The FTSE 100 was in consolidation mode on Wednesday morning after a China-induced rally on Tuesday. However, the bulls took control after lunch and sent the index over 0.3% higher.
The impact of China’s stimulus measures fizzled out on Wednesday morning, although the key beneficiary mining sector was still higher for the week.
London’s leading index even managed to carve out gains despite weakness in oil heavyweights BP and Shell who slipped back with oil prices.
“Brent Crude remains close to $75 a barrel as supply concerns continue to swirl. Although crude prices remain well below the peak in 2022, when they were nudging $120 a barrel, the intensity of the Israel’s attacks on targets in Lebanon has increased concerns that that the conflict will spread further across the Middle East,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
The stocks leading the rally at midday included Rentokil, Fresnillo, and Croda. Rentokil was the top riser, up 4%, after an activist investor took a board seat following a period of poor performance.
“Pest control outfit Rentokil was not in a strong position to refuse any requests from activist investor Nelson Peltz, so news that a representative from his Trian Fund Management vehicle is joining the board shouldn’t come as a big surprise,” said AJ Bell’s Russ Mould.
“After serving up a doozy of a profit warning earlier this month, Rentokil’s board is hardly in a position to suggest it doesn’t need help or fresh ideas, and it will be interesting to see where Peltz looks to exert pressure.
“Weaker than expected revenue at Rentokil has been compounded by internal problems around the integration of acquired branches and poor cost control as the company strained to hit sales targets. This state of affairs does not reflect well on the company’s discipline.”
With little economic news on Wednesday, the big story in London is the Rightmove takeover interest from Rupert Murdoch’s REA Group and the third revised bid announced on Wednesday. Like the two prior bids, the third was rejected by Rightmove.
“While there was a shift in the tone of Rightmove’s announcement earlier this week in that it was ‘carefully considering’ REA’s latest proposal, it didn’t take long for the property portal to go back to its dismissive ways,” Russ Mould said.
“REA looks to be running out of patience with Rightmove after it rejected a third takeover proposal, banging the drum even louder that it’s bad form not to properly engage in a conversation. This sets the tone for REA taking a hostile approach, bypassing the board and negotiating directly with shareholders.
“Rightmove’s biggest investors are asset management firms and they will all have a price at which they’d be happy to let their shares go. Names like Kayne Anderson Rudnick, BlackRock and Lindsell Train won’t be emotionally attached to a business like Rightmove in the way a founder or company employee might be. They’re holding Rightmove stock to make money and it’s clear that REA continues to want the business.”