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Equities up, gold down, bitcoin stable – this is a remarkably different picture than last week’s troubling scenes that dogged financial markets.
It suggests investors have had time to collect their thoughts over the weekend, and to start the new week in a calmer mood. It also helps that Ukraine peace talks have dominated the news agenda, giving hope to investors and individuals around the world.
All the major equity indices in Europe moved higher, including the FTSE 100 which went up 0.4% to 9,579. The UK index saw broad-based gains, with nearly every sector in favour apart from utilities and energy.
Miners were in vogue amid ongoing M&A activity in the sector. News that BHP has walked away from a second attempt to buy Anglo American has left investors hungry for action elsewhere. Glencore was among the top risers on the FTSE as it is seen as a potential merger candidate for one of the big players, or as a buyer itself.
BHP
It was inevitable that BHP might try its luck with a second attempt at buying Anglo American. The clock was ticking to get in with another offer before Anglo’s merger with Teck became a formality, but whatever happened behind closed doors hasn’t derailed this deal.
BHP has walked away, leaving Anglo to pursue a future with Teck. For BHP, this is frustrating on two levels. First, buying Anglo could have greatly strengthened its position in copper, seen by many as one of the most important metals of the future. Second, a combined Anglo/Teck creates a competitor with bigger scale.
BHP has enough to do with existing projects to keep it busy, and it remains a major player in the industry. However, this is an industry built on M&A, and no-one wants to be the loser when it comes to either diggers or dealers.
Rosebank Industries
The mini-Melrose is getting its ducks in a row after making its debut acquisition.
Rosebank Industries bought electrical components group ECI in the summer and has drawn up a restructuring plan as it begins to execute a buy, improve and sell business model.
It will close more than one quarter of ECI’s sites – a brutal situation for workers, but Rosebank deems it necessary to make the target run more efficiently and ultimately become more valuable. This won’t happen overnight and so it is now a waiting game for Rosebank’s shareholders for the company to deliver on its word.
M&C Saatchi
In advertising, the name Saatchi is synonymous with the ‘Labour Isn’t Working’ poster of a snaking unemployment line which helped swing the Conservative election victory in 1979. Yet M&C Saatchi itself has fallen victim of late to hundreds of thousands of US federal workers not being in work themselves as it blames the recent shutdown in Washington for weak trading.
There is a significant profit warning from M&C Saatchi, and it is striking to see management acknowledge this is not a timing issue. The lost revenue, principally centred on its Issues division, which focuses on government PR work, is gone for good.
Any hope the company might salve the disappointment over the weak performance with a share buyback proved forlorn.
Investors will be watching closely to see if Saatchi’s vulnerability flushes out further takeover interest. In the last few weeks alone, the company has rebuffed a bid from Brave Bison for its Performance arm and seen activist investor Harwood Capital up its stake amid speculation it might push for a sale or breakup of the group.
The dismal performance Down Under, where its Australian business appears to be suffering acutely in the teeth of macro-economic uncertainty, needs fixing sooner rather than later. M&C Saatchi will hope a major overhaul delivers.
Russ Mould: Investment Director
Russ Mould is AJ Bell's Investment Director. He has a Master's degree in Modern History from the University of Oxford and more than 30 years' experience of the capital markets.
He started out at Scottish...
