Proactive Investors -
- FTSE 100 stays below session peak of 7,806.39
- Wall Street seen mixed with Nasdaq indicated lower
- IMF sees interest rates returning to pre-Covid levels
Bitcoin bags $30k
Bitcoin was back above US$30,000 this afternoon, having broken that level for the first time in 10 months in Asian trading, sending short liquidations spiralling to US$50mln and opening the possibility for a move above 31k if the bulls remain galvanised.
30k was a key target for bitcoin longs since the start of 2023, when the benchmark cryptocurrency proved itself as among the best-performing asset classes and a safe-haven play amid widespread turmoil in the traditional markets.
Year to date, BTC/USDT is over 80% higher, with yesterday’s performance alone seeing a 4.6% surge. Around 2.30pm in London, Bitcoin was trading at $30,145.
Trooli Yours
BT Group (LON:BT) altnet competitor Trooli has been acquired by Agnar UK Infrastructure Ltd, a newly incorporated entity headed by French nationals Elie Nammar and Maxime Buisson of Vauban Infrastructure Partners.
Trooli’s full-fibre broadband network spans over 200,000 homes across the south of England.
Deal specifics have not been disclosed, though ISPreview noted that previous reports put a £100mln value on Trooli’s network worth.
Companies House documentation shows that Joanna Louise Fissenden remains as company secretary, but all former directors have now resigned.
Trooli DebtCo Ltd was removed as a controlling shareholder and renamed as Whippet DebtCo Ltd.
A quick look at some of today’s movers
Risers
GSTechnologies - up 46% to 1.6p: Shares jumped after it received verbal confirmation from the UK Financial Conduct Authority regarding the eligibility of its stablecoin application for the Regulatory Sandbox. The company anticipates a formal decision in mid-May 2023 as it continues to assist the regulator with its application review.
Block Energy - up 26% to 1.83p: Block Energy’s shares were on the front foot after it announced the signing of a memorandum of Understanding (MoU) with the government of Georgia. The company said the agreement covers government support and initiatives to assist in the development of projects through data sharing, cooperation and the facilitation of meetings with national and regional large oil companies.
Oriole Resources - up 8% to 0.14p: Shares bounced as it announced a potential US$1mln investment into its new sub-holding company NewCo. NewCo has been created to manage Oriole's five Eastern Central Licence Package (CLP) gold licences in Cameroon, with the funding expected to be secured in the second quarter of this year from a Canadian investment bank. The bank would gain a 10% interest in NewCo, Oriole said, with the investment earmarked “for gold exploration, funding the company's proposed work programme” and enabling it “to pursue other funding opportunities”.
Fallers
Devolver Digital - down 6% to 30p: Shares fell to a new low of 29p before rebounding slightly after the indie games publisher and developer reported lower profits than expected due to non-cash impairments for under-performing games released in the past year. A group-wide assessment was made of the commercial viability, carrying value and future prospects of each of its existing games and those in development, resulting in a further US$22.3mln in non-cash impairments to the carrying value of IP and US$47.7mln of non-cash impairments to balance sheet goodwill of previous acquisitions.
Modest gains seen on Wall Street
Wall Street is likely to open higher on Tuesday as investors await an inflation report that will set help determine the Federal Reserve’s next interest rate decision, while the start of earnings season later this week will provide an indication of the health of the banking sector.
Futures for the Dow Jones Industrial Average (DJIA) rose 0.2% in pre-market trading while those for the broader S&P 500 index gained 0.3% and contracts for the Nasdaq-100 added 0.4%.
After a volatile session, the main US benchmarks ended largely flat on Monday as investors returned from the Easter long weekend still digesting March’s non-farm payroll report. The DJIA closed 0.3% up at 33,587, while the Nasdaq Composite slid 4 points to 12,084 and the S&P 500 added 4 points to 4,109.
“It was the first opportunity that investors had to react to the non-farm payrolls figure, which was released on Good Friday,” commented Richard Hunter, head of markets at interactive investor.
“The reading of 236,000 was in line with expectations, with a moderate fall in the unemployment rate to 3.5% from a previous 3.6%. There was also a slight decline in wage inflation, all of which left the consensus unchanged that the Federal Reserve would persist with its hiking policy for now and raise rates by 0.25% at the upcoming May meeting.”
Hunter noted that this week promises to uncover further clues with a busy economic and corporate calendar in sight.
“Consumer price and producer price index data will provide fresh updates on the Fed’s battle against inflation, and at the end of the week the first quarter earnings season begins in earnest as three of the larger banks report results,” he added.
The Consumer Price Index (CPI), out on Wednesday, is expected to show headline inflation rose 0.2% in March from February’s 0.4% month-over-month gain, and at an annual rate of 5.2% from 6% in February.
“The banks will be an early test of investors’ mettle on any number of fronts, not least of which will be the early fallout from the recent banking turmoil, as JP Morgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC) and Citigroup (NYSE:C) open the season,” Hunter said.
“In particular, loan growth will be scrutinised and could prove to be tepid in view of tightening lending conditions, while there will also be a close eye on any increase in souring loans, given the slowing economy," he continued.
"In turn, this could lead banks to increase provisions for bad debts once more, with the additional pressures of a deal-making drought and trading volatility also potentially weighing on earnings.”
12.25pm: Jefferies puts likely success of Glencore (LON:GLEN) merger with Teck at less than 50%
Glencore PLC ticked higher along with other mining stocks today. Jefferies has been assessing the likelihood of its move for Teck succeeding along with the FTSE 100-listed company's options should it not.
The broker puts the probability of success in Glencore’s plans to merge with Teck at less than 50%. It highlighted a number of reasons:
1) the additional premium that Glencore can economically justify is small (Jefferies expects a 10% bump as a final offer);
2) Teck's management has made a strong (but debatable) argument against the strategic and economic benefits of this merger;
3) Teck's controlling Class A shareholders may reject an offer from Glencore at any price;
4) valuation for the combined de-merged, large listed coal company would be an issue due to ESG factors and concerns about thermal coal fundamentals;
and 5) regulatory approvals will be difficult.
Nevertheless the broker thinks Glencore's management move to merge with Teck and then de-merge the combined company's coal business as a separate listed entity has effectively "let the cat out of the bag".
At this point, Jefferies believes a coal spin for Glencore becomes probable, with or without Teck.
The broker estimates a coal spin could unlock trapped value from the Glencore structure while it also thinks the firm will also continue to hunt for M&A opportunities as there is a compelling argument to buy rather than build.
Jefferies doesn’t see Glencore a bid target itself.
“While we cannot rule it out entirely, we believe it is highly unlikely that Glencore becomes a target for BHP or any other miner (note that the companies have not commented on these media reports). However, we do see value in Glencore as a standalone” analysts at the broker wrote.
Jefferies has a buy rating and 650p per share price target for Glencore with shares trading up 2.3% at 467.75p each.