After last week’s market plunge which knocked £73bn off the value of Britain’s biggest companies, shares are edging higher at the start of a key week for the global economy.
All eyes will be on the Federal Reserve and whether or not it will raise US interest rates on Wednesday.
Before then, investors have pushed shares higher, with positive industrial production and retail sales figures from China over the weekend providing some support, despite a fall in Asian markets and the yuan slipping to its lowest level since July 2011.
Among the leading risers are companies with South African links. They were hard hit last week after the surprise departure of the country’s finance minister Nhlanhla Nene. His replacement - the relatively unknown David van Rooyen - was not universally welcomed, and over the weekend President Jacob Zuma made another sudden change, giving the post back to Nene’s predecessor Pravin Gordhan.
Despite this chopping and changing, the rand recovered lost ground and helped lift Old Mutual by 13.1p to 168.8p, making it the biggest riser in the FTSE 100. Financial group Investec is topping the FTSE 250 mid-cap index, up 41.7p at 460.7p. Meanwhile paper and packaging group Mondi is 39p better at £13.14 while troubled mining group Anglo American - which dropped its dividend payments as part of a restructuring - has added 7.45p to 300.4p.
Overall the FTSE 100 is back over the 6000 level - just - adding 49.78 points to 6002.56.
But oil prices continued to slide amid concerns about oversupply, as Iran ramps up production ahead of the lifting of sanctions. Brent crude is down 0.95% at $37.57 a barrel. So BP has slipped 0.7p to 337.3p but Royal Dutch Shell A shares have added 3p to 1456.5p as it cleared the last regulatory hurdle for its takeover of BG, up 11.2p to 937p, after China approved the deal. There have been some suggestions the deal may now be too expensive following the plunge in the oil price, but analysts at Liberum said:
We believe the combination is a good deal for BG investors and will be seen as a good deal by Shell holders in future. We do not believe Shell will try to renegotiate the terms agreed with the BG Board but will live with them. Everything the Shell chief executive has stated recently confirms this view.
The only way in which the deal could fall apart is if a third party waits until Shell has received all 5 approvals and then submits a higher bid than Shell’s for BG. We understand that Shell and BG have 28 days to post documents to shareholders ahead of their votes. This is likely to be the only period a third party would use to make an alternative offer.
Morrisons is up 2.7p to 141.7p after the supermarket appointed Greene King’s Rooney Anand as a non-executive director, while Tesco has added 4.75p at 149.1p and Sainsbury is 8.7p better at 243.7p.
But publisher Pearson has fallen after a Telegraph report that top universities have stopped buying the company’s products in a row over ebook pricing. Ian Whittaker at Liberum said:
[There is an] article in the Telegraph stating that several UK universities have purged all of Pearson’s material from their teaching materials in a row over the charging of eBooks - in some cases, reportedly upping prices by 100-fold - to make up revenues as print textbook sales decline.
If correct, it looks like Pearson’s tactics have backfired. The article quotes a Pearson spokesman as saying the UK higher education business is a “small but growing part of Pearson” but the news adds to the feeling that the January trading update is likely to deliver another profit warning. Reiterate as top sell.
