Technician in paper mill with pile of paper
Buyout war possible after DS Smith confirms talks with International Paper / Image source: Adobe

Stock prices in London closed slightly higher on Wednesday, as investors continue to tread water ahead of a key US inflation reading on Friday.

Amongst individual stocks, DS Smith rose on the back of takeover talks with International Paper. Diploma climbed, as shareholders were pleased with its £236 million acquisition.

The FTSE 100 index closed up 1.02 points at 7,931.98. The FTSE 250 ended up 33.02 points, 0.2%, at 19,810.66, and the AIM All-Share closed up 2.59 points, 0.4%, at 742.11.

The Cboe UK 100 ended down marginally at 793.08, the Cboe UK 250 closed up 0.3% at 17,225.15, and the Cboe Small Companies ended up 0.1% at 14,644.71.

In European equities on Wednesday, the CAC 40 in Paris ended up 0.2%, while the DAX 40 in Frankfurt ended up 0.5%.

This week, markets are awaiting the core personal consumer expenditure price index for February, which is the Fed’s preferred inflation reading.

It is due out on Friday, when markets are closed for Good Friday. Markets will reopen on Tuesday, after Easter Monday.

According to FXStreet, the core PCE index is expected to unchanged annually at 2.8%. On a monthly basis, the reading is expected to ebb slightly to 0.3% in February, from 0.4% in January.

‘It’s worth emphasising that the month-to-month readings need to cool down. This cooling is crucial because if they don’t, disinflation against the 12-month readings, which the Fed uses to gauge progress, may halt and potentially reverse,’ said SPI Asset Management’s Stephen Innes.

Stocks in New York were higher at the London equities close, with the DJIA up 0.6%, the S&P 500 index up 0.4%, and the Nasdaq Composite up 0.1%.

Meanwhile, numbers on Wednesday showed that consumer confidence and economic sentiment in the eurozone picked up this month.

According to Eurostat’s indicator, the single currency area’s consumer confidence picked up to negative 14.9 points in March, from minus 15.5 in February. The reading was in line with a flash estimate. It is the strongest consumer confidence reading in just over two years.

The wider economic sentiment index picked up to 96.3 points in March, from 95.5 in February.

Analysts at ING said: ‘The end of a long period of stagnation in the eurozone is getting closer as businesses are becoming more upbeat about the months ahead. Inflation expectations for services are becoming more benign, which will confirm the ECB’s view that rates can moderate.’

The pound was quoted at $1.2630 at the London equities close Wednesday, up compared to $1.2626 at the close on Tuesday.

The euro stood at $1.0823 at the European equities close Wednesday, lower against $1.0828 at the same time on Tuesday. Against the yen, the dollar was trading at JP¥151.35, down compared to JP¥151.50 late Tuesday.

In the FTSE 100, DS Smith jumped 8.7%. After the market close on Tuesday, DS Smith confirmed that it was in talks with International Paper, regarding a possible all share takeover offer.

Under the terms of the proposal, DS Smith shareholders would receive 0.1285 shares in International Paper for each share they own in DS Smith.

Based on International Paper’s share price of $40.85 at close of business on Monday, the terms represent a value of 415 pence per share. This would value DS Smith at around £6.2 billion.

Talks with Mondi will also continue.

Earlier this month, Mondi and DS Smith agreed a deal in principle which valued each share in DS Smith at 373p.

Mondi shares closed up 1.1%.

Diploma rose 9.5%, after it announced the proposed acquisition of Peerless Aerospace Fastener for around £236 million.

The London-based supplier of specialised technical products and services said it expects the transaction to complete in the next few weeks, following customary regulatory clearances.

Peerless Aerospace Fastener is a Farmingdale, New York-based distributor of specialty fasteners into the US and European aerospace markets.

In the FTSE 250, TI Fluid Systems shares tumbled 15%.

Shares fell after an investor sold a block of shares at a heavily discounted price.

Broker Peel Hunt said BC Omega Holdco Ltd has sold 50.0 million shares in TI Fluid at 135p each by way of any accelerated bookbuild to institutional investors, raising £67.5 million.

Amongst London’s small-caps, CMC Markets surged 17%.

In a trading update for the financial year ending March, the London-based online trading firm said it expects full-year net operating income to exceed the top end of the previously guided range of between £290 million and £310 million.

This would be up from £288.4 million in financial 2023.

‘CMC has seen a sharp upgrade cycle in the past few months, the strength of which has caught us by surprise, emphasising the significant effect of operating leverage and how quickly fortunes can turn in this sort of business,’ said Shore Capital analyst Vivek Raja.

Brent oil was quoted at $85.41 a barrel at the London equities close Wednesday, down from $85.94 late Tuesday.

Gold was quoted at $2,190.33 an ounce at the London equities close Wednesday, higher against $2,176.17 at the close on Tuesday.

In Thursday’s UK corporate calendar, JD Sports Fashion will publish full year results.

The economic calendar for Thursday has a handful of results from the US, including GDP, initial jobless claims, and the Michigan consumer sentiment index.

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Issue Date: 27 Mar 2024