21 Jun 202121:07Wall Street recovers from Friday’s routThe outside of the New York Stock Exchange today Photograph: John Angelillo/UPI/REX/Shutterstock
And finally (again) US stocks have posted a strong day of gains, making up lost ground after chunky falls last week.
The Dow has surged by nearly 590 points to close 1.8% higher, its best day in several months, while the broader S&P 500 climbed 1.4%.
CNN has more details:
The Dow snapped a five-day losing streak, its longest since January, while the S&P recorded its first gain in four days — its longest losing streak since February. It was the S&P’s best day in about five weeks.
Monday’s rebound was the Dow’s best performance since early March and is bringing the index back from “extremely oversold levels,” said analysts at Bespoke Investment Group.
The tech-focused Nasdaq Composite finished up 0.8%.The recent stock market losses came on the heels of last week’s Federal Reserve policy update, which paved the way for a sooner-than-predicted interest rate hike.
US stocks soared Monday, making up lost ground after a multi-day losing streak last week. The Dow closed 1.8%, or nearly 590 points, higher. The S&P 500 — the broadest measure of Wall Street — climbed 1.4%. The Nasdaq Composite finished up 0.8%. https://t.co/Wft68PC1XX
— CNN Business (@CNNBusiness) June 21, 2021
21 Jun 202121:02Nils Pratley: Morrisons shouldn’t capitulate in another depressing takeover saga
My colleague Nils Pratley has some advice for Morrisons’ board, as they face the prospect of a private equity takeover:
If Andrew Higginson, Morrisons’ chair, wants to fight for independence, or even just a decent price, he needs to sound more indignant. The late Sir Ken Morrison would have been spitting with fury by now, rallying shareholders to recognise Morrisons’ inherent strengths. The few boilerplate words that emerged from the Bradford HQ at the weekend were too timid.
Higginson could try modelling sale-and-leaseback structures of his own, if that’s what shareholders want. At least prepare a dossier on the property portfolio, including its farms. And ring Amazon to see if it’s interested in buying an equity stake to add to its online partnership deal. David Potts, the chief executive, could do his bit by expanding on his recent refrain about a “renaissance” for UK supermarkets. What does he think it means for dividends over the medium-term? Sketch out a few scenarios to switch the focus from the market’s soft rating of the entire supermarket sector.
Berenberg’s analysts, incidentally, calculated that CD&R would still be able to make an internal rate of return of 19% if it paid 270p a share. Morrisons board should take that as a challenge. Do not capitulate cheaply or be fooled by notional fat takeover premiums. Morrisons is a good business and independence suits it.
Morrisons shouldn’t capitulate in another depressing takeover sagaRead more
21 Jun 202119:10Morrisons £5.5bn takeover bid did not ‘add genuine value’, says LGIM
And finally… here’s our news story on the Morrison’s deal:
Britain’s largest investor has criticised the £5.5bn takeover bid for Morrisons by a US private equity firm, saying it was “not adding any genuine value” as shares in the supermarket group rose by more than one-third.
Legal & General Investment Management (LGIM), the seventh-largest shareholder in Morrisons, raised concerns about the price of the bid from Clayton, Dubilier & Rice as well as the possibility that the suitor could try to sell its shops to generate cash.
Shares in Morrisons surged by 35% on Monday, after the chain rebuffed the offer, potentially sparking a bidding war.
The price move was spurred by news over the weekend that Morrisons, which employs about 120,000 people in the UK, had become a takeover target, making the Bradford-based supermarket group the top FTSE 250 riser on Monday morning, the first opportunity to trade shares after the approach was made public.
Morrisons £5.5bn takeover bid did not ‘add genuine value’, says LGIMRead more
Goodnight. GW
21 Jun 202119:06
Part of Sanjeev Gupta’s metal empire that faces the threat of administration has asked its bankers to give it time to try to negotiate with four potential buyers.
It is understood that Liberty Aluminium Technologies, a supplier of cast parts to Jaguar Land Rover, could be forced into administration within days if its main bank, Close Brothers, does not agree to give it more time.
Gupta has been openly seeking buyers for parts of his GFG metals empire since last month, as he seeks to stave off a collapse that could threaten thousands of jobs at Liberty Steel and other related companies.
Liberty Steel employs 3,000 people in the UK, while the loose GFG Alliance employs about 35,000 workers worldwide, in the UK, US, Europe, Australia and elsewhere.
Sanjeev Gupta’s Jaguar Land Rover supplier asks for time to talk to buyersRead more
21 Jun 202118:53
Back on Wall Street, stocks are continuing to rally.
The Dow is now up 553 points, or 1.6%, at 33,843, as investors show renewed confidence in the ‘reflation trade’, and ‘value stocks’, after Friday’s jitters.
#WSJWhatsNow: U.S. stocks rallied Monday, lifting the Dow 500 points pic.twitter.com/AuggquRlIJ
— The Wall Street Journal (@WSJ) June 21, 2021
21 Jun 202118:50Flexible rail season tickets in England criticised over savings claims
New flexible rail season tickets will disappoint passengers and fail to bring them back to the railway, passenger groups and campaigners have said as the tickets went on sale in England on Monday.
The government scheme is designed to make rail travel cheaper for part-time workers, with more splitting their time between the home and office since the coronavirus pandemic.
However, the new tickets, part of a wider shake-up of the rail industry, were criticised by campaigners and commuters for offering paltry savings as the prices were revealed.
Alice Ridley, of Campaign for Better Transport, said:
“Many passengers are going to be disappointed. There’s a danger that people will change the way they commute and start driving, and we wanted flexible tickets to encourage people back onboard trains. We don’t think these tickets are going to do that or provide the savings that people had hoped for.”
Flexible rail season tickets in England criticised over savings claimsRead more
21 Jun 202118:17CBI and City bosses warn against giving staff legal right to work from home
The heads of the UK’s largest business lobby group and two major City employers have warned against giving workers the legal right to demand remote working, claiming it would harm young employees and city centre economies.
Lord Bilimoria, the president of the CBI, said that while employees should be able to request the option of working from home, flexible working arrangements must be allowed to evolve in their own way.
“The worst thing possible would [be to] have any legislation that entitles people to the right to work from home,” he said, speaking at the City Week conference on Monday.
“They should have the right to request it. But every employer should make that decision about the mix of working from home [and the office],”.
Bruce Carnegie-Brown, the chairman of the insurance market Lloyd’s of London, agreed with Bilimoria, saying legislation would be “inappropriate”.
Anne Richards, CEO of asset manager Fidelity International, said flexible employers who treated staff like grownups could end up having a “competitive advantage” in the job market.
Here’s the full story:
CBI and City bosses warn against giving staff legal right to work from homeRead more
21 Jun 202117:52Morrisons: More Reaction
Danni Hewson, AJ Bell financial analyst:
“After a year of feeding the nation Morrisons looks like it could be the subject of a feeding frenzy after turning down a takeover bid. Shares in the supermarket have ridden the roller coaster of anticipation today ending up 34.6% at 240.20, giving the FTSE 250 a much-needed boost.
The more domestically focussed of London’s indices was unsurprisingly downbeat for much of the day that was supposed to be “Freedom Day” but rallied after lunch and ended the day up 0.6% at 22,457. Morrisons’ rival stores seemed to be living vicariously with investors contemplating the future of the entire sector which increasingly seems to be undervalued with major changes to business practices possibly overlooked by some because of covid costs. Ocado and Sainsbury topped the day’s FTSE 100 risers.
Chris Hunt, head of retail at law firm, Gowling WLG:
“This is an interesting crossroads that has huge potential for further market penetration. Whatever the outcome of the inevitable further wooing of the Board, there is a real opportunity to enhance and evolve a successful supermarket formula that already resonates with a strong customer base.
Looking out for the supply chain pitfalls that govern keeping or improving on their pole position is vital to this effort of course.”
Andy Halliwell, senior director at digital consultancy Publicis Sapient,
Morrisons occupies an unusual space in the grocery landscape of the UK, for a couple of reasons. Morrisons still own much of their supply chain all the way back to the producers and farms that supply it, as well as the manufacturing of many of their own-brand goods for stores, which is an asset at a time when supply chains are challenged by a combination of COVID-19 and Brexit. They also have a unique relationship with Amazon, being the supplier of much of the product for Amazon Prime Pantry and their Go store recently opened in London.
When you combine this with their financial situation – trading at almost 1 to 1 book value, yet with a pension surplus and minimal debt and lease commitments, you can see how the business could become a target. I would be surprised if there aren’t a number of very hurried discussions taking place with Amazon though, to see if they’re looking to launch the Whole Foods brand through a Morrisons acquisition in the UK (despite their current distinct brand positions) or perhaps as a way of accelerating the rollout of the Amazon Grocery store brand. It may just be too soon for Amazon to commit to the UK marketplace though – where they’ve traditionally preferred a more staggered, test & learn approach, and ultimately I don’t believe they’re interested in owning such a large amount of real estate. An Amazon offer would almost certainly be preferred by existing shareholders, and the offer could be comparatively cheap for Amazon if they offered an appealing mix of cash and shares rather than a pure cash-buyout.
This will be a cause of concern for the employees across Morrisons however – an industry which has seen its fair share of turmoil over the last 12 months. However the situation plays out, there is likely to be a restructure ahead, potentially with assets being sold off and a change in strategy, and some consolidation of the organisation. With layoffs at Sainsbury’s recently as well, many new digital technologies and touch points, the supermarket industry is seeing significant pressure on recruitment, talent and long-term stability. It will be fascinating to see how things evolve in the next few months.”
21 Jun 202117:47
Other cryptocurrencies are also weakening today, alongside bitcoin.
Ether is down around 9% in the last 24 hours, according to Coindesk data, at $1,940, while XRP (used on the Ripple network) has shed over 9% to $0.66.
Joke currency dogecoin’s recent performance won’t amuse anyone who owns it, it’s down 20% in the last 24 hours, at around $0.22. Dogecoin has fallen over two thirds since Elon Musk called it a ‘hustle’ on Saturday Night Live.
Dogecoin correction update: -71% since the Musk SNL peak.$DOGE pic.twitter.com/P5CaFNYHWy
— Charlie Bilello (@charliebilello) June 21, 2021
Bitcoin is still down today, at around $32,500 — a drop of over 6% in the last 24 hours, as news of China’s latest crackdown weighs.
Ed Moya of OANDA says:
Bitcoin needs to expedite transitioning mining out of China. Over the weekend, Bitcoin was under pressure on continued measures against Bitcoin creators in Sichuan, which uses hydropower.
The cryptocurrency mining community is rushing to get out of coal-fired power plants but losing clean energy sources is extra bitter.
21 Jun 202117:13
The blue-chip FTSE 100 also closed higher, up nearly 45 points or 0.65% at 7062 points.
After dropping to a one-month low early this morning, the market recovered and clawed back some of last Friday’s 1.9% fall.
Online grocer Ocado was the top riser, up 4% (Morgan Stanley upgraded its rating on the stock this morning), followed by Sainsbury’s (+3.85%).
Steelmaker Evraz (+3.6%), asset manager Intermediate Capital (+3.3%), engineering firm Weir Group (+2.8%) and housebuilder Taylor Wimpey (+2.6%) were also in the top risers.
Morrison’s 34% surge helped to lift the FTSE 250 index of medium-sized companies; it finished 0.6% higher at 22,457 points.
21 Jun 202116:59
Rival supermarket chain Sainsbury’s also rallied today, finishing up 3.85% at 270.1p.
The private equity bid for Morrisons has created speculation that other supermarkets could also be eyed up. And Czech billionaire Daniel Kretinsky has already been building a stake in Sainsbury’s, which reached almost 10% in April.
Tesco, the UK’s largest supermarket chain, also finished higher, up 1.7%.
Michael Hewson of CMC Markets says:
Unsurprisingly supermarkets have outperformed after the surprise £5.5bn weekend bid from US buyout firm Clayton Dubilier and Rice, for Morrisons.
While the bid was rejected it has given the entire sector a boost in anticipation of a bidding war, not only for Morrison but also for the likes of Sainsbury which has outperformed this year due to Czech billionaire Daniel Kretinsky increasing his stake in the business, while Tesco has become much cheaper since it returned over £5bn to shareholders in February.
21 Jun 202116:31Morrisons close 34% higher, at highest since November 2018
Shares in WM Morrisons have closed 34% higher tonight, at 240.2p each, its highest closing level since November 2018.
Such a surge, over last week’s private equity approach of 230p, indicates that the City is anticipating a higher bid for the UK’s fourth-largest supermarket chain.
Morrisons’ share price over the last five years Photograph: Refinitiv
That values Morrisons at around £5.75bn, compared with Clayton, Dubilier & Rice’s offer of around £5.5bn, and up from £4.3bn on Friday night.
[CD&R’s bid has an enterprise value of £8.7bn, as they’d also take on £3.2bn of net debt].
Updated at 17.44 BST21 Jun 202115:02
Back in the City, shares in Morrisons are still very sharply higher – now up over 33% at 239p, having soared once the market opened.
That’s further above the 230p per share offer which was rebuffed last week, implying that the City does expect a higher bid.
One shareholder has told the FT that the bid is too low….
The UK’s largest asset manager has blasted the bid for Wm Morrison by Clayton, Dubilier & Rice, warning the private equity house “would not be adding any genuine value” to the supermarket with its purchase.
Andrew Koch, senior fund manager, active equities at Legal and General Investment Management, a top 10 shareholder in Morrisons, suggested the bid from the buyout firm was too low. CD&R approached Morrisons with a 230p-a-share offer last week, giving the UK’s fourth-largest supermarket group an enterprise value of £8.7bn.
“The [retail] sector generally looks undervalued, and private equity look to be interested in Morrisons partly because it has a lot of freehold property which they would ‘sale and leaseback’ to generate cash to pay back to themselves,” said Koch. “That’s not adding any genuine value, and the company could do that themselves. So I would personally not expect a bid to succeed at that level.”
Legal and General slams Morrisons bid as shares surge https://t.co/whQFRrcfFS
— Financial Times (@FT) June 21, 2021
21 Jun 202114:55
Dallas Federal Reserve president Robert Kaplan has been explaining that the Fed predicted US interest rates would rise sooner, because the economic outlook has brightened so much.
Reuters explains:
The tilt by Fed policymakers to a faster expected start to interest rate increases was a reaction to an economic outlook that took a sharp turn between December and June, Dallas Federal Reserve president Robert Kaplan said on Monday.
As of December the path of the coronavirus pandemic remained uncertain, but “when we got to March it was clearer that we were going to get the pandemic under control…By the time we get to June…you’ve really got a big upgrade” that made the core of officials expect rate increases in 2023 instead of 2024, said Kaplan.
“What you are seeing…is monetary policymakers simply reacting to the dramatically improved economic outlook.”
Fed's Kaplan (2023 voter)
– Still expects 6.5% GDP growth
– Expects unemployment rate to drop to 4-4.5%
– Still have not returned to as much as in person work as we may have by the fall
– In favour of taking the foot off the accelerator sooner rather than later
— DailyFX Team Live (@DailyFXTeam) June 21, 2021
Fed's Kaplan
– Moderating asset purchases sooner rather than later may increase Fed's odds of achieving inflation goal
— DailyFX Team Live (@DailyFXTeam) June 21, 2021
21 Jun 202114:34
#DOW 33650.09 +1.08%#SPX 4196.76 +0.73%#NDX 14064.0 +0.10%#RTY 2262.12 +1.09%#VIX 19.21 -1.49
— IGSquawk (@IGSquawk) June 21, 2021
21 Jun 202114:12Selfridges has launched its Garden Centre on Oxford Street, with a grow bag installation in front of the store’s historic canopy entrance. Photograph: Jason Alden/Jason Alden/Curtesy of Selfridges
In other retail news…Selfridges has launched garden centres at its stores in London, Manchester and Birmingham stores, capitalising on the gardening boom that accelerated during the pandemic.
The retailer said the new centres feature its own-label compost and an exclusive themed clothing range from Prada, and form part of a creative theme for the year called Good Nature.
Selfridges said it was launching the new range after the number of gardeners rose by 3 million last year, with nearly half of them aged under 45, as the nation turned to home pursuits during the pandemic.
The garden centres also include a “potting shed” where customers can talk to experts and take part in workshops and events that will run between 25 June and 11 July. A dial-a-gardener problem-shooting consultation service is another feature of the launch.
Selfridges launches gardening centres as interest grows during Covid crisisRead more
21 Jun 202113:49
Stocks have opened higher on Wall Street, as traders look to put Friday’s slide behind them.
The Dow and the S&P 500 are both higher, with tech stocks are dipping, pulling the Nasdaq lower as investors return to companies who will benefit from the reopening.
- Dow Jones industrial average: up 250 points or 0.75% at 33,540 points
- S&P 500: up 18 points or 0.44% at 4,184 points
- Nasdaq Composite: down 48 points or 0.35% at 13,982
Chemicals producer Dow Inc (+2.7%), construction equipment maker Caterpillar (+2.2%), and network equipment maker Cisco +1.8%) are leading the early Dow risers, after it posted its worst week since last autumn.
But Salesforce.com (-0.9%) and Apple (-0.7%) are dipping.
Dow jumps more than 200 points, rebounds from its worst week since October https://t.co/siZ17cgHyE
— CNBC (@CNBC) June 21, 2021
Stocks opened higher Monday, attempting to bounce after a hawkish shift by Fed policy makers triggered a selloff last week that contributed to a 3.5% weekly decline by the Dow Jones Industrial Average, its largest since October.https://t.co/jMC3qUseHxhttps://t.co/NFZAfdKnxU pic.twitter.com/MlAVRv95vR
— MarketWatch (@MarketWatch) June 21, 2021
21 Jun 202113:28
US economic growth picked up last month after a dip in April, according to the latest healthcheck.
The Chicago Fed National Activity Index rose to +0.29 in May, from -0.09 the previous month. It combines 85 different indicators to get an overall picture of economic activity and related inflationary pressures,
May’s data suggests a pick-up in activity, but not as fast as during the initial recovery from the pandemic:
Chicago Fed Nat'l Activity Index for May confirms a pickup in US economic growth, "led by improvements in production-related indicators": https://t.co/FsCDtQckbs pic.twitter.com/r1EZiiuehV
— James Picerno (@jpicerno) June 21, 2021
The survey found that production-related indicators rose, including a rise in industrial output. The employment picture also improved a little, with Nonfarm payrolls rising by 559,000 in May after increasing by just 278,000 in April.
But the personal consumption category declined, suggesting the consumer spending boom may be fading (US retail sales fell in May, while the housing market appears to be cooling).
NEW DATA: Chicago Fed National Activity Index points to a pickup in economic growth in May as the #CFNAI increased to +0.29 from –0.09 in April. https://t.co/nJqDX5uI4u pic.twitter.com/zyDP7CrC9T
— ChicagoFed (@ChicagoFed) June 21, 2021
