Video: HSBC Posts Biggest Intraday Jump Since 2009 (Bloomberg)
The FTSE 100 was expected to rise today despite a disappointing stock market flotation in the US of the high profile tech company Palantir triggered concerns about the high valuations of technology stocks.
After an initial leap beyond the listing price, Palantir stock closed down, giving it a $15.8 billion valuation.
Investors instead focused on US treasury secretary Steve Mnuchin’s positive noises over a potential covid rescue package aimed at boosting those most financially affected by the pandemic. A fiscal stimulus has been the subject of a bitter battle between Democrats and Republicans for months now as the two sides failed to reach an agreement on the size and scope of any aid.
Mnuchin said yesterday he would be willing to try and broker a deal one more time, sparking a rise in stocks that outweighed concerns about the country’s political leadership after the ill-tempered presidential candidates’ TV debate the previous evening.
An outage on the Tokyo stock exchange put the world’s third largest market out of action for a whole day today during a session heavy with news that could affect share prices. The outage at the trading system designed by Fujitsu affected exchanges in three other Japanese cities. This threw investors’ strategies into disarray for the first day of the new quarter and the second half of Japan’s financial year – usually a busy day as investors readjust their portfolios.
Shortly before trading was due to start, the Bank of Japan issued its keenly watched Tankan report which showed sentiment among big Japanese corporates was not improving as fast as analysts had hoped.
European markets often take a cue from the major Asian exchanges in early trade, but the absence of prices from Tokyo left them flying somewhat blind today.
Traders are expecting a modest rise on the opening with the FTSE predicted to gain 18 points to 5884 on the opening of trading. Manufacturing data known as the PMI reports will be published later this morning in the UK, Spain, Italy, France and Germany, which could give markets more direction, likewise Eurozone unemployment figures expected to jump from 7.9% to 8.1%.
US jobless data is going in the other direction (a reason why President Trump does not feel under pressure to do a Covid rescue package). Unemployment claims in the US are expected to be shown at 12.22 million this afternoon, down from 12.58 million before.
All eyes will be on Rolls-Royce for news on whether it will finally announce the emergency rights issue it needs to raise cash to survive. The company has been expected to announce a £2.5 billion fundraising exercise all week but it has failed to materialise, leading many to expect it today.
Shares have been falling sharply all week with investors citing jitters about whether the company has left it too late. Many companies raised adequate funding far earlier in the pandemic, fearing that if they left it too late, big investors such as pension funds would have committed so much cash to other fundraisers that their appetites to invest would be diminished.
Rolls-Royce is one of the jewels of Britain’s engineering crown but its activities – particularly in aero engineering – have been hit hard by the collapse in aviation due to Covid 19.
Elsewhere, Gardaworld’s takeover bid for G4S is keeping investors happy. The Canadian security giant lodged a formal bid yesterday which was swiftly rejected by the board, leading shareholders to predict a higher offer from the predator, which has spent much of its energies throwing mud at the business and its management. Shares yesterday were significantly above G4S’s offer price, highlighting that investors expect Garda to put a more generous offer on the table soon.
Elsewhere in the world of mergers and acquisitions, gambling group 888 sparked fresh speculation of deals last night when it said it was potentially interested in making a bid for William Hill’s non-US business. 888 and William Hill had both had talks of possible combinations twice in the past. 888’s comments came shortly after William Hill received a takeover bid from US giant Caesers Entertainment.