Live Markets: Want to boost your share price? Move to America!
02/03/2023 11:32
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STOXX 600 down 0.1%
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Financials top drag
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Eurozone core prices surge
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S&P 500 futures dip
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WANT TO BOOST YOUR SHARE PRICE? MOVE TO AMERICA! (1129
GMT)
If the mountain won't come to Muhammad then Muhammad must go
to the mountain, goes an old saying, and it does look like some
UK executives seeking to boost their company's share prices are
indeed thinking along these lines.
Take Shell SHEL.L . The Financial Times reported last week
that top executives at the Anglo-Dutch energy including CEO Wael
Sawan discussed moving listing and headquarters to the U.S..
The idea - a potential blow to London as a financial hub
-was ultimately dismissed, the report said, even though for
Shell a relocation could have the advantage of lifting its share
price further by the means of a higher U.S.-level valuation
multiple.
European and UK companies including are typically much
cheaper than their U.S. peers, and some analysts believe the
deep discount boils down to market factors with the bigger
capital depth of Wall Street that helps lift U.S. multiples.
The report about Shell discussing a move to America comes
after talk of U.S. takeovers. In January, Alastair Syme, head of
energy research at Citi, advocated a re-run of the industry
consolidation seen 20 years ago, saying transatlantic mergers
were the only way for European majors to fill the value gap.
But any U.S. takeover would likely stumble on government
opposition. "Nice in theory, but impossible in practice," says
Andrea Scauri, portfolio manager at Lemanik. "European states
won't hand over governance of such sensitive companies".
So maybe a relocation is less complicated.
Building materials firm CRH CRH.L is planning to move its
listing to New York, the FT reports. Online betting firm Flutter
FLTRF.L , which is also eyeing Wall Street, said today that
feedback from shareholders has been supportive. In 2022, plumber
Ferguson FERG.L left the FTSE 100 for the NYSE.
The MSCI UK .dMIGB00000PUS currently trades at 10.5 times
12-month forward earnings, a 42% discount compared to the MSCI
USA .dMIUS00000PUS , according to Refinitiv data.
(Danilo Masoni)
*****
STOXX 600 AT ONE MONTH LOW (0855)
European shares dropped to a one-month low on Thursday in
advance of closely-watched inflation numbers that could set the
outlook for European Central Bank's rates and could send
decade-high interest rates up even higher.
The STOXX 600 index .STOXX slid 0.55% to its lowest since
Feb. 2, hurt by banks .SX7P down 1.7% and tech stocks .SX8P
the latter falling alongside drops in Tesla's Frankfurt listed
shares TSLA.F , which lost 5.4% a day after the company held an
investor day.
A preliminary reading of harmonised euro zone inflation for
February is due at 1000 GMT on Thursday, and
higher-than-expected inflation readings from the Netherlands
earlier today and from France and Germany earlier in the week
are a poor omen for those hoping the data will show price
pressures are easing.
European government bond yields rose to fresh multi-year
highs in early trading. GVD/EUR
Germany's DAX .GDAXI lost 0.86%, France's CAC40 .FCHI
shed 0.77%, though the materials sector helped Britain's FTSE
100 .FTSE to hold up a little better, it was down 0.2%.
M&G MNG.L shares are up 3.3% after Sky News reported
Australian investment bank Macquarie Group Ltd MQG.AX is at
the early stages of exploring a takeover bid of over 5 billion
pounds ($6.00 billion) for British money manager.
Alun John
*****
FUTURES DIP AHEAD OF FLASH INFLATION (0741)
European shares were heading for a softer open ahead of key
inflation numbers that could drive expectations of more
aggressive European Central Bank rate hikes and send decade-high
interest rates up even further.
A preliminary reading of harmonised euro zone inflation for
February is due at 1000 GMT on Thursday, and
higher-than-expected inflation readings from the Netherlands
earlier today and from France and Germany earlier in the week
are a poor omen for those hoping the data will show price
pressures are easing.
European government bond yields rose to fresh multi-year
highs in early trading. GVD/EUR
Eurostoxx 50 STXEc1 March futures dropped 0.43%; German
Dax futures FDXc1 slipped 0.3%; though British FTSE100 futures
held up a little better trading flat. FFIc1
In company news, eyes will be on M&G shares at the open
after Sky News reported Australian investment bank Macquarie
Group Ltd MQG.AX is at the early stages of exploring a
takeover bidof over 5 billion pounds ($6.00 billion) for British
money manager MNG.L
Germany's Merck KGaA MRCG.DE said its 2023 earnings would
slip due to a decline at its electronic chemicals unit and a
drop in COVID-related demand, and London Stock Exchange Group
LSEG.L reported slightly above consensus results for 2022, and
announced plans to seek shareholder approval for a buyback
directed at shares owned by Blackstone and Thomson Reuters, the
owner of Reuters News.
(Alun John)
*****
MORNING BID EUROPE-EU inflation risks loom large for markets
(0530GMT)
Asian markets had thought to bask in the glow from Wednesday's
radiant PMI data from China, and the region in general. Taiwan,
Thailand and Vietnam all enjoyed a pick-up in activity, while
JPMorgan's global manufacturing PMI rose nearly 2 points to an
eight-month high of 50.8.
The hopeful mood, however, could not survive Elon Musk's
"Master Plan". Seems his three-hour YouTube live stream was big
on robots and saving the planet but short on new vehicles,
specifically a much-awaited small and affordable EV.
Tesla's shares TSLA.O duly sank 5.6% after the bell,
erasing around $36 billion in market worth, and dragging Nasdaq
futures NQc1 down 0.5% in Asian hours.
Adding insult to injury was a further tick up in 10-year
Treasury yields US10YT=RR to a four-month top of 4.018%, while
two-year yields US2YT=RR reached their highest since 2007 at
4.921%.
Investors are still smarting from a spike in the prices paid
component of the ISM manufacturing survey to 51.3, the highest
in five months and well above its December trough of 39.4.
That saw Fed funds 0#FF: shift to price in a near
one-in-three chance the Federal Reserve could hike rates by 50
basis points on March 22. Markets are now leaning toward a peak
of 5.50%-5.75%, compared with 5.0% just a month ago. FEDWATCH
Futures have also now taken more than 100 basis points of
rate cuts out of 2024, a remarkable turnaround for one month.
And they are hardly alone. Back in mid-January, Euribor
futures 0#FEI: had implied ECB rates would end 2024 at 2.4%.
Now it's 3.4%. Markets are fully priced for a 50bp hike on March
16, with even a non-trivial chance of 75bp, and are flirting
with another 50bp in May. 0#ECBWATCH
That leaves a lot riding on what EU (HICP) inflation figures
for February show later on Thursday. Median forecasts are for an
annual figure of 8.2%, but risks are on the upside following the
surprises from France, Spain and Germany.
There's even talk of 8.5% or more, a result that would
really shake the world of bonds.
Wayne Cole
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UK discount to US https://tmsnrt.rs/3ZfVe3P
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