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LONDON MARKET CLOSE: FTSE 250 Surges As Greene King Accepts Takeover

Mon, 19th Aug 2019 17:01

(Alliance News) - London stocks started the week on the front foot amid stimulus hopes and the prospect of further trade talks between the US and China. In Monday's afternoon company news, Greene King shares shot up 51% after the pub operator accepted a takeover bid.The FTSE 100 index closed up 72.50 points, or 1.0%, at 7,189.65. The FTSE 250 ended up 276.12 points, or 1.5%, at 19,097.97, and the AIM All-Share closed up 4.43 points, or 0.5%, at 846.41.The Cboe UK 100 ended up 1.1% 12,196.36, the Cboe UK 250 closed up 1.5% at 16,967.65, and the Cboe Small Companies ended up 0.7% at 10,918.67.In European equities on Monday, the CAC 40 in Paris ended up 1.3%, while the DAX 30 in Frankfurt ended up 1.3%."Stock markets in Europe have rallied today as the macroeconomic backdrop has improved a little," said David Madden at CMC Markets. "Last week, we saw that Germany's economy contracted, and now there is chatter the country will set aside EUR50 billion as a stimulus package. Given how prudent the German government are, even the possibility of a stimulus package says they mean business," he said, also citing Chinese lending reform plans as another reason for the leg higher on Monday.News of German stimulus came as the central bank on Monday warned the country is teetering on the brink of recession.Germany's economy contracted 0.1% in the April to June period, according to preliminary figures from the country's statistical agency Destatis, which were released last week. Another quarter of contraction in the summer months would technically put Germany into recession."The total economic output could fall again slightly," the Bundesbank said of the July to September period in its monthly report released Monday.The central bank said it remained to be seen whether exports and manufacturing catch themselves in time before dragging domestic indicators like employment and consumer spending down with them.The euro stood at USD1.1092 at the European equities close Monday, against USD1.1095 at the same time on Friday.Meanwhile, the pound was quoted at USD1.2139 at the London equities close Monday, compared to USD1.2147 at the close on Friday.Outside of Europe, stocks in the US were also racking up some sizeable gains on Monday."The decision by the Trump administration to allow Huawei 90 days to keep buying from US suppliers has added to the positive move in stock markets. Not only does it help US tech companies, it sends a positive message to Beijing that they are willing to be reasonable, and that is a step forward in US-China relations," he said.Stocks in New York were firmly in the green at the London equities close, with the Dow Jones up 1.1%, the S&P 500 index up 1.3%, and the Nasdaq Composite up 1.5%. In a further sign of improving US-China relations, Donald Trump's chief economic advisor said Sunday that Washington and Beijing are working actively to revive negotiations aimed at ending their trade war.If teleconferences between both sides' deputies pan out in the next 10 days "and we can have a substantive renewal of negotiations," Larry Kudlow said on Fox News Sunday, "then we are planning to have China come to the USA and meet with our principals to continue the negotiations."That left it uncertain, however, whether a Chinese delegation would be coming to Washington next month, as a White House spokesperson predicted after US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin left a round of trade talks in Shanghai in July.This news came prior to Commerce Secretary Wilbur Ross on Fox Business Network saying Huawei has been given a 90-day reprieve on the ban from buying US technology."There's another 90 days for the US telecom companies, some of the rural companies are dependent on Huawei," Ross said on Fox Business Network. "We are giving them more time to wean themselves off."The new deadline for implementing the ban is November 19, he said.With hopes the US and China will work towards resolving their trade impasse soon, stocks benefited from risk-on trade on Monday. This was, however, to the detriment of safe haven asset gold. Gold was quoted at USD1,501.04 an ounce at the London equities close Monday against USD1,509.11 at the close on Friday.This saw Mexican gold miner Fresnillo end the session 1.5% lower, tracking the price of the precious metal downwards.In other commodities, Brent oil was quoted at USD59.25 a barrel at the London equities close on Monday from USD58.56 late Friday."Oil is higher today on account of the heightened tensions in the Middle East," CMC's Madden explained. "An oilfield in Saudi Arabia came under attack from Yemeni separatists, and that raised the temperature of the mood in the region. The wider bullish move in the markets on the back of Chinese banking reforms and the possibility of a stimulus from Germany, and the Trump's stance on Huawei, are helping the energy market too."This saw London-listed oil majors rise, with BP gaining 2.0% and Royal Dutch 'A' and 'B' shares up 2.1% and 2.0% respectively. Among other blue-chip risers, J Sainsbury ended the session up 3.2%.This was after the supermarket said it is not talking to internal candidates to replace Chief Executive Mike Coupe who still has the support of the company's board, Reuters reported.The news came following reports from the Daily Telegraph that the supermarket chain was preparing a succession plans and potential replacements for Coupe. In a statement given to Reuters, Sainsbury's said: "Every responsible business has potential succession plans for its CEO. This is nothing new."We are not talking to internal candidates about succession planning for Mike and have been clear he has the full support of shareholders and the board."Boosted to the top of the mid-cap FTSE 250 was Greene King, shares surging 51% to 850.00 pence on afternoon news of a takeover bid.The pub operator said it has accepted an 850p cash offer from Hong Kong-listed property developer CK Asset Holdings, which represents a 51% premium to Greene King's closing price of 563p on Friday. The offer values Greene King's issued share capital at GBP2.7 billion, giving the firm an enterprise value of GBP4.6 billion.CK Asset said the UK pub and brewing sector will "continue to be an important part of British culture". CK Asset has previously invested in the UK pub sector, owning a small portfolio of freehold pubs, all of which are leased to Greene King.In the UK corporate calendar on Tuesday, there are annual results from miner BHP Group and interim results from oilfield services firm John Wood, house builder Persimmon and Travelex owner Finablr. In the economic calendar, German producer prices are out at 0700 BST followed by eurozone construction output at 1000 BST and the Consortium of British Industry's industrial trends survey at 1100 BST. Focus this week lies on central banks, however, with the minutes from the US Federal Reserve's last meeting released on Wednesday and the Jackson Hole symposium kicking off on Thursday, which will see Fed Chair Jerome Powell speak.London Close is available to subscribers as an email newsletter. Contact info@alliancenews.com

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