16th Mar 2015 10:45
LONDON (Alliance News) - UK stocks are trading higher Monday mid-morning, with CRH as the worst performer in the FTSE 100, after its deal to buy assets from peers Holcim and Lafarge was thrown into doubt, while investors are mainly looking ahead to the US Federal Reserve's monthly meeting ending on Wednesday.
The FTSE 100 is trading up 0.5% at 6,771.23, having dropped 2.5% last week. The FTSE 250 is up 0.4% at 17,183.57, while the AIM All-Share is flat at 717.58.
In Europe, the French CAC 40 is up 0.8% and German DAX 30 is up 1.0%, having hit a new record high Monday morning at 12,032.96.
This week will be driven mainly by central bank news, with European Central Bank President Mario Draghi speaking Monday in Frankfurt, the Bank of Japan's monetary policy decision due on Tuesday, and the minutes of the Bank of England's recent monetary policy committee meeting due on Wednesday, but with the markets mainly focused on the conclusion of the US Federal Open Market Committee meeting, also on Wednesday.
Chancellor of the Exchequer George Osborne presents the UK government budget on Wednesday as well.
US "interest rates are widely expected to be lifted off their record lows for the first time since October 2008 this summer, and investors are extremely nervous about this," says Craig Erlam, senior analyst at Oanda. "We?re expecting the Fed to remove 'patient' from its statement, suggesting that the rate hike is imminent. The latest economic projections could add to this view if the Fed appears to be more upbeat on growth and inflation."
The dollar's recent rally against its major counterparts has paused early Monday. The euro and the pound are trading higher against the dollar Monday mid-morning, with the eurozone currency quoted at USD1.0537 and the pound quoted at USD1.4786.
Goldman Sachs analysts said Friday they expect the US dollar to hit parity with the euro by September. Goldman's 12-month outlook for the euro has been dropped to USD0.95, from USD1.08. Looking further out, the analysts project that the euro will fall to USD0.80 by the end of 2017.
Among individual London stocks, CRH is the biggest faller in the FTSE 100, down 3.2%, after Swiss cement giant Holcim said it can no longer pursue a merger with French rival Lafarge on the current terms of the proposed deal, saying it wants talks about changing the exchange ratio and "governance issues" and throwing the deal into doubt.
Irish building materials company CRH, which has a separate deal to buy up assets that the two companies are selling to get the deal past antitrust-regulators, said it would press ahead with a shareholder meeting to approve the asset purchase deal. CRH announced last month that it had agreed a deal with the pair to pay EUR6.5 billion to buy assets from the companies primarily in Europe, Canada, Brazil and the Philippines.
Lafarge responded to Holcim's announcement by saying it was committed to the deal, but would refuse to negotiate on anything but the exchange ratio.
In the FTSE 250, Balfour Beatty is the best performer, up 3.4% at 295.6 pence. Jefferies raised the infrastructure company to Buy from Underperform and its price target to 270.00 pence from 115.00p, saying that will new management installed and a turnaround underway, it's looking to 2016 and 2017 profits to drive its valuation. Deutsche Bank also pushed the company's shares up after initiating it with a Buy rating, and its price target at 306.00p.
At the other end of the mid-cap index, Afren is down 22%, having declined by 28% on Friday. JP Morgan, which has an Underweight recommendation for Afren, on Monday cut its price target to 4p from 33p. Shares in Afren, which is due to be relegated from the FTSE 250 next Monday, have lost almost 100% of their value in the past six months.
Still in the economic calendar Monday, the German Bundesbank monthly report is at 1100 GMT, while the UK CB Leading Economic Index is at 1330 GMT. At 1845 GMT, ECB President Draghi will speak at the SZ Finance Day 2015 in Frankfurt. In the US, the NY Empire State Manufacturing index is at 1230 GMT, industrial production is at 1315 GMT, while the NAHB Housing Market Index is at 1400 GMT.
US futures point to a broadly higher opening, with the DJIA, the S&P 500 and the Nasdaq 100 pointed up 0.4%.
By Daniel Ruiz; [email protected]
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