Tuesday, 27 February: The flow of investor confidence was held in the US session on Monday to lead the Dow to close 1.58% higher, backed up by gains on the S&P and NASDAQ of over 1%. During the early hours of Tuesday Asian bourses in general struggled, the Hang Seng amongst those, ended slumping to a 1.1% loss, although the Nikkei managed to close 1.1% higher. For the day ahead investors will await the first comments from the new Fed Chair Powell, as well as Germany’s Euro harmonized CPI numbers.
At the opening bell in London the FTSE was helped 0.3% higher by a raft of positive earnings updates. On the FTSE 100 Sky shares opened almost 20% higher after a bid from Comcast bettered Rupert Murdoch’s former bid from Fox. Comcast has made a £22.1bn bid for the broadcaster, equivalent to £12.5 p/share, a 16% premium on Fox’s current £10.75 p/share bid. We also have to remember that the CMA had provisionally blocked the deal for Fox to acquire the remaining stake in Sky, viewing it would not be in the public interest. Another aspect to this story is that last year Disney agreed to buy the bulk of 21st Century Fox, including their Sky stake. So, the Comcast element could be a spanner in that acquisition and how that deal will be formalised. Comcast have already expressed they’d be happy with co-ownership as long as they held the majority stake, but analysts already seem fairly confident of the deal going ahead. Sky shares closed +20.5%.
Persimmon shares also jumped by 12% after 2017 pre-tax profit jumped 25%. This was from selling more houses at higher prices, who’d have thought? They also plan to return cash to shareholders through special dividends over the short term. Despite running off in early trade shares eventually closed a modest 4.66% higher. On the FTSE 250 Provident Financial shares stole the show after a 35% increase at the opening bell. This was spurred by news that the lender had reached a settlement with the FCA over fines, the agreed deal lower than initial investor fears. They will use a rights issue to raise funds to help pay for the fines. Shares eventually closed a huge 70% on the day.
In other corporate news today British engineering firm GKN has announced its intention to split the company in two. The move has the objective of raising shareholder value and fending off a hostile bid from Melrose Industries. They plan to demerge the main aerospace and automotive parts divisions into two separately listed firms. Shares closed the day 0.16% up.
At the close, the FTSE actually ended up slipping to a 0.1% loss, despite overcoming a blip at lunch to return to +0.3% around the time US markets opened. Unable to make a meaningful break through the 7,300 mark, US markets are currently down, as the majority of euro bourses end the day in the red. The lowered oil price, down 1.7% as we write lagging miners on the main index, with sterling having a quiet session.