FTSE 100 set to gain as oil peaks and Morrisons bid keeps takeover hopes alive
The UK index is expected to jump 21 points to 7085 with BP and Shell likely to do the heavy lifting, although equity gains on Wall Street last night indicated a larger gain was likely.
Yesterday, Fed Chairman Jay Powell aided global equities by saying the central bank would “do everything possible to support the economy for as long as it takes to complete the recovery.”
Futures markets have suggested that the S&P 500 will see a 0.1% rise when trading opens this afternoon.
Brent crude rose $ 75 a barrel for the first time since April 2019 following Powell’s comments, with investors believing Fed actions would continue to fuel global economic growth and all demand for oil and gas. energy that needs it.
UK markets will continue to react to the takeover of Morrisons by US private equity giant Clayton, Dubilier & Rice, whose offer price is widely expected to rise soon.
Shares in the supermarket sector surged in hopes that interest in CD&R could revive a sector that has not been liked despite its status as a generator of cash and real estate wealth.
While Morrisons naturally ran up to the offer price, Sainsbury, Tesco and even Ocado also rose sharply yesterday.
Today there is likely to be more moves as investors bet on the likelihood of a wave of consolidation.
The Morrisons deal is almost certainly about flushing out the group’s vast real estate portfolio – selling it, pocketing the proceeds, and renting it to buyers.
Although Morrisons owns more properties than Sainsbury and Tesco, these rivals also have extensive store portfolios.
Sainsbury, in particular, could attract private equity players as its relatively low valuation of £ 6bn would make it affordable for a private equity firm willing to invest £ 1bn and borrow the rest.
Some are more cynical about how easy it is to make money in such a deal, wondering who the buyout group would sell these companies to in four or five years when they seek to pull out of their investments.
Others still cling to the hope that Amazon can make an offer for Morrisons, with which it is partnering as a food wholesaler to its handful of London stores. Others are less sure that the Silicon Valley powerhouse will choose to totally change its strategy to target less affluent customers and largely north Morrisons.
Bitcoin fell below $ 32,000 for the first time since June 8 as the People’s Bank of China ordered a crackdown on crypto trading. Reports have indicated that many bitcoin mining operations in Sichuan have been shut down after China halted crypto mining.
As always with Bitcoin, these reports remain difficult to verify and no one is quite sure why will-o-the-wisp cryptos move the way they do. Bitcoin’s price is currently $ 32,523.70, having crashed from the April high of $ 65,000. Go figure it out.