Monday 4 April: Markets were fairly subdued on Monday morning with the FTSE barely mustering any significant movements. European markets had little lead with China and Hong Kong markets closed for holidays, Japanese markets fairly stagnant and no major commodity price shifts. UK investors seemingly chose to wait for the release of UK manufacturing data.
The manufacturing PMI for March was 51.0, slightly above February’s 50.8 (34 month low). This puts the first quarter average at 51.6, the lowest since PMI first moved back above 50 in early 2013. The domestic market remains the strongest for new contract wins, doing its best to counteract the falling export business. UK construction PMI held at 54.2, matching February’s 10 month low. Housing construction sank as growth in commercial property and civil engineering picked up. The figure still shows respectable growth, being above 50. It is also around the consensus of 54.3, although the main surprise is driving factors behind the figures, rather than the numbers themselves. Overall, poor global economic growth is certainly a source of flagging activity outside the UK, the fall in sterling may help this in the coming months but on the other hand the pain to the cost side may render it negligible. Not to mention the Brexit, only providing further complications to the sector.
One of the biggest stories to emerge from the business world over the weekend is the huge data leak from Panamanian law firm Mossack Fonseca. Shrouded in secrecy, the firm is one of the most secretive on the planet. That was until over 11 million documents were leaked. For years the firm’s secretive offshore services have been just that, secretive, they’ve also helped the world’s rich and powerful break the law. This story will no doubt continue to evolve over the coming days and weeks, yet we already know it puts numerous heads of state, both current and former into the spotlight. It will be undoubtedly have huge ramifications for the offshore world.
In other news, Tesco is considering the sale of their loss making Giraffe restaurant chain. The move will go a small way towards ridding the supermarket of previous strategic errors. Phil Clarke’s acquisition three years ago has proved increasingly costly. The shares were today 0.43% higher and YTD they are over 30% higher.
Alaska Air Group has announced an agreed deal worth £2.8bn to buy Virgin America. After completion the deal will create the fifth largest US airline, enabling Alaska Air to tap into the lucrative hubs of San Francisco and Los Angeles. Sir Richard Branson has expressed his sadness over the deal, although Virgin shares rose around 40% after the news broke.
A deal between French telecoms firms Orange and Bouygues Telecom has collapsed, initially sending European telecoms down during Monday’s session. The deal was believed to be one of the last chances for consolidation within the French market; if successful it’d have reduced the mobile operators in France from 4 to 3.
The FTSE 100 on the day closed 0.3% higher, with subdued activity the story on Monday. Despite a steady slide from midday, the index held onto gains for the first time in 3 sessions. Other main European markets told a similar story, whilst at the time of writing both the Dow and S&P 500 were marginally down.