1630:Close London equities have finished higher again, basking in the afterglow of the ECB's actions yesterday. The resulting possible stabilization of the Eurozone crisis -at least for the short term- has unleashed sharp upside moves in the shares
of miners; on the premise that a more stable Eurozone will "feed-through" into greater demand for basic resources world-wide. As well, and as analysts at Credit Suisse mused yesterday, many of these companies' share prices
had already been pummeled year to date. In their own words, "The steel industry remains burdened with chronic structural overcapacity that could take between seven to close to 20 years to eliminate (...) pricing power remains cyclical and not structural as a consequence and returns could be muted for many years. But the performance of global steel equities over the past 24 months (down 39 per cent relative to MSCI World up 13 per cent) suggests the market is aware of this trend; thus we see a cyclical window of opportunity to own steels." Barclays rose following an upgrade out of Deutsche Bank.
Tobacco stocks were out of favour, not only because investors tend to switch out of them when markets start looking a bit racier, but also because of continuing worries over anti-smoking legislation being prepared in Russia. Associated British Foods was down ahead of results on Monday, while commodities trader Glencore was the biggest faller after its increased merger terms received a lukewarm reception from Xstrata's independent directors. The top-share index still ended the week 83 points higher than it started it.
1603: Economists at Barclays Research see today's employment report as tilting the balance in favour of more Fed action at next week's meeting. In their own words: "In our view, the August employment report will leave the FOMC dissatisfied with the pace of progress and, as a result, we look for the Fed to ease further at next week's FOMC meeting."
1513: The independent directors of Xstrata have noted the revised and improved terms from suitor Glencore and do not seem very impressed. 'The proposed exchange ratio of 3.05 [to 1] represents a premium of 17.6 per cent to the undisturbed Xstrata share price on 1st February 2012 and 22.2 per cent to the closing price on 6th September, which is significantly lower than would be expected in a takeover,' the directors write in a letter to Glencore requesting clarification of the outline proposal received this morning. FTSE 100 is up 14 at 5,791.
1448: Hopes that the ECB's move will demand the boost for metals have lifted the mining sector today. Iron ore miners Evraz and Ferrexpo are standout performers, up 12.6 per cent and 14.4 per cent, respectively. Glencore continues to fall and Xstrata continues to rise after the former raised its bid for the latter. The deal, which is now being classed as a takeover and not a merger, is expected to be recommended by Xstrata's board and approved by shareholders, according to analysts at Jefferies this afternoon. 'A merged Glen-X would be one of our top picks', the broker said. The FTSE 100 is up 14 points at 5,792.
1445: Xstrata top 20 shareholder Schroders says Glencore's revised proposed offer for the company is still inequitable.
1330: US non-farm payrolls for the month of August rose by 96,000, versus the 130,000 expected by the consensus. Furthermore, the previous two months' data has been revised down. That would seem to have confounded those observers who, on the basis of seasonal patterns, had been expecting a pick-up in employment. FTSE 100 up 5 to 5,783.
1220: Footsie enjoyed a buoyant morning session, although after bursting through the 5800 level in the first hour it has been poodling along between 5,780 and 5,790 for the last hour or so. Steel maker Evraz leads the advance, while mining stocks and bankers also put on a spurt following the ECB's blockbuster decision yesterday to sanction potentially unlimited purchases of Eurozone countries' sovereign debt on the secondary market. One mining stock that is going the other way, however, is Glencore, after it was forced to up its terms to save its proposed merger with Xstrata. Xstrata's directors are considering the new proposal. With the market in a risk-on mood, some of the old defensive favourites such as booze makers SABMiller and Diageo, pharmaceuticals giant Glaxo, household goods firms Reckitt and Unilever, plus ciggie firm IMPs and BATs, are out of favour. FTSE 100 is up 12 at 5,789.
1013: After commencing today´s shareholders´ meeting with a delay Xstrata has just announced that the trader, Glencore, has revised its bid offer higher, to 3.05 Glencore shares for each Xstrata share.
0930: UK industrial production rose by 2.9% month-on-month in July, its sharpest increase since 1987. Manufacturing output rose at a 3.2% month-on-mnth clip.
0856: The Footsie is slightly higher after rising over two per cent yesterday on the back of the ECB's bond-buying plan. 'It would appear on the face of it that so far [ECB President] Mario Draghi's plan to support the Euro
is working with the currency trading higher against most others and yields on Spanish and Italian 10-year paper falling for a second day with Spain's yields under six per cent for the first time in four months,' said sales trader Matthew Nelson from Spreadex. The FTSE 100 is up four points at 5,781.
0836: Glencore has just announced that its shareholder meeting to discuss the merger with Xstrata has been adjourned. 'Glencore has requested to temporarily suspend Glencore's shares on the London Stock Exchange and Hong Kong Stock Exchange. Glencore is considering its options and will update the market in due course,' the company said. According to the Financial Times, Glencore Chairman Simon Murray told shareholders in Switzerland that there had been 'overnight developments. The paper says that Glencore has until 11:00 local time (in Zug) to ask Xstrata to also adjourn its shareholder meeting.
0804: The good times keep rolling in London after yesterday's ECB-inspired rally, albeit somewhat more slowly than yesterday. It is more a case of topping up yesterday's gains, however, rather than another full-blown charge ahead in early trading. Once again, miners and banks are to the fore. Xstrata is nervously lower ahead of the eagerly anticipated shareholder vote on the proposed merger with Glencore. FTSE 100 is up 5 at 5,783.