Stock prices in London softened from earlier highs but market sentiment was still positive heading into Monday afternoon after Donald Trump picked hedge fund manager Scott Bessent as his US Treasury pick.
The FTSE 100 index added 15.72 points, 0.2%, at 8,277.80. The FTSE 250 rose 15.80 points, 0.1%, at 20,597.49, and the AIM All-Share rose just 0.31 of a point to 732.51.
The Cboe UK 100 was up 0.2% at 832.65, the Cboe UK 250 was up marginally at 18,073.26, and the Cboe Small Companies was down 0.1% at 15,586.25.
The CAC 40 in Paris fell 0.1%, and the DAX 40 in Frankfurt advanced 0.2%.
‘The selection of Scott Bessent, the hedge fund manager as next US Treasury Secretary was greeted euphorically in the capital markets: one of their own and, arguably, like many of new economics team could have been picked in any Republican administration. Risk appetites have been animated. Still, we suspect market positioning may have led to an exaggerated response. The dollar has been sold. Stocks have bought,’ Bannockburn Global Forex analyst Marc Chandler commented.
The pound was quoted at $1.2565 on Monday afternoon, shooting up from $1.2511 at the time of the London equities close on Friday. It had traded above $1.26 earlier on Monday. The euro climbed to $1.0479 from $1.0394. Against the yen, the dollar was trading at JP¥154.50, down from JP¥154.87.
According to the Wall Street Journal, Bessent outlined a ’3-3-3’ view for the US economic outlook. He wants to cut the budget deficit to 3% of gross domestic product by 2028 from over 6% in 2023. He is eyeing GDP growth of 3% and wants to pump an extra 3 million barrels of oil per day.
Trump has pushed for tariffs, labelling it his favourite word. He proposed applying tariffs of 60% on Chinese imports.
Bessent, however, has stated he prefers gradual tariff introductions.
Stocks in New York are called to open higher. The Dow Jones Industrial average is called up 0.7%, the S&P 500 up 0.5% and the Nasdaq Composite 0.6% higher.
Hot-on-the-heels of a tepid purchasing managers’ index reading, there was another poor reading of the German economy on Monday. Sentiment among German companies continued to worsen in November.
Business sentiment among German companies deteriorated in November, survey results published by the ifo institute showed on Monday. The ifo business climate index declined to 85.7 points in November from 86.5 in October.
ING analysts commented: ‘Today’s Ifo index paints a rather miserable picture for the German economy - and after meagre growth in the third quarter a (technical) winter recession now looks likely.’
In the UK, Rachel Reeves’ budget caught firms ‘off guard’ and will undermine investment and jobs, the head of one of Britain’s leading business groups has said.
Rain Newton-Smith, chief executive of the Confederation of British Industry, CBI, said profit is ‘not a dirty word’ because it underpins firms’ ability to invest, but the government’s actions have hampered that.
The chancellor is expected to tell the organisation later on Monday there is ‘no alternative’ to tax rises as she holds firm against criticism of the £25 billion increase in firms’ national insurance contributions, NICs.
Newton-Smith welcomed the new political and economic stability offered by the government after the turbulence of the Conservative years, but condemned the way firms have been blindsided by the increase in NICs and the lowering of the threshold at which they start to be paid.
Brent oil was quoted at $74.56 a barrel early Monday afternoon, rising slightly from $74.46. Gold faded to $2,684.23 an ounce from $2,703.04.
In London, Anglo American rose 1.7%. It said it has struck a deal to sell its remaining steelmaking coal portfolio, netting $3.78 billion.
The miner said it will sell the business to Peabody Energy. Coupled with the $1.1 billion sale of its roughly 33% stake in the Jellinbah is a joint venture, it expects to net about $4.9 billion from the disposal of its steelmaking coal business.
The portfolio being sold to Peabody consists of coal mines in Australia. Peabody is to pay $2.05 billion in upfront cash. There is a $725 million deferred cash consideration and the potential for up to $550 million in a price-linked earnout.
In addition, there is another possible $450 million cash portion hinging on the reopening of the Grosvenor mine. Anglo American suspended output at the Queensland asset in June ‘following an underground coal gas ignition incident’.
Chief Executive Duncan Wanblad said: ‘The sale of our steelmaking coal business is another important step towards delivering the strategy that we set out in May to create a world class copper, premium iron ore and crop nutrients business.’ The CEO added: ‘All the transactions to deliver our portfolio transformation are well in train - the demerger of Anglo American Platinum is expected by mid-2025 and we have seen strong interest in our nickel business with the sale process well progressed. We expect De Beers to follow, recognising its unmatched industry and brand position and good progress in working with stakeholders to position the business for long term success as we work toward separation for value.
Anglo American in May unveiled a ’radical‘ strategy that will see it keep copper and iron ore assets, while getting rid of platinum and diamond businesses. The move, which followed a ’comprehensive asset review‘ and it was announced at a time when Anglo American was fending off a takeover approach from larger peer BHP.
To unlock shareholder value and to simplify its portfolio, Anglo American said early this year it intends to ’demerge‘ Anglo American Platinum and also ’divest‘ or ’demerge‘ De Beers as part of its new strategy.
Also rising was ITV, up 8.8%, on M&A chatter. ITV’s boss has been mulling with advisers a possible separation of a unit, Sky News reported on Saturday, while possible bidders are in early talks about teaming for a tilt at buying all or parts of the FTSE 250 listing.
Sky, citing television industry sources, reported that CVC Capital Partners and a ’major European broadcaster‘ are among those that are mulling over the merits of making a bid to acquire ITV.
The European broadcaster is believed to be Television Francaise SA, which operates the TF1 TV channel in France.
Sky News sources also stated that All3Media and Mediawan are possible suitors for the ITV Studios production arm.
Mediawan is a production company but also distributes third-party and in-house content. All3Media is in TV and film production, and it was sold by Liberty Global and Warner Bros Discovery in May to the RedBird IMI joint-venture for $1.45 billion.
ITV had previously looked into acquiring All3Media, but in July last year announced it had opted against pursuing a deal.
Sky News, citing one source, said that work on bids are not yet advanced enough to require a disclosure under UK stock market rules.
Sky News also reported that ITV Chief Executive Officer Carolyn McCall has spoken to the company’s financial advisers about a possible demerger or form of separation of its two main business units.
‘A depressed valuation and relative weakness in sterling are the context for reports of bid interest in ITV – with the possibility of yet another domino falling in a UK market which has seen plenty of M&A in 2024,’ AJ Bell analyst Russ Mould commented.
‘There is further speculation that ITV might look to demerge the business on the basis that the individual parts might attract a better valuations as standalone entities – particularly its ITV Studios production arm. The latter has endured a lingering effect from the Hollywood writers’ strike last year, which pushed back many productions, and the more disciplined spending approach of the big global streaming giants. However, it has also enjoyed some notable successes this year including Rivals on Disney+ and Mr Bates vs The Post Office.’
B&Q owner Kingfisher plunged 14% after trimming the top end of its profit outlook. It now expects adjusted pretax profit of £510 million to £540 million in the year to January 31 2025, the top end of the range lowered from £550 million. This would be a decline of up to 10% from £568 million posted last year.
Kingfisher said sales fell 0.6% to £3.22 billion in the third quarter to October 31, with like-for-like sales 1.1% lower at constant currency.
This compared to market consensus of £3.27 billion and negative 0.2% for sales and LFL performance respectively, according to Barclays.
One retailer trading higher, however, was JD Sports. The stock rose 5.9%. Deutsche Bank raised the stock to ’hold’ from ’sell’. UBS, meanwhile, opined that ‘the bar can’t drop much lower’, following the athleisure retailer announcing Thursday that profit will be at the lower end of guidance. UBS has a ’buy’ rating on JD Sports shares.
Elsewhere in London, Quadrise jumped 15%. It said it has inked a collaborative agreement with Littoinen, Finland-based fuel supply systems firm Auramarine.
The London-based energy technology company and supplier of MSAR emulsion technology fuel revealed that the partnership will focus on the marine sector and aims to improve operational inefficiencies and decarbonise energy-intensive applications.
Quadrise said it will provide expertise in MSAR and bioMSAR fuels and Auramarine will provide fuel systems expertise for the conversion of marine vessels to Quadrise fuels.
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