FTSE 100 closes over 137 points higher
Just Eat is top dog on Footsie
Sterling in freefall against the US dollar
5.05pm:M&A gives Footsie a boost
FTSE 100 romped to a higher close on 'merger Monday' as Just Eat (LON:JE), the take-away app, shot up on M&A excitement Just Eat is poised to combine with Dutch rival Takeaway.com to form one of the world's largest food delivery firms.
The other big story was London Stock Exchange Group PLC (LON:LSE) debating whether to buy data firm Refinitiv. The former confirmed it was in talks to buy the data company in a US$27bn deal.
The UK's premier share index soared over 137 points to close at 7,686, while its mid-cap cousin, the FTSE 250 added over 28 points to finish at 19,886.
The Footsie and its dollar earning constituents were also boosted by a pound in freefall. Sterling was down 1.20% against the greenback at the time of writing to around $1.2225.
Neil Wilson, chief market analyst at Markets.com commented: "The reasons for the pound’s fall are well worn: there is an increased risk of a no-deal Brexit, with the rhetoric from key government ministers over the last day or so sharpening up.
"The message is clear that the Boris regime is prepared to take this to the wire. In many ways it’s his only choice. We’re also seeing the USD firming, with the dollar index up now to 97.90, its highest since May, and looking to retake 98."
On Wall Street, stocks were mixed, however, as investors await this week's Federal Reserve meeting and the prospect of a first US interest rate cut in over a decade. The Dow Jones Industrial Average was up around 64 points at 27,256 at the time of writing, while the broader-based S&P 500 shed around 4 points at 3,021.
3.30pm: Weak pound provides Footsie boost
The Footsie was a little off the top but still enjoying a bonanza day on a day when sterling hit the skids.
Against the greenback, the pound was down 1.31 cents at US$1.2251, suggesting that Merger Monday – as today has been dubbed – might become a weekly event with prime UK companies looking this cheap to cash-rich overseas companies.
The FTSE 100 was up 135 points (1.8%) at 7,684, led by Just Eat PLC (LON:JE.), as shareholders salivated at the prospect of the online food ordering portal combining with Dutch rival Takeaway.com.
Just Eat shares were up 24% at 790p, slightly overshadowing the day’s other big merger story, which was London Stock Exchange Group PLC (LON:LSE) debating whether to swoop for Refinitiv, which includes the old Reuters terminals business and the Datastream time-series product.
The bourses operator was up 15% at 6,530p.
Drugs maker AstraZeneca PLC (LON:AZN) was the third best blue-chip performer, rising 4.0% to 151.88p, after Deutsche Bank raised its price target.
2.40pm: Sterling in free-fall after "no deal" rhetoric hardens
With the pound in free-fall traders are piling into blue-chip UK equities.
The pound has plunged by more than a cent against the US dollar to US$1.2261; with a high proportion of big dollar earners among its constituents, that's good news for the Footsie, which is up 148 points (2.0%) at 7,697.
The FTSE 250, less susceptible to moving in the opposite direction to sterling, was nevertheless up 96 points (0.5%) at 19,954, despite asset management firm Sanne Group PLC (LON:SNN) losing almost a third of its value at 507p after it admitted that rather than the improvement in margins it had expected in the first half of 2019 it witnessed a fall.
Investors have also got it in for Sports Direct International after its dog's breakfast of a results statement on Friday, with the shares down 9.5% at 208p.
Completing a triumvirate of mid-cap mingers is Woodford Patient Capital Trust PLC (LON:WPCT), which hinted it might dump Neil Woodford as its investment manager.
Neil Woodford sells more than half his shares in listed fund https://t.co/nCjWCMAQKA
— The Guardian (@guardian) July 29, 2019
US markets, meanwhile, have opened mixed, with the Dow Jones 30-share index up 25 points (0.1%) at 27,218 and the S&P 500 down 4.6 points (0.2%) at 3,021.5.
12.15pm: Sterling's rout on forex markets makes UK stocks look cheap
Sterling’s continued retreat on foreign exchange markets may be bad news for Brits holidaying abroad but it is doing wonders for UK blue-chip stocks.
The FTSE 100 was up 96 points (1.3%) at 7,645, lifted by sterling giving back more than two-thirds of a cent against the US dollar.
“Sterling has cracked, opening up fresh lows versus the dollar, and it may now be heading for 1.21 or even 1.20 again,” suggested Neil Wilson at markets.com.
“The fresh push to the downside follows an escalation in no-deal risks. Specifically, the market has reacted to Michael Gove saying that the government is ‘working on the assumption’ of a no-deal Brexit. Foreign Sec Dominic Raab also took a tough stance today while speaking to Today [the current affairs radio programme],” Wilson added.
Having had all of the weekend to pore over the shambolic results announcement from Sports Direct International PLC (LON:SPD), the City is sticking the boot – or overpriced trainer, if you prefer – into the athletic leisurewear purveyor.
The shares are down 9.3% at 208.4p after the company finally got its full-year results published after the close of play on Friday.
“We take the view that Sports Direct will remain in the headlines for the wrong reasons and it cannot continue to buy UK retailers at bargain-basement prices and expect to turn them around when it faces an uphill battle against the changing dynamics of the UK high street,” said Helal Miah, an investment research analyst at The Share Centre.
“We would join calls by others in saying that corporate governance at the group needs a radical overhaul. While the share price reaches new lows, we still suggest the shares are best avoided,” he added.
That man Neil Wilson (again) reckons it is too early to write off Mike Ashley, the owner of Sports Direct.
“His mercurial style and talents have always raised eyebrows in the City. Whilst there are clearly many doubts about the elevation strategy, among others, we are in no doubt that Mr Ashley is the master of the stack ’em high approach. Moreover, the fallout from HoF [House of Fraser] may well clip his wings in terms of making further dilutive acquisitions. Chastened, this may be the time we see a renewed focus on the basics,” Wilson suggested.
10.45am: Week starts with a bang(er)
It has been a bright, confident morning thus far, thanks largely to two big merger deals announced by Footsie constituents.
London's index of heavyweight shares was up 92 points (1.2%) at 7,641 – its highest point of the day – led by Just Eat PLC (LON:JE.), which is about to dine Dutch with its Netherlands competitor Takeaway.com, and London Stock Exchange Group PLC (LON:LSE), which confirmed press reports it is in talks to buy financial data giant Refinitiv.
Insurance broker Hiscox Ltd (LON:HSX) was a party-pooper, however, shedding 1.4% at 1,748p after its interims.
Outside of the FTSE 100, investors were tucking into pork products maker Cranswick plc (LON:CWK) after its first-quarter trading update and news of the acquisition of Katsouris Brothers, a leading Mediterranean food products business.
The shares were up 6.9% at 2,754p.
Housebuilders were underperforming the market after the release this morning of house purchase mortgage approvals data.
Mortgage approvals cranked up to 66,400 in June from 65,600 in May, which was ahead of the consensus forecast of 65,800.
Net consumer credit rose by £1.0bn in June, which was also ahead of the consensus forecast of £900mln.
“House purchase mortgage approvals exceeded their 12-month average, 65.4K, in June and should rise further soon in response to the recent recovery of indicators of buyer demand and the looming fall in mortgage rates,” predicted Pantheon Macroeconomics' chief UK economist, Samuel Tombs.
“Less positive was the stabilisation of the effective interest rate on the stock of mortgage debt at 2.42% in June. Nonetheless, it should decline again over the coming months, given that the effective interest rate on all new mortgages was just 2.02% in June, down from 2.08% in May,” he added.
8.40am: Just another merger Monday
Merger and acquisition activity stoked interest in the FTSE 100, which defied the predictions of a subdued start to rise 43 points to 7,591.69.
Just Eat (LON:JE.) led the pack, rising 23% after confirming it reached an “in-principle” £9bn merger agreement with its Dutch rival Takeaway.com.
“Activist Cat Rock must be purring about this merger, something they’ve been pushing for some time,” said Neil Wilson, analyst at Markets.com.
“Activism is on the march in Europe (see Lazard’s latest) and we can expect further agitation from investors to deliver more value.
“The more the likes of Cat Rock and Elliott pull the strings successfully the more activists will be on the prowl. It could open up a bidding war now for a prize asset that needs some help.
“The deal gives Just Eat and its interim CEO the perfect exit, whilst also creating a company with the scale and strength to take on Deliveroo, Uber Eats and Amazon.”
Also in the M&A mix was the London Stock Exchange (LON:LSE), which rose 9% after confirming it is in talks to acquire Reuters’ former data business in an all-share deal worth £22bn.
A former FTSE 100 constituent wishing it had some uplifting news was Sports Direct (LON:SPD), which crashed 16% after its after hours Friday bombshell revealing the Belgian tax authorities are after it for more than €600mln.
6.12am: FTSE 100 set for subdued start
The first half the trading week looks likely to be dominated by a will-they-won’t-they guessing game around US interest rates.
At issue is not whether the Federal Reserve will cut borrowing costs – a 0.25% snip is an almost a racing certainty.
No, the speculation ahead of Wednesday’s meeting is whether Jerome Powell et al will be a little bolder.
Based on the reaction of Asia’s main markets overnight, the likelihood of the Fed going for a 0.5% cut is next to zero after economists and analysts perhaps got a little over-excited over the prospect last week.
Korea’s Kospi benchmark led the regional bourses lower, with Hong Kong, China and Japan trading in the red too.
Here in the UK, the FTSE 100 looks set to make a subdued start, with spread betting firms predicting it will open just three points higher at 7,552.06.
London dynamic has changed
Of course, London’s dynamic has changed somewhat following the elevation of Boris Johnson to Prime Minister.
The hard-line rhetoric over the weekend suggesting the newly-reformatted Tory administration was preparing to exit Europe without a deal pushed the pound below US$1.24. At 6am it was changing hands for US$1.2363.
In terms of corporate news, the schedule fills up later in the week with updates from Lloyds (LON:LLOY), BT (LON:BT.A) and Next (LON:NXT).
M&A activity, meanwhile, appears to be ramping up.
Investors in Cobham (LON:COB) are reportedly hoping for a bid rival bid to the £4bn private equity take-private deal tabled last week.
One suspects we will hear more today on a potentially monster bid by the London Stock Exchange (LON:LSE) for the former terminals business of Reuters – reported to be in excess of £20bn.
Around the markets: Gold US$1,432.80 an ounce, up 60 cents; Brent crude down 23 cents a barrel at US$63.23; Bitcoin £7,802.96, up £102.60.
Proactive news headlines:
Europa Oil & Gas Holdings Plc’s (LON:EOG) 30% owned Wressle onshore oil field development has received a significant boost as efforts continue to secure planning permission. The company revealed that the North Lincolnshire Council has withdrawn its case in respect of an upcoming appeal which seeks to overturn a past refusal of planning consent.
Union Jack Oil PLC (LON:UJO) executive chairman David Bramhill has described the latest twist in the Wressle planning permission saga as ‘very positive’.
Integumen PLC’s (LON:SKIN) wound care division is expanding to create a scientifically-developed CBD-infused dressing. Its Wound pHase operation is collaborating with Cellulac (in which Integumen has a 9.35% stake), the University of Limerick and the Irish government-supported Research Centre for Resource Efficiency.
Victoria Oil & Gas PLC (LON:VOG) has signed a non-binding term sheet for an energy supply deal in Cameroon. The agreement is with Aksa Energy to supply up to 25mln standard cubic feet a day of gas to Aksa Energy's planned 150-megawatt power station in Bekoko, Douala.
Coinsilium Group Limited (AQSE:COIN), the blockchain company advisor, has been appointed as an advisor to Jur AG, a new blockchain-based decentralised legal ecosystem.
Silence Therapeutics PLC (LON:SLN) has announced the appointment of an independent director from its new partner, New York-listed specialty pharma group Mallinckrodt (NYSE:MKN).
Echo Energy PLC (LON:ECHO) told investors that the initial data processing from the recent 3D seismic programme in Argentina is now complete.
Columbus Energy Resources PLC (LON:CERP) said it is seeking permits and negotiating contracts necessary to drill the Saffron and Clove prospects identified in the South West Peninsula, Trinidad.
Providence Resources PLC (LON:PVR) has again extended the deadline for a payment into its bank account from its Chinese partner, APEC Energy Enterprises.
Graphene specialist Directa Plus PLC (LON:DCTA) told investors it has landed a contract to treat and recover crude oil from producing wells onshore Europe.
Katoro Gold PLC (LON:KAT) is looking at ways to boost the resource at its two gold projects in the Lake Victoria Goldfields, Tanzania to one million ounces to help their marketability.
Tlou Energy Ltd’s (LON:TLOU) quarterly report today highlighted the ongoing progress in Botswana, at the Lesedi coal bed methane project.
Eden Research PLC's (LON:EDEN) fungicide, Mevalone, has been granted 120-day "emergency use" authorisation in France for the treatment of storage diseases on apples.
Avacta Group PLC (LON:AVCT) chief executive Dr Alastair Smith, will present at the European Biotech Investor Day in New York on August 1 when he will discuss the company’s drug development pipeline.
Metal Tiger Plc (LON:MTR) said drilling results from the Reung Kiet lithium project in Thailand confirm wide intersections of lepidolite hosting pegmatite below the shallow historical open pit.
Chaarat Gold Holdings Limited (LON:CGH) said is confident of meeting its targets at the Kapan mine by the end of the third quarter.
Aminex PLC (AEX) has been transferred from the official list of the Financial Conduct Authority to the premium listing segment. The group has cancelled its shares on the Euronext Dublin as it believes it is necessary to secure the “appropriate flexibility afforded by the transfer to the standard listing segment in London”.
Business Headlines
Financial Times
- PSA threatens to shut Ellesmere Port Vauxhall plant - carmaker lines up alternative Astra factory in Europe in case of Brexit hit to profitability
- Deutsche Bank probes access of fired workers to lender’s systems
- KPMG contracts from UK government rise despite scandals
- LSE lays high-stakes $27bn bet on data
Times
- The City eyes deal spree after blockbuster start to year
- Fracking rules need shake-up, says Cuadrilla as profits halve
- Mike Ashley’s heir apparent Michael Murray pockets £10mln at crisis-hit Sports Direct
- Trump’s rate cut pressure on Fed ‘shows central banks in thrall to politicians’
- Primark is demanding that landlords cut its shop rents by 30%
Daily Telegraph
- Sports Direct auditor in the dark over Belgian tax claim
- No-deal exit 'would leave UK farmers defenceless'
- Hold the fries: McDonald's customers switch to salads in healthy eating boost
- Private equity spies £1bn swoop on accounting challenger Cogital
Guardian
- UK aerospace industry steps up no-deal Brexit plan to switch regulator
- Wealthiest 10% cash in as average family income falls
- HS2: hated by some, halted in parts, but still making progress
Monday’s main market news
Interims: Hammerson PLC (LONLHMSO, Keller PLC (LON:KLR), Hiscox PLC (LON:HSX)
Trading updates: Cranswick plc (LON:CWK), Gama Aviation PLC (LON:GMAA)
AGMs: Active Energy PLC (LON:AEG), Remote Monitor Systems PLC (LON:RMS)
Economic data: US Dallas fed manufacturing index, UK mortgage approvals and consumer credit