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Team Asset Management offers its weekly round-up of global markets
The prospect of more rate hikes left most markets behind last week, but the FTSE 100 was a notable exception as it broke through 8,000 for the first time.
The UK benchmark stock index extended its year-to-date gain to 7.5%, reflecting its exposure to the international economy. Companies in the FTSE 100 derive more than three-quarters of their revenue from overseas, shielding him from the pessimistic outlook for the UK domestic economy.
Company specific news was also a driver of last week’s outperformance. Vodafone rose more than 9% after US telecoms group Liberty Global announced it had acquired a 4.9% stake in the £1.2 billion company.
Liberty Global’s move follows the build-up of holdings by other foreign companies over the past year, including Etisalat (13%), backed by the United Arab Emirates, and French billionaire Xavier Niel’s Atlas Investissement (2.5%). Investors are understood to be pushing for a business restructuring to spark a revival. Former CEO Nick Read resigned late last year after the company lost more than 40% of its market value during his four-year tenure.
Standard Chartered rose another 5% after increasing its share buyback and dividend to stave off an alleged takeover attempt by First Abu Dhabi Bank. Although Abu Dhabi Bank announced last month that it was not seeking a deal, it has not ended speculation that it will rekindle interest once the six-month period during which it cannot make an offer expires in July. A deal would transform the stakes-backed FAB into a global player.
Manchester United made the headlines again last week when the deadline for formally declaring an interest in a bid for the football club expired. Jim Ratcliffe, the billionaire founder of the chemical group Ineos, had expressed his interest early on and on Friday evening Sheikh Jasim Bin Hamad Al Thani submitted an offer.
Sheikh Jasim, son of Qatar’s former PM, insists the bid will be debt-free through his Nine Two Foundation and that significant investments will be made to modernize football teams, training facilities at Carrington and Old Trafford Stadium.
New York-listed Manchester United shares have doubled since the Glazer family announced their intention to consider selling the club in November. The winning bidder is expected to match the world-record $4.6 billion paid by Denver Broncos owner Rob Walton for a sports team.
Records were also broken in the sky. Last week Air India signed letters of intent to purchase 250 aircraft from Airbus and another 220 from Boeing. The national carrier, which was bought by the government from the Tata Group last year, is trying to modernize its fleet so it can compete on international routes with Gulf carriers like Emirates and Qatar Airlines and fast-growing domestic competitors including IndiGo SpiceJet.
The news is a welcome but challenging development for aircraft manufacturers. Airbus has fallen behind delivery targets due to supply chain bottlenecks, reducing its monthly production target for its single-aisle A320 from 75 to 65 by the end of 2024. Production of its wide-body A350, better suited for long-haul international travel, will be increased from six to nine per month.
Elsewhere, better-than-expected economic data is putting pressure on stocks amid concerns it will embolden central banks to hike interest rates further. The value of retail sales in January in both the UK and US surprised to the upside, suggesting decades of low unemployment has helped consumers be more resilient to higher living costs.
US annual CPI inflation also slowed less-than-expected to 6.4% in January, and although UK inflation fell to a five-month low, it remains in double digits at 10.1%, well above the Bank of Austria’s target rate England of 2%. Futures markets are now pricing in two more quarter-point rate hikes by the BoE by summer, taking its policy rate to 4.5%.
Oil pared recent gains and Brent crude slipped $3 to $84 a barrel as the impact of announced Russian production cuts began to fade. Russia will cut production by 500,000 barrels a day from March in retaliation for the $60 price cap on its oil imposed by the EU, the G7 and Australia. European natural gas prices also fell to an 18-month low of 50 euros per megawatt hour as the mild winter has allowed storage capacities to be kept above levels usual for this time of year.
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