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| | London Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | London close: Stocks drop into the red as M&A fever fails to sustain optimism The M&A fever that sent UK markets higher on Wednesday morning fizzled out towards the end of the day, with the FTSE 100 dropping into the red by the close. BG Group, which had soared as much as 40% early on, pared gains to finish 26.7% higher after the natural gas outfit recommended a £47bn takeover offer from Shell. Shares in the latter, however, plunged firmly into negative territory as a result.
Not even bid speculation surrounding Sky and ARM Holdings could support markets, as nervousness ahead of the latest Federal Reserve minutes and uncertainty about Greece weighed on sentiment.
The Footsie, which touched a high of 7,012.06 initially, fell 24.36 points (-0.35%) to 6,937.41 after three days of gains. The index surged 1.9% on Tuesday, its biggest rally since January.
Minutes from the 17-18 March Federal Open Market Committee meeting were due for release at 18:00, though any hawkish comments on rates will likely be taken with a pinch of salt following last week's disappointing non-farm payrolls figure.
Investors were also showing their nerves ahead of Thursday's deadline for Greece to pay back €458m to the International Monetary Fund. Meanwhile, Prime Minister Alexis Tsipras's decision to fly to Moscow to meet with Russian President Vladimir Putin has also concerned many.
"Even if the Greeks were to pay the debt as expected, the timing of this meeting shows the Greeks want to be seen to not be playing by the book," said analyst Joshua Mahony from IG.
BG Group, Sky and ARM gain on M&A BG Group came off its highs but was still the standout riser after its board recommended a £47bn takeover offer from Shell. The bid values BG at around 1,350p per share, a 50% premium to its closing price of 910.4p on Tuesday. If the transaction completes, BG shareholders will be left with a 19% stake in the enlarged company.
While Shell itself dropped 8.6% following the news, others in the sector were rising on hopes that the deal will trigger a new wave of industry consolidation. Larger players such as BP have held up well amid the oil crisis compared with their smaller peers and could now look to snap up struggling producers, analysts said.
Sky was in demand amid bid speculation that France's Vivendi could table a bid for the UK listed TV and broadband operator. Though Vivendi representatives denied Sky is an acquisition, market participants piled into Sky stock on an earlier Reuters report that Vivendi could pay up to £28bn for the company.
Shares in ARM Holdings rose after a report in a Chinese news outlet pointed to US consumer tech giant Apple being a likely suitor to snap up the UK chipmaker.
Mining stocks mostly erased gains after an earlier rise as risk appetite took a hit, with BHP Billiton, Glencore and Rio Tinto finishing down. Precious metal producers Randgold and Fresnillo were also tracking gold and silver prices lower.
Experian shares received a boost by Credit Suisse which lifted its stance on the information services and credit checking group from 'neutral' to 'outperform', saying it expects a "re-rating".
Market Movers
techMARK 3,203.11 +0.09%
FTSE 100 6,937.41 -0.35%
FTSE 250 17,561.47 +0.23% |
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| | FTSE 100 - Risers
BG Group (BG.) 1,153.00p +26.65%
Experian (EXPN) 1,181.00p +2.70%
ARM Holdings (ARM) 1,123.00p +1.91%
Shire Plc (SHP) 5,485.00p +1.86%
Burberry Group (BRBY) 1,743.00p +1.69%
Sky (SKY) 1,039.00p +1.56%
Hargreaves Lansdown (HL.) 1,185.00p +1.54%
Direct Line Insurance Group (DLG) 322.70p +1.22%
London Stock Exchange Group (LSE) 2,550.00p +0.99%
St James's Place (STJ) 982.50p +0.82%
FTSE 100 - Fallers
Royal Dutch Shell 'B' (RDSB) 2,019.50p -8.56%
Royal Dutch Shell 'A' (RDSA) 1,982.50p -5.32%
Ashtead Group (AHT) 1,064.00p -2.83%
Randgold Resources Ltd. (RRS) 4,691.00p -2.80%
Fresnillo (FRES) 686.00p -2.69%
Aviva (AV.) 550.00p -1.96%
Babcock International Group (BAB) 994.00p -1.88%
CRH (CRH) 1,752.00p -1.68%
Tesco (TSCO) 246.85p -1.65%
Smiths Group (SMIN) 1,120.00p -1.58%
FTSE 250 - Risers
Ophir Energy (OPHR) 156.30p +7.35%
RPS Group (RPS) 244.90p +4.66%
NMC Health (NMC) 695.50p +4.59%
Drax Group (DRX) 391.10p +4.49%
Tullow Oil (TLW) 313.60p +4.43%
Fidelity China Special Situations (FCSS) 158.60p +4.07%
Ted Baker (TED) 2,678.00p +4.04%
Michael Page International (MPI) 550.00p +3.58%
Premier Farnell (PFL) 188.40p +3.52%
Hellermanntyton Group (HTY) 347.50p +3.27%
FTSE 250 - Fallers
Acacia Mining (ACA) 271.10p -3.66%
Amec Foster Wheeler (AMFW) 898.50p -2.44%
Euromoney Institutional Investor (ERM) 1,134.00p -2.16%
Rank Group (RNK) 186.00p -1.90%
Brown (N.) Group (BWNG) 321.90p -1.89%
International Personal Finance (IPF) 490.60p -1.88%
Soco International (SIA) 169.50p -1.80%
JD Sports Fashion (JD.) 471.30p -1.79%
Millennium & Copthorne Hotels (MLC) 578.00p -1.78% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks mostly lower as energy producers reverse gains European indices snapped earlier gains after a report showing US oil inventories grew more than expected last week fuelled concerns of an oversupply in the market. A rally in energy producers earlier on, supported by news of a merger between Shell and BG Group, was short-lived following the stockpiles report which sent industry shares in the opposite direction.
Brent crude plunged 3.7% to $56.96 per barrel towards the close of trading, data from the ICE showed.
In other negative news for the market, German factory orders fell 1.3% year-on-year, compared to analysts' estimates for a 0.5% increase, the Economy Ministry in Berlin revealed.
On the upside, Eurozone retail sales rose 3% year-on-year in February, better than the 2.8% increase predicted by the market.
Meanwhile, Greek Prime Minister Alexis Tsipras met with Russian President Vladmir Putin in Mosow. Tsipras said Greece was not in favour of Western sanctions on Russia and warned that it could spark another Cold War.
Greece is due on Thursday to pay €448m in debt repayments to the International Monetary Fund in the wake of negotiations with the Fund and the EU for further aid.
After the close, the Federal Reserve publishes the minutes of its March meeting amid speculation the central bank will delay its first interest rate hike further after Friday's worse-than-expected non-farm payrolls report.
Companies: SBM Offshore, Sky
SBM Offshore NV declined on news the Dutch company agreed to compensate Petroleo Brasileiro SA for contract losses estimated at $1.7bn.
Sky gained amid bid speculation that France's media giant Vivendi could table a bid for the UK listed TV and broadband operator.
Easyjet rose after reporting a 7.5% increase in passenger growth for March.
Bayerische Motoren Werke AG and PSA Peugeot Citroen slumped after Kepler Cheuvreux SA downgraded the shares. |
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| | US Market Report | | US open: Stocks edge forward ahead of Fed minutes, as Alcoa kicks off earnings season US stocks edged forward on Wednesday, as investors awaited the publication of the minutes from the latest Federal Reserve meeting. Just in New York, the Dow Jones Industrial Average was up 0.27%, while the S&P 500 and the Nasdaq gained 0.30% and 0.37% respectively.
On Tuesday, US markets surrendered session gains to end lower amid worries about the upcoming earnings season which unofficially kicks off Wednesday.
According to data from Thomson Reuters, first-quarter S&P 500 earnings are projected to have declined by 2.8% from a year ago, which would make the quarter the worst for results since the third quarter of 2009, not long after the US emerged from the Great Recession.
"Considering the way the dollar has strengthened over the last three months observers will be keen to see how much of a negative impact this is having on the US corporate arena," said Alastair McCaig, market analyst at IG.
On Wednesday, traders will be anticipating the release of the latest minutes of the Fed meeting, which could offer more signs of the US central banks stance on the pace of rate increases.
Investors are also likely to focus on comments from New York Fed President William Dudley and Fed Governor Jerome Powell.
"At the last meeting the Fed dropped its 'patience' language but also revised down its growth and inflation forecasts," said CMC Markets' analyst Jasper Lawler.
"The removal of forward guidance was largely priced in so it was the growth revisions that markets reacted to."
Meanwhile, the Mortgage Bankers Association said its seasonally adjusted index of application activity, which covers home purchase demand and refinancing demand, climbed 0.4% in the week ended 3 April.
Oil prices were under pressure in the wake of rising inventory and record output in Saudi Arabia. West Texas Intermediate fell 2.7% to $52.56 a barrel, while Brent crude dropped 1.79% to $58.06 a barrel.
In company news, Royal Dutch Shell Group fell 3.46% after announcing it would buy BG Group in a deal worth almost $70bn, while the British company jumped 31.59%.
Lightweight metals manufacturer Alcoa, which will unofficially kick off the earnings season on Wall Street after the close on Wednesday, advanced 1.86%, while drugstore chain Rite Aid rose 1.96% after reporting better-than-expected fourth quarter profit.
Apple fell 0.2% after analysts at Societe Generale downgraded their rating on the stock to 'hold'. |
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| | Broker Tips | | Broker tips: BG Group, Experian, Tate & Lyle A counter offer for BG Group looks unlikely, according to Canaccord Genuity, which downgraded its rating on the natural gas firm from 'buy' to 'hold' after Wednesday's takeover offer by Royal Dutch Shell. Analyst Richard Griffith said: "We cut our recommendation from 'buy' to 'hold' and would only subscribe to remaining buyers of BG in the event of a counter offer which we believe seems unlikely looking at the current share price trading at a discount to the deal metric value."
Experian shares received a boost on Wednesday by Credit Suisse which lifted its stance on the information services and credit checking group from 'neutral' to 'outperform' and hiked its target from 1,100p to 1,300p.
"The combination of accelerating organic growth, an on-going buyback scheme, prodigious cash generation and optimised balance sheet will drive a re-rating in our view," the bank said.
Numis Securities has lowered its recommendation for Tate & Lyle from 'hold' to 'reduce', saying there is "little to excite" investors of the sweeteners and sugar group. | | |
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