Market buzz: GKN shareholders say 'yes please', Barclays settles with DoJ

1757:Close Far from a quiet sort of day suitable for an Easter egg hunt ahead of the long weekend, Thursday’s session was choc-a-bloc. There was the tense conclusion of the soap opera-style GKN/Melrose will-they-won't-they drama, while a deluge of economic data and regulatory decisions to kept investors gripped down to the wire.

The FTSE 100 index closed just 11.87 points higher or 0.17% at 7,056.61, after a late dose of volatility. The pound was down 0.3% against the dollar at 1.4031 and down 0.2% on the euro 1.1409.

Over on Wall St, the main stock indices are all up at least 1%, with Apple and Intel leading the Dow, Facebook flying 4% higher but Amazon down 1%.

1642: Vedanta warns that that due to a court decision to stop mining in Goa there "could be a likely impairment of $500m to $600m net of taxes ($700-800m gross of taxes). The Supreme Court of India judgement in February directed that, effective 16 March 2018, all mining operations in the state of Goa are to be stopped. "This is mainly related to mining reserve and would be reflected in the results for FY 2017-18. Impairment is non-cash accounting item. Further, the closure of group's iron ore business in Goa would not have any material impact on the group's profitability."

1635: The path to completion of Melrose's takeover of GKN "should be reasonably straightforward from here now" says analysts at Olivetree Financial, who see Melrose shares moving to circa 250p in the shorter term.

Now that Melrose controls over 50% of GKN, the natural course of events here would be that GKN’s board is now forced to change its recommendation, says Olivetree. "We would expect this to be forthcoming in the near term. Once this happens, Melrose will have access to a decent portion of GKN shares that it could not previously persuade to tender – for example the passive fund and retail elements of the register. This will be in excess of 20% of GKN."

"History tells us that it is likely this 90% level (and thus total ownership) is now achieved," the analysts said.

1618: So it seemed the resistance of the GKN board was futile after all, as shareholders in the engineer have accepted the £8.1bn hostile offer from Melrose Industries. Melrose, which first announced back in January that it had made an approach to GKN, said in a statement that it received valid acceptances representing around 52.4% of the voting rights of GKN. Melrose had earlier this week lowered its acceptance condition for the takeover from 90% to 50% plus one share.

Earlier Goldman Sachs cut its stake to 6.4% from 11.8%.

1512: Facebook shares trading higher by 2.87% to $157.53, while Amazon is in the red after Trump's tweet earlier.

1500: The final reading on the University of Michigan's consumer confidence gauge for the month of March has printed at 101.4, versus 99.7 for February and down from a preliminary reading of 102.0 (consensus: 102.0).

"Consumer sentiment at month's end was marginally below the mid-month reading due to uncertainty about the impact of the proposed trade tariffs. The Sentiment Index, however, still reached the highest level since 2004, and the Current Conditions Index set a new all-time peak," says UofM's Richard Curtin.

1445: Chicago PMI slumps to one-year low at 57.4 for March, after 61.9 in February (consensus: 61.5) amid supply issues, although MNI says that: "Q1's outturn was still the second-best calendar quarter result since Q2 2014 and the best first quarter outturn since 2011."

1413: The US Department of Justice has settled with Barclays for a $2bn fine over the claims over the underwriting and issuing of residential mortgage-backed securities (RMBS) in the lead up to the financial crisis. That's about £1.42bn. Yesterday, Credit Suisse put the bill for DoJ litigation at 1.5bn pounds. Hence investors see that as good news, sending Barclays shares shooting higher.

Announcing the deal, the DoJ also said two former Barclays executives have agree to pay $2m to resolve individual claims against them.

1408: This may help to explain some of the recent moves in Miners. On 27 March, Macquarie put out a note in which it cut its targets for BHP, Rio, Fresnillo and Bacanora Minerals, while upping those for Glencore and S32.

1407: Here's a tidbit from Credit Suisse on Takeda's possible interest in Shire.

"We would not assume typical deal synergies given Shire's lean infrastructure. Relative size is also an obstacle, with similar market caps but $20bn of Shire debt. CSe Shire's NPV is 2x Takeda's.

"Potential for Strategic Deal vs full bid?: We believe a deal between Shire and Takeda covering neuroscience, GI and oncology could have strong rationale ($16bn of Shire NPV). Shire is in the process of reviewing ADHD in order to focus on rare diseases. Other bidders could include PFE (with the required scale), as they have an interest in haemophilia and rare diseases."

1330: Initial weekly unemployment claims drop to 215,000 (consensus: 230,000); core PCE price index up 1.6% year-on-year, as expected. Income and spening up by 0.2% and 0.4% on the month, also as expected.

1324: Speaking on Bloomberg TV, US Commerce Secretary Wilbur Ross is saying "there's no lack of communication between the US and China".

He also indicated that a statement from Trump on trade negotiations with China will be "forthcoming".

Interestingly, he emphasised how when Trump came to the White House he called off talks on a trans-Pacific trade deal, but did not do the same with TTIP. That was intentional, he said.

1304: US futures in the pre-open slightly higher: S&P 500: +43 points to 2,618.25; Nasdaq Composite: +44 points to 6,526.

1303:

I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!

— Donald J. Trump (@realDonaldTrump) March 29, 2018

1222: A "mixed bag" of high frequency data suggests we are on track for UK growth to remain subdued at around 0.4% in the first quarter of 2018, Oxford Economics says, though the snow in early-March and the collapse of Carillion "add much uncertainty and the chances of a surprise outturn are far higher than usual".

"Consumer weakness was writ large across the week’s backward-looking data. But the GfK survey suggests that consumers see some light appearing at the end of the tunnel in the form of a revival in spending power, so consumer spending growth should start to recover as we move through the year."

1212: Analysts at Jefferies and RBC Capital Markets have both been looking at Ted Baker the former downgrades the stock and the latter reiterates 'outperform'.

1210: Broker Liberum reckons CME's bid for NEX of 1000p was "clearly aiming to deter any competitive threat". £10 is a "good price" but, the 50% cash component "might be a little disappointing for some and thus leave the door ajar for a competing offer with a higher cash component".

Olivetree Financial reckons CME has "won the day".

1206: JD Wetherspoon shares down after supplier Conviviality, a major wholesaler to pubs and off licences, said it plans to call in the administrators.

Broker N+1 Singer said that, serving around 23,000 outlets out of a market size of c.45,000, the fact that the wholesaler has not secured the necessary funding "will have clear short term supply issues" for both hospitality and drinks sectors. "Given wider consumer and cost related challenges currently facing the sector and the significance of Easter trading this is clearly a negative of varying degrees for the quoted pubs & restaurant sector. Our understanding is that the majority, if not all, of the pubs and restaurant stocks have exposure to Conviviality in terms of drinks supplies."

There could be potential M&A interest in buying Conviviality, or at least parts of it, from private equity and UK supermarket groups, convenience and grocery groups, high street value retail chains and wholesalers. Alongside Sainsbury's, Tesco, Morrisons and Asda, analysts Phil Carroll and Clive Black at Shore Capital suggested companies such Costcutter and Spar due to the recent consolidation of the supply chain seen with Tesco buying Booker, Coop buying Nisa, Morrison’s owning McColls and Sandpiper.

1203: Corporate dealmaking volumes rose past $1.2trn over the first quarter of 2018, marking the fastest start ever in M&A for a year, the FT says, citing Thomson Reuters data. Activity is 67% higher versus 2017 and roughly a third more than in 2007, when the previous record was set.

1033: Three-month copper futures are rising from $6,608 per metric tonne at Wednesday's close to $6,733.

1023: Looking at the data deluge from earlier, Ian Stewart, chief economist at Deloitte, said: “Household spending power has been flatlining for the last two years. That has forced consumers to run down savings and borrow more just to sustain sluggish growth in spending.

“2018 should offer some relief, with falling inflation and stronger wage growth helping boost consumer spending power.”

0938: We've got a deluge of UK data, including confirmation that GDP slowed at the end of last year (to 0.4%), though more timely figures show the services sector is beginning to pick up (index of services up to 02% from 0.1%).

0837: GKN shares are rising, with less than four and a half hours until the 1pm GKN/Melrose deadline...

GKN is up more than 1% to 428p, while suitor Melrose is down 0.1% at 222.9p.

Lee Wild, head of equity strategy at broker Interactive Investor says, "Melrose’s hostile bid for GKN has been the most bitter takeover battle in recent memory and is one that could well have a lasting impact on UK takeover rules. GKN has used everything in its arsenal to fight off turnaround specialist Melrose, but it’s still far from clear whether it will be enough.

"What is certain is that this will go to the wire. It may even be that the result is not publicly announced until after the market close, forcing investors to wait over the Easter holiday before being able to act on the outcome. A GKN victory is widely tipped to trigger selling of its shares, as Melrose backers bet that benefits take far longer to feed through than they would have done had the bidder won."

0734: NEX Group has agreed to be taken over by Chicago's CME Group for 1,000p per share in cash and shares, which values NEX at £3.9bn, based on the closing price of CME stock overnight of $158.84..

0730: London stocks are set for a weaker open on Thursday, with volumes likely to be thinner than usual as we head into the long Easter weekend. The FTSE 100 was being called to open 24 points lower at 7,020.

0714: UK consumer confidence is on the up, according to the long-running consumer confidence survey from GfK. The index for March moved to -7, worse than the -6 at this stage last year, but three points better over the previous month.

0706: Parliament's Treasury committee has announced an inquiry into economic crime amid renewed concerns about money laundering and the security of consumers’ data, brought into the public imagination by recent talk about Russian money boosting the London housing market and the Cambridge Analytica scandal.

0702: US stocks finished in the red again overnight, although losses outside of the technology arena were less stark than those seen on Tuesday. The Dow Jones Industrial Average finished 0.04% lower at 23,848.42, the S&P 500 was down 0.29% at 2,605.00, and the Nasdaq 100 slid 1.06% to 6,460.81.