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FTSE Charges Ahead 50 Points, Hits 3-Week Highs

ByIG
Published 11/30/2012, 12:47 AM
Updated 01/01/2017, 02:20 AM
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Equities have had their morning coffee today and the FTSE is on a charge, adding nearly 50 points to reach 5850 and three-week highs.

The late breaking story of yesterday, that Invensys would be offloading its reputable rail signalling business to German giant, Siemens, has sent their shares skyrocketing. Having added 27% yesterday, they trade 12% better today. The prospect of a 76p return to shareholders has enticed buyers, and caused a flurry of broker revisions this morning. Conspiracy theories are out in force, as the value of the deal is roughly the same as Invensys’ market cap.

Is Siemens paying too much? Does this leave the potential for counter bids, as a portion of the Invensys business is seemingly available as a standalone entity? We had seen them come under scrutiny as a target earlier in 2012, and paying nearly the full price of the firm for around a third of its business has taken the city by surprise. The feeling seems to be that "the sum of the parts is worth more than the whole," and this could leave the company vulnerable in the coming months.

US markets enjoyed a politically-induced rally as the Speaker of the House spoke optimistically of progress towards a fiscal cliff resolution, after talks with business leaders appeared to be fruitful. Today’s talks keep the issue centre stage, but risk assets are trading in "solution mode." Currently we see another 65 points to go on top of yesterday’s 107-point Dow rally, and an opening call of 13,050.

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