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London close: Stocks higher, GSK jumps on rejection of Unilever deal

London stocks closed above the waterline on Monday, with pharmaceuticals giant GlaxoSmithKline pacing the advance after it confirmed it had rejected an offer from Unilever for its consumer healthcare arm.
The FTSE 100 ended the session up 0.91% at 7,611.23, and the FTSE 250 was 0.56% firmer at 22,871.64.

Sterling was in negative territory against its main trading pairs, and was last down 0.17% on the dollar at $1.3652, while losing 0.1% against the euro to change hands at €1.1969.

“On days like today traders are usually twiddling their thumbs, searching desperately for something else to hold their interest,” said IG chief market analyst Chris Beauchamp, referring to the Martin Luther King Day holiday for US markets.

“An absence of volume and news once the UK equity market data is out of the way means that markets of all types tend to drift aimlessly, as everyone waits for the US to rejoin the party.”

Beauchamp said that while European markets were able to edge higher, those gains would be swiftly reversed if US traders return tomorrow in a similarly-bearish mood to that seen on Friday.

“And with US earnings season still warming up and a key Fed meeting yet to come this month there is still plenty that might hold back investors from taking on more risk.”

In economic news, UK house prices continued to rise in January, marking the busiest start to the year on record.

According to the latest Rightmove House Price Index, the average price of property coming to market rose by 0.3% in January from December, to £341,019.

That was 7.6% higher than January 2021, and the highest annual rate of price growth recorded by Rightmove since May 2016.

Rightmove said it was the busiest ever start to a new year, driven by ongoing strong demand and weak supply.

Buyer enquiries surged by 15% year-on-year, while the number of available homes for sale per estate agency branch dropped to just 12.

“New year sellers and buyers have been quick off the mark this year, with Rightmove recording the highest ever number of Boxing Day sellers coming to market,” said Tim Bannister, director of property data at Rightmove.

“These early-bird sellers who got themselves ready to come to market are now benefiting from the busiest start to the year that we’ve recorded.

“All the signs suggest that prices are likely to continue to rise until more choice is available.”

Footfall at UK retail destinations, meanwhile, strengthened last week as shoppers returned to high streets, according to data from retail analyst Springboard.

Footfall increased 1.5% from the week before, with footfall on high streets up 7.2%. However, footfall at retail parks and shopping centres declined 4.9% and 4%, respectively.

Compared with 2019, before the pandemic hit, retail sales were down 21.3% across all UK retail destinations last week.

“The second week of the year delivered mixed results; an overall increase in footfall across all UK retail destinations from the week before, but a rise that was driven wholly by high streets, whilst in both retail parks and shopping centres activity declined,” said Diane Wehrle, insights director at Springboard.

“It seems that whilst the government’s Plan B guidance to work from home if possible is still in place, there are the first signs that employees are starting to drift back to the office.

“For the first time since mid-November footfall rose in high streets from the week before across all periods of the day, with a double digit increase in the first part of the day, when employees travel into offices, for the second consecutive week.”

In equity markets, GlaxoSmithKline jumped 3.91% after revealing it had rebuffed a £50bn offer from Unilever for its consumer healthcare business – a joint venture with Pfizer.

GSK said it had rejected three proposals from Unilever, all of which “fundamentally undervalued” the business and its future prospects.

“The market has given a thumbs down to news that Unilever has bid for GlaxoSmithKline’s consumer goods division,” said Russ Mould, investment director at AJ Bell.

“The negative share price reaction probably reflects investors’ fears that Unilever is going to come back with a higher offer and potentially pay too much.

“GlaxoSmithKline’s share price has jumped on the news as Unilever’s actions effectively fire the starting gun for a bid war for the consumer goods unit. Nestle could be interested, so too private equity.”

Unilever shares ended the day down 6.52%.

Elsewhere, Taylor Wimpey gained 4.19% after the housebuilder said it was set to meet its annual targets following an “excellent” year and pledged to return excess cash to shareholders.

Antofagasta was 4.17% higher after UBS upgraded shares of the Chilean copper miner to ‘neutral’ from ‘sell’, and lifted the price target to 1,400p from 1,300p as it said the risk-reward was more balanced after recent underperformance.

Events business Informa was ahead 4.35%, and Cineworld rallied 4.52% following weekend reports that all Covid-19 restrictions in England were set to be scrapped “within days”.

On the downside, asset manager Ashmore fell 1.11% after it posted a drop in second-quarter assets under management, citing weaker emerging markets.

Shares of Darktrace slid 7.06% following a report the cybersecurity firm has come under attack from short seller ShadowFall.

“We believe that the quality of the Darktrace business is watery-thin, driven by an aggressive, promotional, sales focus, which we doubt will stand the test of time,” the Telegraph quoted ShadowFall as saying.

Market Movers

FTSE 100 (UKX) 7,611.23 0.91%
FTSE 250 (MCX) 22,871.64 0.56%
techMARK (TASX) 4,517.58 1.32%

FTSE 100 – Risers

Taylor Wimpey (TW.) 160.80p 4.19%
Admiral Group (ADM) 3,255.00p 4.18%
Antofagasta (ANTO) 1,436.50p 4.17%
GlaxoSmithKline (GSK) 1,707.80p 4.07%
Informa (INF) 576.60p 3.71%
British American Tobacco (BATS) 3,144.00p 3.66%
Reckitt Benckiser Group (RKT) 6,397.00p 3.26%
Land Securities Group (LAND) 813.00p 3.20%
Next (NXT) 7,634.00p 2.67%
AstraZeneca (AZN) 8,770.00p 2.65%

FTSE 100 – Fallers

Unilever (ULVR) 3,662.00p -6.97%
Flutter Entertainment (CDI) (FLTR) 11,125.00p -1.33%
Evraz (EVR) 573.00p -1.17%
Polymetal International (POLY) 1,158.00p -0.73%
Fresnillo (FRES) 802.00p -0.42%
Rightmove (RMV) 690.20p -0.38%
Barclays (BARC) 214.55p -0.32%
Prudential (PRU) 1,313.50p -0.30%
Smith & Nephew (SN.) 1,256.50p -0.24%
B&M European Value Retail S.A. (DI) (BME) 563.80p -0.18%

FTSE 250 – Risers

Cineworld Group (CINE) 42.79p 5.33%
Network International Holdings (NETW) 286.30p 4.60%
Euromoney Institutional Investor (ERM) 930.00p 4.47%
Oxford Instruments (OXIG) 2,345.00p 4.42%
Auction Technology Group (ATG) 1,228.00p 4.22%
NCC Group (NCC) 238.00p 3.93%
Dr. Martens (DOCS) 340.00p 3.66%
Micro Focus International (MCRO) 451.60p 3.11%
XP Power Ltd. (DI) (XPP) 5,250.00p 2.94%
Lancashire Holdings Limited (LRE) 541.00p 2.85%

FTSE 250 – Fallers

Hipgnosis Songs Fund Limited C Shs NPV (SONC) 112.50p -100.00%
AVI Global Trust (AGT) 210.00p -80.15%
Darktrace (DARK) 413.20p -7.06%
Baltic Classifieds Group (BCG) 224.00p -5.08%
Ferrexpo (FXPO) 266.20p -4.04%
Countryside Properties (CSP) 339.40p -3.85%
Virgin Money UK (VMUK) 193.00p -2.87%
Vietnam Enterprise Investments (DI) (VEIL) 716.00p -2.72%
Aston Martin Lagonda Global Holdings (AML) 1,361.00p -2.69%
Baillie Gifford Shin Nippon (BGS) 188.00p -2.59%

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