Stock prices in London improved at the open on Monday, with FTSE 250 stocks Hipgnosis and Tyman rising on news of prospective takeovers for both firms, while investors more widely shook off nerves ahead of a key US inflation reading later this week.
The FTSE 100 index opened up 96.75 points, 1.2%, at 7,992.60. The FTSE 250 was up 152.32 points, 0.8%, at 19,543.62, and the AIM All-Share was up 3.13 points, 0.4%, at 748.80.
The Cboe UK 100 was up 1.2% at 798.06, the Cboe UK 250 was up 0.8% at 16929.51, and the Cboe Small Companies was down 0.3% at 14,744.84.
In European equities on Monday, the CAC 40 in Paris was up 0.3%, while the DAX 40 in Frankfurt was up 0.4%.
This week, the spotlight is on the US personal consumption expenditures reading, due Friday. This is the US Federal Reserve’s preferred indicator.
According to FXStreet, the core PCE index is expected to cool to 2.6% annually in March, from 2.8% in February.
‘The headline PCE data covering March will be in the calculus by the time it’s unveiled courtesy of the previous day’s report, but the personal spending release still has market-moving potential. Specifically, traders will look to the PCE-derived ’supercore’ inflation measure to refine expectations for the May FOMC meeting where anything cooler would come as a welcome surprise and likely be greeted with enthusiasm on Wall Street,’ said SPI Asset Management’s Stephen Innes.
In China, the Shanghai Composite was down 0.7%, while the Hang Seng index in Hong Kong was up 1.8%.
Overnight, the People’s Bank of China left the one-year loan prime rate - which serves as the benchmark for corporate loans - unchanged at 3.45%. The five-year LPR - which is used to price mortgages - was left at 3.95%. It had been cut from 4.20% in February, in an effort to stimulate the country’s flagging housing market.
Market consensus had been expecting no change in April, given that the PBoC had left one-year medium-term lending facility rate unchanged at 2.50% last week.
In Asia on Monday, the Nikkei 225 index in Tokyo was up 1.0%. The S&P/ASX 200 in Sydney closed up 1.1%
The pound was quoted at $1.2380 early on Monday in London, lower compared to $1.2410 at the equities close on Friday. The euro stood at $1.0663, down slightly against $1.0664. Against the yen, the dollar was trading at JP¥154.71, up compared to JP¥154.52.
In the FTSE 100, Ocado jumped 4.4% to the top of the index.
Ocado has faced investor pressure to consider a listing in New York, the Telegraph reported on Saturday.
The newspaper reported that the grocer and warehouse technology firm has had face-to-face talks with investors, a New York listing was a prospect that was discussed.
The Telegraph noted that ‘one leading fund manager’ said they would like to see Ocado explore a ‘trans-Atlantic shift’.
Other London listed retailers got a boost on Monday. Marks & Spencers, Sainsbury’s, and B&M were up 3.5%, 2.9%, and 2.8%, respectively.
In the FTSE 250, all eyes were on takeovers.
Tyman rose 29% to 380.56p, after it said it agreed to a £788 million takeover offer with Quanex.
Tyman shareholders will be entitled to receive 240.0p in cash and 0.05715 of a new Quanex share.
The Quanex takeover offer for Tyman values each Tyman share at 400.0p, a premium to the closing price of 296.0p at close on Friday.
Tyman Non-Executive Chair Nicky Hartery said: ‘This transformative and complementary transaction will strengthen the enlarged business for the benefit of all our customers, employees and other stakeholders. In the context of a rapidly evolving North American marketplace, our board ultimately determined that this transaction is the best path to maximising value for Tyman shareholders, who will be able to realise a meaningful portion of their holding in cash at a significant premium to the prevailing share price while also participating in the future upside of the enlarged group.’
Hipgnosis Song Fund shares shot up 10% to 101.20p, after it said on Saturday that it would be ‘minded’ to accept an official cash bid from Blackstone, should one be forthcoming.
Hipgnosis Songs Fund, a music investment company, which has bought up the royalty rights to song catalogues of artists including the Red Hot Chili Peppers, Journey and Neil Young, had accepted a $1.40 billion bid from Alchemy Copyrights on Thursday. Alchemy trades as Concord Chorus Ltd.
The Blackstone bid values each Hipgnosis Songs Fund share at $1.24 each, the company overall at $1.50 billion.
‘The board, having reviewed the proposal with its financial adviser, Singer Capital Markets, has indicated to Blackstone that the proposal is at a value that it would be minded to recommend to its shareholders should Blackstone announce a firm intention to make an offer pursuant,’ Hipgnosis Songs Fund said.
Takeover offers weren’t limited to the FTSE 250 index, though. On AIM, Base Resources surged shares surged 94% to 10.50p.
Energy Fuels, a US-based uranium and critical minerals producer, said it has agreed to takeover Base Resources. The offer values Base Resources at A$375 million.
‘The combined group will have the financial and technical capability to not only build Toliara into one of the best critical mineral projects in the world, but also to develop an integrated value chain for the rare earth elements that are essential to the global energy transition,’ said Base Resources Managing Director Tim Carstens.
In the US on Friday, Wall Street ended mixed. The Dow Jones Industrial Average closed up 0.6%, whilst the S&P 500 fell 0.9% and the Nasdaq Composite lost 2.1%.
Brent oil was quoted at $86.20 a barrel early in London on Monday, down from $87.01 late Friday.
Gold was quoted at $2,356.23 an ounce, lower against $2,391.85.
Still to come on Monday’s economic calendar, there is a eurozone consumer confidence reading.
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