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What to Watch: May survives for now, Asian markets dive, and Inmarsat's $3.4bn takeover

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
A puppet head of Britain’s prime minister Theresa May spearing a representation of the UK economy positioned near Whitehall outside Downing Street during a People’s Vote march on Saturday. Photo: Isabel Infantes/AFP/Getty Images

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

May survives for now

Theresa May has survived an attempted coup from members of her own party over the weekend, as Brexit preparations continue to go down to the wire.

BuzzFeed News and The Sunday Times reported over the weekend that MPs within the Conservative Party were pushing Theresa May to set out a timetable for her resignation in a bid to gain support for her Brexit withdrawal agreement.

May appears to have resisted these calls for now, but there is still pressure on the prime minister to leave. Tory backbencher Nigel Evans, a joint executive secretary of the influential Conservative 1922 Committee, said on Monday Theresa May should set out her plans to quit in order to get her Brexit deal through.


“Clearly a number of people do not want the prime minister anywhere near the next phase of negotiations, which is the future trading relationship between ourselves and the EU,” he told BBC Radio 4’s Today.

He said there should be an “orderly” process to replace the PM, with a full leadership contest rather than an interim successor.

May is set to give MPs a vote on seven different Brexit options this week, ahead of the new April 12 exit deadline.

The pound was down 0.1% against the euro (GBPEUR=X) and down 0.2% against the dollar (GBPUSD=X).

 


European and Asian market slip on growth fears

European stock markets were lower in early trade after a brutal start to the week for Asian markets.

Japan’s Nikkei 225 (^N225) closed down by 3%, Hong Kong’s Hang Seng index (^HSI) was 2% lower, and China’s benchmark Shanghai Composite (000001.SS) was down by 1.9%.

“It has been universally acknowledged for some time now that the global economy has been slowing down, given the declines at the end of last year, against a backdrop of a US central bank that appeared intent on continuing to raise rates,” Michael Hewson, chief market analyst at CMC Markets, said in a morning email.

“The sharp slide in yields at the end of last week merely serves to highlight while some central banks do have some ammunition in the monetary policy toolbox — like the Federal Reserve — there are others that have much less, and the gradual flattening of yield curves would appear to suggest that bond markets think the global recovery is starting to roll over.

“European markets have got off to a negative start this morning, following on from the heavy declines in the US on Friday and Asia today.”

Britain’s FTSE 100 (^FTSE) was down by 0.6%, Germany’s DAX (^GDAXI) was down by 0.3%, France’s CAC 40 (^FCHI) was down by 0.5%, and the Euronext 100 (^N100) was down by 0.6%.

Inmarsat’s $3.4bn takeover

Inmarsat (ISAT.L) has agreed to be taken over by a consortium of private equity firms including Apax and Warburg Pincus in a £2.6bn deal.

Under terms announced on Monday, the satellite communications group will be sold for cash at $7.21 (546p) a share. The offer represents a 46% premium to when the approach was made. Shares were up 7% in early trade.

The deal comes after US rival EchoStar Corp walked away from discussions to buy Inmarsat last year after it rejected an offer worth £3.2bn.

As well as UK group Apax and US-based Warburg Pincus, the consortium also includes the Canada Pension Plan Investment Board, and the Ontario Teachers’ Pension Plan Board.

Sports Direct opposes Debenhams deal

Mike Ashley’s Sports Direct (SPD.L) has hit out at Debenhams (DEB.L) for rejecting his latest attempts to gain control of the struggling retailer.

The billionaire said that an offer to buy Debenhams’ Danish business Magasin du Nord for £100m, made public last week, is one of several offers that Sports Direct has made to put the department store chain on a more secure footing.

Sports Direct said on Monday that its proposals are better than the “multiple insolvency processes” Debenhams is considering as it looks to restructure.

Responding to claims by Debenhams that Ashley’s appointment as chief executive would be a conflict of interest given his ownership of House of Fraser, the company said: “Sports Direct does not consider House of Fraser to be a competitor of Debenhams.

“In any event, were Mr Ashley to become CEO of Debenhams he would, as previously announced, step down from his roles at Sports Direct. He would also be subject to fiduciary duties to Debenhams.”

Debenhams shares were down by 19%.

Majestic Wine to shut stores

Majestic Wine plans to close stores as part of a wider group transformation that will see it rebrand as Naked Wines, the online retailer it took over in 2015.

The specialist wine retailer did not specify the number of stores it will close.

Boss Rowan Gormley said: “We also believe that a transformed Majestic business does have the potential to be a long-term winner, but that we risk not maximising the potential of Naked if we try to do both.

“Where we have no choice but to close stores we will aim to minimise job losses by migration into Naked. Therefore we have taken a decision to focus all of our capital and energies into delivering the long-term potential of Naked, and releasing value from Majestic.”

Financial services confidence tanks

Optimism among financial services companies is falling at its fastest rate since the height of the financial crisis amid a Brexit “national emergency”, according to a survey published on Monday.

The Confederation of British Industry (CBI) and PwC surveyed 84 financial services and found their optimism about UK business conditions declined by 45% in the first quarter of 2019. That was the worst reading since 2008. The survey’s authors blamed the confidence slump on ongoing Brexit uncertainty.

“The alarm bells ringing at the state of optimism in the financial services sector have now reached a deafening level,” Rain Newton-Smith, the CBI’s chief economist, said in a statement.

What to expect in the US

US stock futures were pointing to a lower open later today. S&P 500 futures (ES=F) were down by 0.4%, Dow Jones Industrial Average futures (YM=F) were down by 0.4%, and Nasdaq futures (NQ=F) were up by 0.7%. The VIX volatility-tracking index (^VIX) was up by 29%.