A mixed month with record highs for the S&P, the FTSE climbing back up but tensions still rising across the world.
New Prime Minister, old concerns: The Markets in July
The markets were boosted in July by a combination of relief at an apparent easing of tensions in the US-China trade dispute, along with hopes of a 0.25% cut in US interest rates at the next Fed meeting. The S&P broke through the 3,000 mark for the first time and the FTSE 100 made it back through 7,700 for the first time since August last year.
Rising tensions and slowing economies
The positive mood was somewhat dampened towards the end of the month by the increase in tension with Iran and some underwhelming Q2 corporate earnings in the US. There was also a noticeable increase in commentary warning that the global economy appears to be slowing faster than expected.
There was a further slide in Sterling, ongoing since May, taking it down to its lowest point for two years. That was mainly due to concerns about the increasing chances of a No deal Brexit in October after Boris Johnson won the long running Conservative leadership contest and tilted the Cabinet much more to Leave supporters via a large number of changes.
A slew of takeover rumours
In terms of bid rumours there was little of note during the month. ITV’s launch of a new streaming service with the BBC coincided with renewed rumours of a takeover bid and reports that an activist investor might be about to take a stake. Cobham’s all-cash £4bn takeover by US private equity group Advent came at a decent premium but could run into political scrutiny, much as Inmarsat’s has.
There have also been rumours of a possible takeover bid and activist investor interest in Flutter Entertainment, the gambling group formerly known as Paddy Power Betfair.
Elliott Advisers, the US activist investor which successfully forced Whitbread to sell Costa, is now taking a strong interest in Saga. Reports are that it believes there would be some value in the company separating the tour operator business from the insurance side. Saga’s shares have not recovered from a poor set of results in April when it shocked the market by lowering its profit guidance and cutting its dividend.
There has also been speculation that premium fashion retailer Ted Baker might be subject to a bid from founder Ray Kelvin. He retains a 35% but resigned earlier in the year following allegations of inappropriate behaviour and the company has since issued a profit warning leading to a sharp drop in the shares.
For those opting for a staycation in the wake of the fall in sterling there is always the consolation of the upcoming Ashes to look forward to.
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