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What to watch: GoCompare takeover, stocks break records, Virgin Money profits sink

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·Finance and policy reporter
·4 min read
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A general view of an open Tower Bridge with the skyline of Canary Wharf, London.
UK stocks are trading at five-month highs. Photo: PA

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and around the world.

Magazine publisher Future buys GoCompare

Price comparison website GoCompare (GOCO.L) and magazine publisher Future (FUTR.L) have agreed the terms of a £594m ($792m) takeover of GoCompare.

GoCompare shares leapt 13.7% to 125.6p on Wednesday after the announcement.

The deal will see its shareholders receive a combination of Future shares and cash that price each GoCo Group share at 136p. It marks a premium of around 23.6% on the stock’s closing price of 110p the day before the announcement.

Shares in Future, which owns Country Life, Four Four Two, Marie Claire, Music Week, Woman’s Own and dozens of other UK magazines, slid 10.2% on Wednesday.

Rishi Sunak to set out UK spending plans

UK chancellor Rishi Sunak will set out the UK government’s spending plans for day-to-day departmental budgets in his spending review statement in the House of Commons at 12.30pm in London.

The chancellor has promised “quite a significant” increase in spending on day-to-day services, including “tens of billions” for infrastructure. But public sector workers are expected to face pay restraint.

The chancellor is unlikely to set out tax plans and how measures will be funded however, as in a typical budget. But the speech may include clues about “how long the fiscal taps will stay open, and the first signs of how quickly and where taxes will be raised or public spending cut,” according to Deutsche Bank analysts.

WATCH: The chancellor's spending review — seven things you should know

UK stocks at highest since June as US markets hit record high

UK stocks were trading at their highest level since early June on Wednesday, as vaccine advances and hopes of a smooth US presidential transition buoyed financial markets.

European markets opened higher following Tuesday’s rally on Wall Street on Tuesday, which saw the Dow Jones (^DJI) break through the 30,000 mark for the first time to close 1.5% higher. The S&P 500 (^GSPC) had also reached a record high, up 1.6%, and the Nasdaq (^IXIC) gained 1.3%.

It comes after confirmation that the US government’s General Services Administration had acknowledged Joe Biden’s victory in the election, alleviating uncertainty over the transition from Donald Trump. Investors also welcomed the choice of former US Federal Reserve chair Janet Yellen as Biden’s Treasury secretary.

Britain’s FTSE (^FTSE), France’s CAC 40 (^FCHI) and Germany’s DAX (^GDAXI) all rose at the open, though were close to flat from mid-morning.

US stock futures were pointing to slight falls on Wednesday as trading began in Europe after hitting new record highs on Tuesday. S&P futures (ES=F) were trading 0.2% higher, Dow Jones futures were up 0.1% (YM=F), and Nasdaq futures (NQ=F) were up 0.4%.

Asian markets had been mixed overnight. Japan’s Nikkei (^N225) gained 0.5% and the Hang Seng in Hong Kong (^HSI) rose 0.2%, but China’s Shanghai Composite (000001.SS) dropped 1.2%.

Watch: Markets have good reasons to extend risk rally

Virgin Money profits slide 77% as it braces for £501m loan losses

Virgin Money UK (VMUK.L) shares slid on Wednesday as it reported a 77% decline in underlying profits, after setting aside a “conservative” £501m ($658m) to cover potential bad loans.

It became the latest bank to set aside more cash for feared credit losses, in a sign of lenders’ concerns over the economic outlook for the UK. Its total credit provisions now stand at £735m.

Chief executive David Duffy said it was “too early” to incorporate potential vaccines into its near-term forecasts, and said he expected unemployment to rise and government stimulus to be cut back.

The company recorded underlying profits before tax of £124m ($165.5m) in its full-year results, down 77% year-on-year. It posted a £141m post-tax loss on a statutory basis, when restructuring programmes and acquisition-related costs are factored in.