Market Report: Traders hunger for more from Glencore
Friday 03 May 2013
There is no rest for Ivan Glasenberg. His commodity trading giant Glencore International has just completed the long-awaited mega deal – buying the miner Xstrata – but the City is hungry for more. The $30bn (£19bn) takeover was completed yesterday, and the new Glencore shares will begin trading today – Xstrata shareholders get 3.05 shares in Glencore. But this deal is old news for traders and brokers … they want to know what comes next.
Jefferies' Chris LaFemina said: "Our analysis indicates that there is a strategic rationale for Glencore to attempt to acquire Anglo."
Mr LaFemina has said this deal might not come until next year, but Glencore likes to buy assets when no one else is bidding and the asset looks cheap, and he added: "That time is clearly now."
But deals are also likely to go the other way – Mr Glasenberg will be running the rule over what Glencore can offload. Underperforming assets will be shown the door, and there is already a plan to close a nickel mine in Western Australia this summer.
As deal-doers tried to work out what else Mr Glasenberg might like to buy or sell, Glencore took the top spot on the blue-chip index and grabbed 16.85p to 331.15p.
The FTSE 100 put on 9.42 points to 6,460.71. Yusuf Heusen, sales trader at IG, said: "Heading into the close, the FTSE 100 clawed its way into positive territory after the ECB surprised nobody by cutting rates."
Tobacco groups puffed up on news that the Government has scrapped plans to introduce standardised plain cigarette packs. Imperial Tobacco was up 64p to 2,370p.
The "space race" for supermarkets was supposed to be over, but City scribblers said Sainsbury's commitment to opening new shops, particularly convenience stores, will set it apart from the rest of the pack.
Sainsbury's will reveal its final results for 2012 next week. Despite facing the "abnormally weak industry backdrop", UBS analysts think it has confidence in its investment programme, with new stores and extensions. UBS said that "despite burgeoning evidence" that rival supermarkets – particularly Tesco – have slowed down expansion, it is full steam ahead at Sainsbury's, and this is a reason to snap up shares.
The shop-watchers expect the chain to outperform a "still-sluggish" overall market. They rate the shares a buy with a 425p price target. The shares rang up a 4.1p gain to 386.1p.
Over at rival Tesco, Shore Capital's analysts reckon it is on a "demonstrably better course" and rated it a buy with a 370p target for shares that were 4.55p worse off at 366.05p.
The oil group BG Group gushed to the top of the table when it said its growth projects are on track and added 46.5p to 1,136p.
The engineering group IMI was knocked back 26p to 1,220p, with a rating cut to hold by analysts at Berenberg Bank.
The mid-cap tech star Imagination Technologies crashed to earth when it issued a shock profit warning because of a hit on licensing revenues caused by delayed deals. The microchip designer, run by Hossein Yassaie, lost 76.425.7 per cent – or 109.1p – to 315.4p.
Jefferies analysts were keen on the catalogue and online group N Brown. They upped their price target from 380p to 500p with a buy recommendation, and said that Angela Spindler, the new chief executive to join in the summer, "will arrive to a business in rude health". The shares were static at 445p.
The energy and environmental consultancy company RPS Group joined Imagination at the bottom of the mid-tier index after it said it expects first-half results to be in line with the previous year. It retreated 32.3p to 218.75p.
Traders have been bereft without takeover gossip recently, but there were rumours yesterday that the wireless-testing technology group Anite could be a target. The US group Teradyne was reported to be one potential suitor. The gossip pushed Anite down 0.7p to 125.5p.
Gulf Keystone, the AIM oil explorer and favourite with retail investors, said it was set for "significant production growth", but it finished the day where it started – at 132.5p.
After the AIM tiddler Coms gave details of its broadband acquisition, buying the broadband customers and assets of So Purple Tech, it powered up 0.1p to 2.2p.
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