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FTSE-100 rises as mega takeover trend sees Twitter enter bidding for TikTok

Donald Trump ordered that a ban on interacting with popular social media platform TikTok or its Chinese parent company will take effect in 45 days: AFP via Getty Images
Donald Trump ordered that a ban on interacting with popular social media platform TikTok or its Chinese parent company will take effect in 45 days: AFP via Getty Images

Shares started with a jump today, building on last week’s positive momentum as hopes grow for the US economy, which continues to defy the doommongers.

A week of healthy news on the US was capped on Friday with a decent set of job numbers, pushing the world’s biggest economy to a fourth straight week of gains.

That came even as talks between Republicans and Democrats for a covid bailout deal continued to stuck in stalemate and US-China relations continue to be deeply fractious.

Those worries hit some Asian markets this morning, but the FTSE-100 still rose 30.9 to 6063.08 by this afternoon.

With little scheduled news in the UK, traders were taking their direction from broader signals on the market.

News of a rival bid to Microsoft’s for the US operations of TikTok was set to spark another surge in global tech shares – already at or near record highs. Twitter emerged last night with a rival potential bid for the Chinese video sharing app’s business. Analysts said Microsoft’s offer was still more likely to succeed but it showed the increased appetite of tech companies with sky high valuations for deals. Microsoft is valued at $1.6 trillion compared with Twitter’s $29 billion.

The new interest in TikTok comes as eight deals around the world worth more than $10 billion have been launched in the past six weeks according to data from Refinitiv. Companies have been either taking advantage of lowly valuations or pitting their interests together in the hope of shoring themselves up against a long period of difficult economic conditions. Companies merging often do so to cut duplicated costs – largely jobs.

That report came on the same day that the Chartered Institute of Personnel and Development reported that one in three UK businesses were planning job cuts in the third quarter of the year as the furlough scheme comes to an end.

Warren Buffett, the so-called Sage of Omaha, declared at the weekend that only a vaccine for Covid could cure the crisis hitting the world aerospace sector. Rolls-Royce, Meggitt and other UK engineers feel his pain. Berkshire Hathaway, his legendary investment company, had to take a $10 billion hit to the value of its Precision Castparts aircraft components business. As it happens, today was a session where the aviation industry did fairly well in the markets, with British Airways owner IAG up 5% and Melrose and Rolls-Royce both gaining more than 2%, but all have seen their stock get battered since Covid struck.

Shares in the AA leaped 15% after its biggest shareholder, Albert Bridge Capital, warned that private equity bidders stalking the group could be trying to buy it too cheaply. The organisation is heavily indebted as a result of its last period of private equity ownership but Albert Bridge fears its bidders are attempting to strike at an opportunistic moment due to the Covid impact on its share price.

Any hopes of a revival longer term to the UK stock market depend on Britain’s faring in the Brexit negotiations and trade talks with non-EU countries thereafter. Bad news on that came from the Institute for Government thinktank which today said Boris Johnson’s government was succumbing to countries’ demands for it to lower standards to their levels in the rush to get deals done. The IFG cited how Washington was already urging the UK to accept its food standards, which would allow chlorinated chicken into the UK. Hormone injected beef is another flashpoint in agricultural circles as the government prepares to ditch EU standards for American ones.

First Group and Arriva are among those public transport groups set to get another wave of subsidies for buses from the Department for Transport. The absence of passengers has meant the taxpayer has had to step in to keep routes going. Share prices in the two groups have been hit hard by the covid crisis but First jumped 6% today. Aviva stayed flat.