London’s FTSE 100 ended the week in positive territory on Friday, though share price falls for its mining sector prevented stronger gains.
Elsewhere, there were M&A developments for investors to mull over. Network International received an improved offer, Sureserve backed a takeover bid, and Kape Technologies warned its suitors may soon have enough support to propose a delisting.
It was a largely decent day to round off the week for European equities. The same could not be said about the pound, however, which struggled in the wake of a tepid UK retail sales reading.
The FTSE 100 index closed up 11.52 points, or 0.2%, at 7,914.13. The FTSE 250 added a more convincing 134.14 points, rising 0.7%, to 19,270.01. The AIM All-Share rose 1.07 points, or 0.1%, at 830.30.
For the week, the FTSE 100 added 0.5%, the FTSE 250 edged up 0.1%. The AIM largely ended the week as it started it.
The Cboe UK 100 ended up 0.1% at 790.93, the Cboe UK 250 rose 0.5% to 16,851.62, and the Cboe Small Companies lost 0.5% to 13,142.98.
In European equities on Friday, the CAC 40 in Paris and the DAX 40 in Frankfurt both rose 0.5%.
Stocks in New York were weaker at the time of the European close. The Dow Jones Industrial Average and S&P 500 were each down 0.2%, and the Nasdaq Composite fell 0.1%.
AJ Bell analyst Danni Hewson said there is still some ‘tension’ in markets.
‘It‘??s been quite the week for investors, with a barrage of economic data and a slew of earnings updates that ricocheted from positive to negative and back again,’ Hewson added.
The pound was quoted at $1.2410 late Friday in London, lower compared to $1.2449 at the equities close on Thursday.
Sterling suffered after underwhelming UK retail sales data. UK retail sales declined by more than expected in March, according to data from the Office for National Statistics.
Retail sales volume is estimated to have fallen 0.9% in March from the month before, following a 1.1% rise in February. February’s monthly rise was revised down from an increase of 1.2%, the ONS said. Markets expected retail sales volume to fall 0.5% in March on a monthly basis, according to FXStreet-cited consensus.
Meanwhile, the UK private sector in April saw the fastest rate of expansion in 12 months, survey results from S&P Global showed, but growth was primarily driven by the service sector.
The headline seasonally adjusted S&P Global flash UK composite output index read 53.9 points in April, up from 52.2 in March.
Rising further above the 50-point mark that separates contraction from expansion, it shows growth in private sector strengthened in April for the third consecutive month.
It was a similar picture in the eurozone, where the gulf between the manufacturing and services sectors also widened in April.
The flash eurozone services PMI from Hamburg Commercial Bank rose to a 12-month high of 56.6 points in April, from 55.0 in March. The reading was higher than FXStreet-cited market consensus of 54.5.
The overall flash manufacturing PMI fell to a 35-month low of 45.5 from 47.3, indicating the downturn in the sector worsened. This was below market consensus of 48.0.
The flash composite PMI rose to 54.4 from 53.7 - an 11-month high.
The euro stood at $1.0974 at the European equities close, up slightly against $1.0971 late Thursday. Against the yen, the dollar was trading at JP¥134.28, up compared to JP¥134.04.
US private sector growth topped expectations this month, figures from an S&P Global survey showed.
The flash S&P Global composite purchasing managers’ index reading spiked to an 11-month high of 53.5 points in April, from March’s final tally of 52.3. The flash figure was above an FXStreet-cited estimate of 52.8 points.
Procter & Gamble rose 3.6% in New York. In the three months that ended March 31, the consumer goods firm said net earnings rose 1.5% to $3.42 billion from $3.37 billion a year earlier. Net sales rose 3.6% to $20.07 billion from $19.38 billion.
Among London listings, Anglo American lost 4.1%, Rio Tinto fell 5.8% and Glencore gave back 2.3%, amid underwhelming trading reports from the sector. There was also some negative regulatory developments, AJ Bell’s Hewson commented.
‘Miners on the FTSE 100 have taken a tumble as Chile’s president announced plans to nationalise lithium mines. The metal is a crucial component in the manufacture of EV batteries and demand has shot up. The Chilean government will need to partner with private companies which have the skills, expertise and supply chains to make the extraction profitable, but the extra red tape is likely to create delays and raise prices,’ the analyst explained.
Dowlais was the top performer in the FTSE 100, adding 3.8%.
On Thursday, Melrose Industries completed the demerger of the GKN Automotive, GKN Powder Metallurgy and GKN Hydrogen businesses from the company into Dowlais. The shares had a poor debut, closing down 20%.
In January, Melrose said the combined DemergerCo businesses recorded £5.20 billion in revenue in 2022, up 6% at constant currency rates. Operating profit was between £320 million and £330 million, up 21%.
Shares in Melrose ended down 2.0%.
Dowlais will next week Tuesday slot into the FTSE 250 Index, index operator FTSE Russell said on Thursday.
Among the FTSE 250 on Friday, Network International surged 10% to 397.00p as confirmed it has received an 400 pence per share takeover offer from Brookfield Asset Management.
The Brookfield offer follows another potential offer for the payments provider from CVC Advisers and Francisco Partners Management at a price of 387p per share.
Network said it is currently evaluating the Brookfield offer with its financial advisers and said a further statement will be made in due course.
There were also M&A moves elsewhere in London. Sureserve shares jumped 37% to 123.51p, after it said it reached an agreement with Cap10 4NetZero, a company indirectly owned by Cap10 Partners, on an all-cash takeover for the energy services provider.
Cap10 will pay 125p for each Sureserve share, a 39% premium to its closing price of 90p on Thursday. The company said this values it at around £214.1 million.
The Sureserve board said it considers the terms of the acquisition to be ‘fair and reasonable’ and intends to unanimously recommend the acquisition at a general meeting, expected to be held in June.
Kape Technologies, meanwhile, said its shareholders should ‘seriously consider accepting’ a revised takeover bid from Unikmind, despite believing it to undervalue the company.
The digital security software provider on Thursday received and final cash takeover offer from Unikmind. The new bid valued Kape at $1.54 billion, up from a previous offer which put a $1.47 billion valuation on the company.
Kape shares rose 0.6%. It has a market capitalisation of £1.24 billion.
On Friday Unikmind, which already owned a 54% stake in Kape, said it purchased around 4.0% more of the company, resulting in a 58% holding. In addition, it said it received commitments of support for just under 13% more of Kape shares, effectively giving it control of 71% of the
company.
Kape noted this development and warned on the rights of its minority shareholders should Unikmind win enough support to power through a delisting. Kape believes Unikmind will get enough support to do so.
‘Therefore, notwithstanding the value of the revised offer, the independent directors believe that Kape shareholders should seriously consider accepting the revised offer,’ Kape said.
‘Kape shareholders who anticipate realising greater value in their Kape shares in the future, whilst recognising and being willing to accept the risks associated with remaining as an investor in an unlisted company controlled by Unikmind, may wish to remain as shareholders in Kape.’
Brent oil was quoted at $81.23 a barrel late Friday in London, down from $81.29 late Thursday. Gold was quoted at $1,977.53 an ounce, sharply lower against $2,002.90.
Monday’s local corporate calendar has annual results from leisure and entertainment business Brighton Pier Group and law firm Keystone Law.
The economic diary has the latest Rightmove UK house price index just after midnight. The week picks up pace with gross domestic product readings from the US and eurozone, respectively, on Thursday and Friday.
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