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The week was set to start on the gloomy note for the FTSE 100 today after a weekend of worsening Covid-19 infection numbers grip the global markets, outweighing hopes of progress on post-Brexit trade negotiations.
Shares managed a decent run on Friday after US pharmaceuticals group Gilead’s Remdesivir won approval from US regulators to be used as Covid treatment. But as the pandemic worsened in most western countries, the optimism wore off over the weekend and Asian stocks were down today. US futures indicated a tough session ahead for Wall Street this afternoon.
The FTSE-100 was predicted by CMC Markets to fall 40 points to 5820 while the the Dax 30 in Germany was priced down 197 at 12458 and the Cac 40 in France 52 points lower at 4857.
There was plenty of corporate news in the papers to keep stockpickers busy
Questions over Talk Talk’s boardroom connections to its takeover bidder Toscafund may dent shares in the group today as they heightened the perception that the bid may go ahead at too low a price.
Investment fund Toscafund launched a lowball takeover offer recently but The Times newspaper today reported that founder and shareholder Charles Dunstone’s company Freston Ventures has other shared investments with Toscafund, while three Freston partners are also on the TalkTalk board.
Those Freston partners include Andy Harrison, former chief executive of TalkTalk’s old parent Carphone Warehouse, and husband of Tristia Harrison, TalkTalk’s chief executive.
Shareholder groups last week raised concerns about whether minority shareholders – those not connected to Dunstone and Toscafund – would get a fair hearing in the takeover process. This newspaper voiced similar concerns on the day of the bid .
The offer values TalkTalk at 97p a share. Last year, Toscafund bid for 135p but TalkTalk rebuffed the approach – a rebuttal the board will doubtless point to as evidence of its independent-mindedness.
A flurry of reports in the media since Friday’s blockbuster profits from Barclays’ investment bank have talked of a likely return to paying dividends for Britain’s big banks.
Banks were ordered to keep their divi powder dry by the Prudential Regulation Authority at the start of the Covid-19 crisis in case their capital was needed to keep lending going into the economy.
Talks between banks and the regulators over lifting the ban have begun, with possible solutions including a nod from the PRA on certain conditions, such as lending continuing to rise and a new agreement on minimum capital levels.
Copper prices, and shares in copper producers, were expected to keep rising as a Joe Biden victory in the US presidential elections looked increasingly likely.
Biden has pledged to spend heavily on green energy if he were to win the presidency, which would be good for producers of the metal, heavily used in electricity cabling and other equipment.
Copper passed $7000 a tonne last week and Goldman Sachs has now pinned it to go to $7500 by next summer, which should boost Anglo American, Antofagasta and other copper miners in London.
Oil may go the other way, hurting BP and Shell, due to a ceasefire between warring parties in major producer Libya.
Royal Mail shares will be in focus after chairman Keith Williams said the group could not economically continue in its statutory duty to deliver post six days a week. He told the Financial Times a change to the company’s Universal Service Obligation, which stipulates the 6-day rule, must be amended to reflect that fact that fewer people are sending letters and more receiving parcels, particularly during the Covid-19 pandemic.
His comments come as the regulator Ofcom is poised to release the findings of its review into the postal system in the coming weeks.
As well as seeing market excitement hot up ahead of the US elections, this week sees big announcements on interest rates and other monetary policies from the European Central Bank and Bank of Japan, as well as US GDP figures which could sway some undecided voters. All three events happen on Thursday.
Brexit will remain in focus, with investors hoping for good news on the trade talks with the EU. The pound had a strong run last week amid optimism of a deal by the middle of November.
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