Europe open: Markets shrug off UK GDP horror; Sunrise deal provides boost
European shares shrugged off UK recession woes and weaker closes on Wall Street and Asia on Wednesday, opening higher as Liberty Global's takeover of Sunrise Communications boosted sentiment.
Asian markets fell on growing uncertainty over whether the US Congress would sign off on more fiscal stimulus to follow President Donald Trump’s unilateral coronavirus-related spending measures.
The pan-European Stoxx 600 index was up slightly at 371 points in early trade. London’s FTSE 100 was in the green despite the country going into its deepest recession since records began.
With the slump in GDP widely expected economists were looking for the shape and speed of any recovery, with hopes diminishing of a rapid bounceback.
“The monthly data shows that a bounce back is underway and picked up steam in June. However, its pace is consistent with a slow recovery – one that seems unlikely to be V-shaped. We expect economic activity to return to pre-pandemic levels only in the second half of 2022,” said Debapratim De, senior economist at Deloitte.
After a slightly sluggish start, equities got a large boost from the news that Liberty Global was taking over Sunrise Communications in a deal valuing the Swiss telecoms group at SFR6.8bn.
Sunrise shares topped the gainers after the board recommended the all-cash offer of SFR110 per share.
Germany’s Freenet also benefited, as it holds around 24% of Sunrise and signed a binding, unconditional commitment to tender its shares at the offer price.
Shares in M&G rose as first-half profit more than halved as the savings and investments company suffered fund outflows and pressure on retail margins during the Covid-19 market disruption.
The FTSE 100 company declared an interim dividend of 6p a share and said it did not expect to increase the payout while the threat of Covid-19 remains.
Insurer Admiral was higher after it reinstated its special dividend and reported a jump in first-half profit after motor claims fell as drivers stayed home during the coronavirus lockdown.
Cineworld stock, which soared almost 30% on Tuesday as speculation it could be go private or be taken over, gave back a large chuck of those gains in early trade.