London stocks rallied yesterday on corporate takeover news but the pound sank to a two-year dollar low on festering Brexit concerns, dealers said.
By the mid-afternoon, the FTSE 100 benchmark index of major blue-chip companies was up two per cent, vastly outperforming its eurozone peers.
Britain’s Just Eat and Takeaway.com of the Netherlands unveiled a plan to join forces to create a heavyweight in the rapidly-growing food delivery sector with around $8 billion in annual sales.
The combination of the two firms would create a delivery platform worth around $11 billion capable of competing against Britain-based Deliveroo and Uber Eats of the United States with a strong presence in Britain, Canada, Germany and the Netherlands.
The news sent Just Eat’s share price rocketing by almost a third, topping the FTSE 100 risers board.
The second biggest gainer was the London Stock Exchange after it confirmed talks over a massive $27-billion takeover of US financial data provider Refinitiv, in a move that would place it in direct competition with Bloomberg.
The takeover, which is worth the equivalent of €24 billion and marks a major switch in strategy under LSE CEO David Schwimmer, sent shares briefly spiking to a record.
The stock later pared gains, to show a gain of just over 15 per cent. The FTSE was also buoyed by the weak pound, which hands a major boost to exporters.
“The FTSE is powering ahead... on merger and takeover news, shrugging off a weak session in Asia where the start of Sino-United States trade talks in Shanghai dominated trading sentiment,” said City Index analyst Fiona Cincotta.
In Paris, Peugeot shares topped the fallers board after “the company said it is considering closing down its Ellesmere Port plant in the UK if the plant becomes unprofitable because of Brexit”, Cincotta said.
Chief executive Carlos Tavares told the Financial Times that he would be forced to shut the facility if market conditions turned “bad” as a result of a problematic EU departure.
Meanwhile, the pound tumbled to a dollar level last seen in March 2017 on festering fears that Britain could crash out of the European Union with no deal in place at the end of October.
Prime Minister Boris Johnson has vowed to lead Britain out of the EU on October 31 even if this means doing so without a divorce agreement.
“The pound has gotten off on the wrong foot at the start of the new week,” said XTB analyst David Cheetham.
“Brexit continues to be the dominant theme with a noticeable harshening of the rhetoric in recent days raising concerns amongst traders.”
Asia markets were mostly down yesterday, with investors cautious ahead of United States-China talks in Shanghai this week and amid more civil unrest in Hong Kong.