Aveva Snowballs

.The FTSE 100 opened at 5874 and trended upwards through the day where it went into the 6000 territory before closing up at 6017 (+2.45%).

Aveva Group, a FTSE 250 company within Software & Computer Services, seemed to snowball today as their share price declined significantly to £15.50 per share (-28.44%).  The decline was off the news that both Schneider Electric and Aveva have mutually agreed not to go forward with the planned acquisition due to being too expensive and risky.  The £1.3billion complex deal will not be going ahead after due diligence was taken by Schneider which brought to light unanticipated issues in relation to Aveva’s software assets which were making the possible merger more complicated than originally thought thus putting an end to talks.  Unfortunately for Aveva this means they will continue to be highly exposed to the Oil & Gas market where 45% of their revenues are generated.  Due to a weakened oil market, there has been a fall in demand for rigs design work and with oil prices hitting new lows yesterday the outlook on Crude and Brent prices seem cloudy.  Brent oil was up today but this is far from a cry of a potential recovery as some economists didn’t believe prices would fall below $40 again a few months ago.  At the time of writing Brent oil stood at $38.54 (+2.99%) putting an end to their 7-day losing streak.

The CPI figure for November was due out of the UK today where we saw the inflation rate move into positive territory for the first time in four months, however, core inflation remained weak at 1.2%.  The Office of National Statistics showed an increase of 0.1% for November when compared to the same period in 2014.  Price movements in transport costs and alcohol and tobacco prices were the main contributors to the rise in the rate but it was the fall in clothes prices, which were taken into account before Black Friday, offset some of the rise.  The Bank of England are already predicting inflation to stay below 1% until the second half of 2016, this in turn has led to analysts pushing the date further into the future as to when they think UK interest rates will rise.

At the close, European indices were up with the FTSE 100 +2.45%, the CAC 40 +3.16%, and the DAX +3.07%.  Asian indices were also down for the day with the Hang Seng -0.17% and the Nikkei 225 -1.68%.  At the time of writing this, US indices were up with the NASDAQ +0.81%, the S&P 500 +1.02% and the Dow Jones +0.99%.