Takeovers drive UK100 higher, GBPUSD consolidates

UK stocks ended modestly higher on Thursday bolstered by a number of takeover moves, although trading was fairly subdued given the closure of US markets for the Thanksgiving holiday.

Investors mulled a survey that showed UK consumer confidence remained largely unchanged following last month’s Budget, still weighed down by ongoing concerns about the strength of the economy.

According to the British Retail Consortium’s latest consumer sentiment monitor, expectations for personal finances over the next three months improved slightly, ticking up to -3 in November from -4 in October.

However, expectations for the wider economy weakened, easing two points to -19, while personal spending overall was unchanged at 17.

On currency markets, sterling edged up 0.04% versus the US dollar to 1.2684, and firmed 0.13% against the euro to 1.2017. Traders are still unsure about the likelihood of further interest rate cuts from both the Bank of England and the US Federal Reserve at their final policy meetings for 2024 next month.

At the stock market close in London, the blue-chip FTSE 100 index was 0.1% higher at 8,281, while the broader FTSE 250 index added 0.8% at 20,762.

Takeover excitement gave a boost to insurer Direct Line which leaped 41.4% after revealing late on Wednesday that it had rejected a ￡3.3bn takeover proposal from Aviva. It is the third bid for Direct Line this year, following two unsuccessful tilts by Belgian insurer Ageas.

Direct Line dismissed the Aviva offer as highly opportunistic, saying that it substantially undervalued the company. Aviva shed 2.0% on the rejection, with an increased bid expected from the FTSE 100-listed firm. The sector bid excitement lifted insurance peer Admiral 3.0% higher.

Also on the M&A front, Renewi jumped 46.8% as the waste management firm said it was minded recommending a ￡700mln takeover proposal from Australian investment firm Macquarie Asset Management, should a firm offer be made.

And on AIM, Loungers soared by 27.7% after agreeing to a ￡340mln all-cash takeover by US investment management firm Fortress. The bid news came alongside strong half-year results from the cafes and bars operator.

Away from bids, broker comment supported gains from supermarket giants Sainsbury's, up 3.1%, and Tesco, ahead 2.3%, with analysts at JPMorgan Cazenove double upgrading both FTSE 100-listed firms to overweight from underweight.

Spirax Group was the top FTSE 100 gainer, adding 3.8% after an upgrade to outperform by BNP Paribas Exane, as well as an initiation at buy from Citi.

And on the results front, under pressure footwear maker Dr Martens rallied 13.6% higher as the FTSE 250-listed firm said that trading since the start of the autumn/winter season had been encouraging and it held guidance for the 2025 fiscal year, even as it swung to a loss for the half year.

Disclaimer:

The information contained in this market commentary is of general nature only and does not take into account your objectives, financial situation or needs. You are strongly recommended to seek independent financial advice before making any investment decisions.

Trading margin forex and CFDs carries a high level of risk and may not be suitable for all investors. Investors could experience losses in excess of total deposits. You do not have ownership of the underlying assets. AC Capital Market (V) Ltd is the product issuer and distributor. Please read and consider our Product Disclosure Statement and Terms and Conditions, and fully understand the risks involved before deciding to acquire any of the financial products provided by us.

The content of this market commentary is owned by AC Capital Market (V) Ltd. Any illegal reproduction of this content will result in immediate legal action.