London stocks had reversed earlier losses to trade up by midday on Monday despite worries about inflation, as Morrisons led supermarkets higher after rejecting a £5.5bn takeover offer.
The FTSE 100 was up 0.2% at 7,030.10, having been weaker earlier in the session after the US Federal Reserve brought forward the timing of tighter monetary policy last week, while St Louis Fed president James Bullard said on Friday that a rate hike was likely as early as 2022.
In equity markets, supermarket chain Morrisons surged more than 30% after saying it had rebuffed an unsolicited £5.5bn bid over the weekend from the US private equity firm Clayton, Dubilier & Rice, which had offered to pay 230p a share in cash.
Peers followed suit, with Ocado, Sainsbury’s and Tesco all higher. Online supermarket Ocado was given the added boost of an upgrade to ‘overweight’ at Morgan Stanley.
Neil Wilson, chief market analyst at Markets.com, said: “There is a lot of private equity money sniffing around the UK as valuations are low – we knew this before the pandemic. But its market share of the UK grocery market, its growing wholesale business and its existing tie-up with Amazon surely means it is not impossible the US tech giant will make an offer.
“However, if Amazon were interested, you’d assume that an offer would have come by now. A PE bid seems more likely and ultimately may be the best way to unlock value for shareholders who’ve gone through a lot but ultimately not seen any appreciation in years (before today). Shares in Tesco and Sainsbury’s were up strongly partly on the read-across, partly on expectations that a PE buyout would see MRW less able/willing to compete.”
Elsewhere, outsourcer Capita surged after saying it was on track to post revenue growth for the first time in six years as trading in the first half of 2021 improved. It also announced the sale of its 51% stake in Axelos, a joint venture with the British government’s Cabinet Office, to PeopleCert International for £183.6m in cash.
On the downside, miner Rio Tinto was knocked lower by a downgrade to ‘sell’ at UBS, which argued that iron ore is approaching an inflection point.
Market Movers
FTSE 100 (UKX) 7,030.10 0.18%
FTSE 250 (MCX) 22,267.90 -0.25%
techMARK (TASX) 4,439.48 -0.28%
FTSE 100 – Risers
Ocado Group (OCDO) 1,961.00p 4.25%
Sainsbury (J) (SBRY) 270.10p 3.84%
Evraz (EVR) 617.60p 2.73%
Weir Group (WEIR) 1,879.50p 2.09%
Tesco (TSCO) 225.60p 1.74%
Bunzl (BNZL) 2,370.00p 1.67%
Antofagasta (ANTO) 1,416.00p 1.54%
Anglo American (AAL) 2,759.00p 1.53%
Rentokil Initial (RTO) 494.00p 1.50%
Intermediate Capital Group (ICP) 2,145.00p 1.42%
FTSE 100 – Fallers
International Consolidated Airlines Group SA (CDI) (IAG) 195.72p -1.51%
Admiral Group (ADM) 3,169.00p -1.25%
HSBC Holdings (HSBA) 424.35p -1.18%
Barclays (BARC) 169.88p -1.15%
Schroders (SDR) 3,523.00p -1.04%
Rio Tinto (RIO) 5,752.00p -0.98%
Hikma Pharmaceuticals (HIK) 2,366.00p -0.88%
Next (NXT) 7,724.00p -0.87%
Lloyds Banking Group (LLOY) 46.04p -0.85%
Entain (ENT) 1,807.00p -0.82%
FTSE 250 – Risers
Morrison (Wm) Supermarkets (MRW) 235.20p 31.80%
Capita (CPI) 39.93p 6.08%
Energean (ENOG) 761.50p 2.91%
Pets at Home Group (PETS) 454.80p 2.71%
Marks & Spencer Group (MKS) 152.40p 2.56%
Elementis (ELM) 146.50p 1.81%
Howden Joinery Group (HWDN) 794.00p 1.66%
Cineworld Group (CINE) 85.34p 1.55%
Genuit Group (GEN) 616.00p 1.48%
Beazley (BEZ) 311.90p 1.43%
FTSE 250 – Fallers
Genus (GNS) 4,844.00p -4.65%
Dr. Martens (DOCS) 405.20p -4.07%
Helios Towers (HTWS) 163.60p -3.65%
JPMorgan Japanese Inv Trust (JFJ) 606.00p -3.35%
BlackRock World Mining Trust (BRWM) 566.00p -3.25%
Indivior (INDV) 148.20p -3.20%
Euromoney Institutional Investor (ERM) 1,024.00p -3.03%
Essentra (ESNT) 322.50p -3.01%
Auction Technology Group (ATG) 1,258.00p -2.63%
Oxford Instruments (OXIG) 2,250.00p -2.60%
