Market rally continues on both sides of the Atlantic as investor optimism continues
As the market rally roared on relentlessly, including new peaks on the Dow Jones Industrial Average, *Vodafone* rang up an impressive gain on growing hopes of a deal with its US partner Verizon.
The two have a wireless joint venture, and last week came talk that the two had been exploring ways to unwind the partnership. Analysts have long speculated that Vodafone could receive a $120m cash boost by selling its 45% in the joint venture, which could be reinvested in European expansion. However there are tax issues yet to be resolved.
But an alternative idea is a Verizon takeover of Vodafone, and last week's report also suggested a full merger had been discussed as recently as December. These proposals apparently fell apart due to disputes about the leadership of the merged business, as well as the location of its headquarters. So a sale of the Verizon Wireless stake is still seen as more likely. Analysts at Espirito Santo said:
We expect this news will be taken well from the perspective of Vodafone investors following recent speculation that it might be considering investing more in fixed assets in Europe, including potentially acquiring Kabel Deutschland. We expect Vodafone will only embark on a series of acquisitions in Europe if it can somehow monetize its 45% stake in Verizon Wireless, so given all of these reports we think Vodafone may be closer to a resolution here than previously.
Vodafone closed 5.75p higher at 184.35p, up nearly 10% on the week. Analysts at Exane BNP Paribas issued an underperform rating on the group but raised their price target by 5% to 178p.
Overall, a better than expected increase of 236,000 in US employment numbers ended the week on a positive note. An upbeat series of economic figures, including UK and US service sector data, had put investors in an upbeat mood during the week, despite the start of $85bn of US government spending cuts as politicians remained at odds over the country's $16trn debt mountain. Hopes that central banks will keep pumping money into the system to stimulate the global economy helped fuel the rally.
So the *FTSE 100* finished at 6483.58, up 44.42 points on the day and more than 105 points on the week.
By the time London closed, the Dow had reached 14,378, having earlier hit a new peak of 14,413.
Commodity companies turned in a mixed performance, with Russian steelmaker *Evraz* up 14.2p at 267.5p after better than expected trade figures from China, a key market for metals. But *Kazakhmys* closed 14.5p lower at 532.5p, following news it would be ejected from the FTSE 100 in the latest reshuffle. *Intu Properties*, down 3.5p at 328.7p, will also be demoted to the FTSE 250, with *easyJet*, up 3p to £10.58, and *London Stock Exchange*, 1p better at £13.83, taking their places.
After disappointing results on Monday, *HSBC* was 18.8p higher at 737p as investors bought back into the sector. *Lloyds Banking Group* was lifted 0.21p to 50.07p, *Royal Bank of Scotland* rose 3p to 306.2p, while *Barclays* was 9.1p better at 318.6p.
*Aviva* followed rival insurer with a shock cut in its dividend on Thursday, sending its shares down by more than 12%. But they recovered 10p to 324.8p on Friday as brave investors dipped their toes back in the water.
But *Marks & Spencer* slipped 3.8p to 362.4p after Credit Suisse began coverage with an underperform rating and 370p price target. It said:
We believe that hopes of a rapid turnaround in general merchandise product and execution later this year will be disappointed by the complexity of the changes to management, slow introduction of IT systems and a logistics platforms where we see few significant improvements before 2016. Food has been solid so far, although we do see growing threats to its core position in premium/convenience and from online. While international space growth is now slowing, M&S will continue to suffer from the over-expansion of the past six years and the poor environment for half its sales base.
Lower down the market gambling group *Sportech* jumped 17.25p to 108p after a tribunal ruled it had overpaid VAT on its Spot the Ball game between 1979 and 1996. The group could receive £80m and will start talks with Revenue and Customs to reach a deal over the amount, although the authorities could still appeal the ruling. Simon French at Panmure Gordon said:
For a company with a market capitalisation of around £180m and net debt of £57m this is a life changing event and we increase our target price from 105p to 145p.
Even if HMRC does appeal against the decision we do not expect it to be successful. When Sportech receives the money it will move into a net cash position which should make the commencement of dividend payments (which we have long assumed happening with the 2013 preliminary results) a formality and may even accelerate the timing. Perhaps more importantly, it gives Sportech the funds to fully capitalise on its market leading position in the US, just as certain states within that country are taking a more permissive approach to online gambling.
Finally specialist electronics supplier *Acal* added 7% to 236p after it raised £6.1m in a placing of shares at 215p each, to help fund the £10m acquisition of French group Myrra. Reported by guardian.co.uk 6 hours ago.
As the market rally roared on relentlessly, including new peaks on the Dow Jones Industrial Average, *Vodafone* rang up an impressive gain on growing hopes of a deal with its US partner Verizon.
The two have a wireless joint venture, and last week came talk that the two had been exploring ways to unwind the partnership. Analysts have long speculated that Vodafone could receive a $120m cash boost by selling its 45% in the joint venture, which could be reinvested in European expansion. However there are tax issues yet to be resolved.
But an alternative idea is a Verizon takeover of Vodafone, and last week's report also suggested a full merger had been discussed as recently as December. These proposals apparently fell apart due to disputes about the leadership of the merged business, as well as the location of its headquarters. So a sale of the Verizon Wireless stake is still seen as more likely. Analysts at Espirito Santo said:
We expect this news will be taken well from the perspective of Vodafone investors following recent speculation that it might be considering investing more in fixed assets in Europe, including potentially acquiring Kabel Deutschland. We expect Vodafone will only embark on a series of acquisitions in Europe if it can somehow monetize its 45% stake in Verizon Wireless, so given all of these reports we think Vodafone may be closer to a resolution here than previously.
Vodafone closed 5.75p higher at 184.35p, up nearly 10% on the week. Analysts at Exane BNP Paribas issued an underperform rating on the group but raised their price target by 5% to 178p.
Overall, a better than expected increase of 236,000 in US employment numbers ended the week on a positive note. An upbeat series of economic figures, including UK and US service sector data, had put investors in an upbeat mood during the week, despite the start of $85bn of US government spending cuts as politicians remained at odds over the country's $16trn debt mountain. Hopes that central banks will keep pumping money into the system to stimulate the global economy helped fuel the rally.
So the *FTSE 100* finished at 6483.58, up 44.42 points on the day and more than 105 points on the week.
By the time London closed, the Dow had reached 14,378, having earlier hit a new peak of 14,413.
Commodity companies turned in a mixed performance, with Russian steelmaker *Evraz* up 14.2p at 267.5p after better than expected trade figures from China, a key market for metals. But *Kazakhmys* closed 14.5p lower at 532.5p, following news it would be ejected from the FTSE 100 in the latest reshuffle. *Intu Properties*, down 3.5p at 328.7p, will also be demoted to the FTSE 250, with *easyJet*, up 3p to £10.58, and *London Stock Exchange*, 1p better at £13.83, taking their places.
After disappointing results on Monday, *HSBC* was 18.8p higher at 737p as investors bought back into the sector. *Lloyds Banking Group* was lifted 0.21p to 50.07p, *Royal Bank of Scotland* rose 3p to 306.2p, while *Barclays* was 9.1p better at 318.6p.
*Aviva* followed rival insurer with a shock cut in its dividend on Thursday, sending its shares down by more than 12%. But they recovered 10p to 324.8p on Friday as brave investors dipped their toes back in the water.
But *Marks & Spencer* slipped 3.8p to 362.4p after Credit Suisse began coverage with an underperform rating and 370p price target. It said:
We believe that hopes of a rapid turnaround in general merchandise product and execution later this year will be disappointed by the complexity of the changes to management, slow introduction of IT systems and a logistics platforms where we see few significant improvements before 2016. Food has been solid so far, although we do see growing threats to its core position in premium/convenience and from online. While international space growth is now slowing, M&S will continue to suffer from the over-expansion of the past six years and the poor environment for half its sales base.
Lower down the market gambling group *Sportech* jumped 17.25p to 108p after a tribunal ruled it had overpaid VAT on its Spot the Ball game between 1979 and 1996. The group could receive £80m and will start talks with Revenue and Customs to reach a deal over the amount, although the authorities could still appeal the ruling. Simon French at Panmure Gordon said:
For a company with a market capitalisation of around £180m and net debt of £57m this is a life changing event and we increase our target price from 105p to 145p.
Even if HMRC does appeal against the decision we do not expect it to be successful. When Sportech receives the money it will move into a net cash position which should make the commencement of dividend payments (which we have long assumed happening with the 2013 preliminary results) a formality and may even accelerate the timing. Perhaps more importantly, it gives Sportech the funds to fully capitalise on its market leading position in the US, just as certain states within that country are taking a more permissive approach to online gambling.
Finally specialist electronics supplier *Acal* added 7% to 236p after it raised £6.1m in a placing of shares at 215p each, to help fund the £10m acquisition of French group Myrra. Reported by guardian.co.uk 6 hours ago.