A dramatic foreign takeover in the FTSE 250 and some smaller merger & acquisitions activity were giving London stocks a boost early Thursday, as market euphoria over a Russian promise to pull back troops in Ukraine dissipated.
A statement from a Russian official on Wednesday put paid to any hopes of a quick peace deal. ‘We cannot state that there was anything too promising or any breakthroughs,’ Kremlin spokesman Dmitry Peskov had told reporters.
The FTSE 100 index was up 12.33 points, or 0.2%, at 7,591.08 early Thursday. The mid-cap FTSE 250 index rose 159.18 points, or 0.8%, to 21,431.65. The AIM All-Share index was down just 0.22 of a point at 1,046.46.
The Cboe UK 100 index was up 0.4% at 755.28. The Cboe 250 was up 1.0% at 18,898.54, and the Cboe Small Companies was marginally lower at 15,359.83.
In Paris, the CAC 40 index was up 0.3%, while the DAX 40 in Frankfurt rose 0.7%.
Asian equities struggled on Thursday. The S&P/ASX 200 in Sydney lost 0.2%. The Nikkei 225 in Tokyo closed down 0.7%. In China, the Shanghai Composite ended 0.4% lower, and the Hang Seng in Hong Kong was down 0.5% in late trade.
Brewin Dolphin was the notable performer in London in early trade on Thursday. The stock surged 61% to 511.26 pence after it agreed to a £1.6 billion takeover from Royal Bank of Canada.
RBC will pay 515 pence per Brewin Dolphin share, a 62% premium to its 318p closing price on Wednesday.
The RBC offer values Brewin's equity at £1.6 billion. RBC noted this represents 2.8% of Brewin Dolphin's £55.0 billion in assets under management as of February 28.
The buyout is an ‘exciting strategic opportunity’ for RBC, allowing the Toronto-based lender a chance to combine its UK and Channel Islands wealth management arm with the FTSE 250 constituent.
Brewin peer Rathbones was up 6.9% in a positive read-across.
Trainline surged 20%, following an announcement that offers its future ‘greater certainty’.
The firm has reached a deal with British railway body Rail Delivery Group to alter the rail ticketing platform's third-party retail licence. Trainline will take a 0.5 percentage point reduction in the base business-to-consumer sales commission rate. It means it will take a 4.5% commission, down from 5%.
Partially offsetting this will be the ‘removal of central industry costs’, which Trainline forecasts at 0.25%.
‘This is a step forward in providing greater certainty to Trainline. It allows us to invest further in product innovation and marketing to encourage more people back to rail. We are committed to continuing to work constructively with RDG and the government to reach agreement on a future retail framework that works for the customer, the industry and rail retailers like Trainline,’ Chief Executive Jody Ford said.
The pound declined to $1.3135 early Thursday in London from $1.3163 late Wednesday, getting no boost from decent UK economic figures.
The euro was quoted at $1.1162, largely unchanged from $1.1163. Against the yen, the dollar fell to JP¥121.53 from JP¥121.94.
In Thursday's economic calendar, there are EU unemployment figures at 1000 BST. In the US, focus will be on the latest jobless claims reading and the core personal consumption expenditure figures at 1330 BST. The latter is an inflationary gauge closely watched by the US Federal Reserve.
Already out, data from the Office of National Statistics showed the UK economy expanded at a faster pace than expected in the fourth quarter of 2021, despite the emergence of the Omicron variant of Covid-19.
Gross domestic product expanded 1.3% quarter-on-quarter in the final three months of last year. The figure topped the previous estimate, which showed 1.0% growth.
The revision means that the UK economy actually ended last year larger than it was two years earlier, before the emergence of Covid-19.
‘The level of GDP is now 0.1% below where it was pre-coronavirus at quarter 4 2019, revised from the previous estimate of 0.4% below,’ the ONS said.
Capital Economics commented: ‘The leap in inflation was behind the fall in real household disposable incomes in Q4 of last year. But it is encouraging that households appear willing to reduce their saving rate in order to carry on spending. This is the main reason why, although GDP growth will slow this year, a recession will probably be avoided.’
Also on the up are UK house prices, according to figures from Rightmove. UK house prices saw the strongest annual surge since 2004 in March.
UK house prices rose 14% yearly in March, accelerating from a 13% climb in February. On a monthly basis, house prices rose 1.1% to £265,312 from £260,230 in February. Prices had risen 1.7% monthly in February.
The annual surge, Nationwide analyst Robert Gardner said, was the strongest growth since November 2004.
‘Nevertheless, we still think that the housing market is likely to slow in the quarters ahead. The squeeze on household incomes is set to intensify, with inflation expected to rise further, perhaps reaching double digits in the quarters ahead if global energy prices remain high. Moreover, assuming that labour market conditions remain strong, the Bank of England is likely to raise interest rates further, which will also exert a drag on the market if this feeds through to mortgage rates,’ Gardner said.
A barrel of Brent oil fetched $106.84 early Thursday UK time, down from $113.56 at the London equities close on Wednesday. Gold fell to $1,930.19 an ounce from $1,934.80.
The yellow metal has recovered from an intraday low of $1,919.55 earlier on Thursday morning, however.
Oil prices fell on reports that the US is considering tapping its reserves to combat a supply crisis sparked by the Ukraine war.
‘These efforts point to two glaring issues. First, the US has had little success in persuading OPEC members to increase output. Second, any expansion in US supply to global markets that hits the oil price will only be sustained once Ukraine and Russia are close to striking a ceasefire deal,’ SPI Asset Management analyst Stephen Innes commented.
OPEC and other major producers, including Russia, are preparing for their monthly meeting later in the day, where they are expected to refrain from lifting output by more than their planned 400,000 barrels, despite the growing energy crisis.
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