brand Robinsons basked in the glory of a prestigious sponsorship that dated back more than eight decades.
That partnership came to an end in 2022, but Britvic is in high spirits for another reason this Wimbledon season.
Company shares were lifted another 4.5% today following news of Carlsberg’s successful bid for the group, which also produces Pepsi for the UK market.
It brings Britvic’s share price more than 30% higher in the past month and 50% higher year to date as the market prices in Carlsberg’s premium-sized takeover bid.
However, the rally on Britvic’s shares fell short of its logical conclusion.
Currently trading at 1,263, the share price has not managed to reach the 1,315p bid price as is common in these situations, with analysts pointing to a concurrent trading update from the soft drink maker.
Group-wide revenues ticked 6.3% higher year on year in Britvic’s third quarter, with ‘other international revenue’, which excludes Brazil, falling 6.6%.
“The market reaction was muddied by an accompanying trading statement from Britvic which showed some revenue weakness. As such, the shares did not rise to the obvious bid level, potentially leaving the door ajar for further developments on the proposed acquisition,” said interactive investor’s Richard Hunter.
8.24am: Revolut founder to make bank on supersized share sale
British fintech giant Revolut founder Nick Storonsky is set to receive an astronomical windfall from an upcoming $500 million share sale.
According to a Sky News report, Storonsky is seeking to offload stock valued in the “tens or even hundreds of millions of dollars” from the planned secondary share sale.
The final amount will depend on the valuation Revolut can attain from potential investors.
The company is seeking a $40 billion valuation in the Morgan Stanley (NYSE:MS)-brokered round, it was reported last month, as the neobank continues to aggressively expand and vie for a UK banking licence.
Revolut has emerged as one of the UK's most successful technology companies, with revenues topping £1.8 billion in 2023, a 95% increase from the previous year.
The company is seen as a likely IPO candidate in the coming years.
8.20am: Blue chips down
The FTSE 100 dipped 17 points to 8,187 in opening exchanges as markets continue to navigate the post-election landscape.
Mining bug caps were down, with Anglo American, Rio Tinto, Antofagasta and Glencore among the biggest fallers.
7.53am: Surge in starting salaries sparks inflation concerns
A new survey conducted by the Recruitment and Employment Confederation and KPMG shows that starting salaries for new permanent roles are increasing at the fastest rate since last October.
This comes amid a general decline in job vacancies, with Office of National Statistics data showing a 1.3% sequential fall in vacancies in the last quarter.
“Employers are still hitting the brakes on recruitment with the general election period causing some uncertainty,” said Jon Holt, chief executive at KPMG in the UK, in comments published in Bloomberg.
“Permanent hiring has taken a particular hit. This lack of demand means competition for the few roles available continues to drive pay growth,” he added.
This will prove to be a minor annoyance for the Bank of England’s plans to reduce interest rates by the end of this year, as higher starting wages could put upward pressure on inflation.
According to the REC survey, six out of the 10 polled sectors saw a decline in demand for permanent staff, although “as policy uncertainty abates, and interest rates drop, we expect permanent hirers to return to the market this summer,” said REC chief executive Neil Carberry.
7.35am: Carlsberg to buy Pepsi maker Britvic
FTSE 250-listed Pepsi producer Britvic PLC (LSE:BVIC) has agreed to be taken over by Carlsberg, the Danish brewery that makes ‘probably the best lager in the world’.
Carlsberg has also agreed to buy out brewer and pub chain Marstons plc’s stake in the Carlsberg Marstons joint venue business.
Carlsberg intends to create “a single integrated beverage company” in the UK, to be named Carlsberg Britvic, comprising senior members of Carlsberg, Carlsberg Marstons and Britvic.
The Danish brewer believes the combined brewing and soft drink powerhouse will deliver up to £100 million in cost savings over the five post-merger years.
“The proposed transaction creates an enlarged international group that is well-placed to capture the growth opportunities in multiple drinks sectors,” said Ian Durant, non-executive chair of Britvic.
“Crucially, to remain competitive at a time when the market is being shaped by the trend of increasing consolidation among bottling partners, Carlsberg's agreement with PepsiCo provides the combined group with a strong platform for continued success.”
Jacob Aarup-Andersen, chief executive of Carlsberg, added: “The proposed transaction is attractive for shareholders of Carlsberg, supporting our growth ambitions and being immediately earnings accretive and value accretive in year three.
“We are excited about expanding our global partnership with PepsiCo and believe that the longer-term opportunities will be very beneficial for both companies.”
7.10am: Markets to dip a few points
The FTSE 100 is set to open flat this Monday as markets continue to navigate the post-election political landscape.
Stocks initially ramped higher following Labour’s decisive victory at the polls, although they ended up getting pushed lower in the closing Friday hours.
Futures contracts now have the blue-chip index dipping a couple of points to 8,188 when markets kick into gear.
There is little of note on the UK macroeconomic calendar, although a new survey from the Recruitment and Employment Confederation shows that British businesses are boosting pay rates for new jobs at the fastest rate since last October.
This could prove a fly in the ointment for the Bank of England’s plans to reduce interest rates this year.
On the company news front, FTSE 250-listed Pepsi producer Britvic PLC (LSE:BVIC) has agreed to be taken over by Carlsberg at a £3.3 billion valuation, or £4.1 billion when including debt.