The FTSE 100 in London was up shortly after midday on Tuesday, with news of annual eurozone factory gate price growth cooling boosting European shares.
A deal between Investec and Rathbones also added some spark to trading on Tuesday. In mainland Europe, meanwhile, cosmetics and beauty firm L’Oreal also went shopping.
The FTSE 100 index was up 5.44 points, 0.1%, at 7,678.44. The FTSE 250 was up 76.63 points, 0.4%, at 18,956.04, and the AIM All-Share was down 2.82 points, 0.4%, at 810.57.
The Cboe UK 100 was up 0.1% at 767.95, the Cboe UK 250 was up 0.4% at 16,562.18, and the Cboe Small Companies ended down 0.5% at 13,276.95.
Annual eurozone factory gate inflation cooled in February, according to data on Tuesday.
According to Eurostat, the producer price index rose by 13.2% annually in February, cooling from the upwardly revised 15.1% rise in January. The January outcome was initially reported at 15%.
FXStreet-cited market consensus had been expecting a slightly higher reading of 13.5%.
Energy prices rose 17% year-on-year. Excluding the energy sector, producer prices were up 10%.
From the previous month, producer prices in the single currency area fell by 0.5%. They had fallen 2.8% in January from December. Market consensus had been expecting a 0.3% fall for February.
Following the news, European equities on Tuesday were in the green. The CAC 40 in Paris was up 0.6%, while the DAX 40 in Frankfurt was up 0.8%.
Over in New York, stocks were called higher. The Dow Jones Industrial Average is called up 0.1%, the S&P 500 index up 0.3%, and the Nasdaq Composite up 0.5%.
In the US, soaring oil prices pushed blue chips firmly into the green but knocked tech stocks on Monday. On Monday, the DJIA closed up 1.0% and the S&P 500 up 0.4%, whilst the Nasdaq Composite was down 0.3%.
Oil prices jumped after Opec+ nations announced unexpected production cuts of more than one million barrels a day in the face of weaker demand. Oil prices continued to make gains on Tuesday morning.
Brent oil was quoted at $85.65 a barrel at midday in London on Tuesday, up from $84.52 late Monday.
White House National Security Council spokesman John Kirby said on Monday that ‘we don’t think that production cuts are advisable at this moment, given market uncertainty’.
On the FTSE 100, Glencore rose by 2.7%
New York-listed Teck Resources on Monday said that it had received and its board unanimously rejected an ‘unsolicited and opportunistic’ acquisition proposal from Glencore.
Glencore offered 7.78 of its own shares for each Teck Class B subordinate voting share, and 12.73 shares for each Teck Class A common share. This represented a 20% premium for both on the date of the offer.
Glencore said the merged company would have an estimated post-tax synergy value of between $4.25 billion and $5.25 billion.
‘The prospect of mega deals in the mining space has got investors excited, bringing a new lease of life to the sector which had previously been suffering from fears about weaker economic activity feeding through to reduced commodities demand,’ said Danni Hewson, head of financial analysis at AJ Bell.
Another deal to attract attention on Tuesday was between Investec and Rathbones Group. They said they have agreed an all-share merger of Rathbones with Investec Wealth & Investment to create one of UK’s leading wealth manager.
Investec W&I UK includes Investec’s wealth and investment businesses in the UK and Channel Islands but excludes Investec Bank and Investec Wealth & Investment International, both of which will remain wholly-owned subsidiaries of Investec.
The merger will create a UK wealth manager with around £100 billion of funds under management and administration, the two companies said.
The enlarged Rathbones will remain an independent premium-listed company in London operating under the Rathbones brand with Investec as a long-term, strategic shareholder. It will continue to be led by Rathbones Chair Clive Bannister and Chief Executive Officer Paul Stockton.
Under the terms of the deal, new Rathbones voting and non-voting shares will be issued in exchange for 100% of Investec W&I UK’s share capital. Following completion, Investec will have an economic interest in Rathbones’ enlarged share capital of 41.25% but its voting rights will be limited to 29.9%. Investec will receive both voting ordinary shares and convertible non-voting ordinary shares that may convert into ordinary shares on a 1-for-1 basis.
Existing Rathbones shareholders will have an economic interest of 58.75% and voting rights of 70.1%. The terms of the combination imply an equity value of about £839 million for Investec W&I UK.
Rathbones shares were up 2.1% to 1,922.74 pence at midday on Tuesday, giving the company a market capitalisation of £1.22 billion. Investec shares were up 3.6% to 460.30p in London. They were up 4.0% at R 102.08 in Johannesburg.
L’Oreal rose 0.9% in Paris. It agreed to acquire Australian luxury cosmetics brand Aesop in a deal valued at around $2.5 billion.
Aesop will join L’Oreal’s Luxe Billionaire luxury brands umbrella, alongside the likes of Lancome, Yves Saint Laurent and Giorgio Armani.
In London’s small caps, Saga lost 8.2%.
The Kent, England-based over-50s travel operator said revenue in the financial year that ended January 31 grew by 54% to £581.1 million from £377.2 million the year before, due to increased trading in the Cruise and Travel businesses.
It swung to an underlying pretax profit of £21.5 million, from a loss of £6.7 million, primarily due to a £69.4 million reduction in Cruise and Travel losses, of which £47.0 million relates to the Ocean Cruise business.
However, statutory pretax loss widened to £254.2 million from £23.5 million the year before, reflecting an impairment of insurance goodwill of £269.0 million.
‘The longer the market had to look at Saga’s results this morning the less it liked about them. Yes, in theory the group returned to ’profit’. But this was an adjusted profit and on a statutory basis losses widened thanks to impairments on its insurance business,’ said AJ Bell’s Hewson.
Saga declared no dividend for the financial year, unchanged year-on-year.
Looking ahead, the company said the progress made in the last year puts it in ‘good stead’ as it enters financial 2023. It added that it remains focused on reducing its debt through the continued repayment of its ocean cruise ship debt and the £150 million bond on maturity in May 2024.
The pound was quoted at $1.2508 at midday on Tuesday in London, up compared to $1.2386 at the equities close on Monday. The euro stood at $1.0930, up against $1.0883. Against the yen, the dollar was trading at JP¥132.88, up compared to JP¥132.32.
Gold was quoted at $1,984.21 an ounce, down against $1,988.83.
Still to come on Tuesday’s economic calendar, there is some US data. Johnson Redbook retail sales index will be out first, followed by the US labor turnover survey.
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