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WEEKLY MARKET ROUND-UP – 28/06/21

Rolling up their sleeves

Although a number of smaller nations are leading the charge towards full covid vaccination, among developed nations, the US is pulling ever closer to the UK after its early leadership. Meanwhile, Europe’s biggest nations remain some way off the pace while Canada continues to bring up the rear.

Source: Our World in Data/ Statista. Data as at 19 June 2021. *Canada data as at 12 June 2021

Morrisons approach could spark bidding war in sector

Shares in Morrisons leapt some 35% on Monday (21 June) after the UK’s fourth-largest supermarket chain received a £5.5bn takeover offer from the US buyout firm Clayton, Dubilier & Rice over the weekend.

Morrisons rebuffed the approach but the news sent ripples of excitement through the sector at the prospect of a summer bidding war for Britain’s biggest supermarkets. Ocado and Sainsbury’s were the top performers in the FTSE 100 index on Monday, adding 4% and 3.8% respectively, while Tesco shares gained 1.7% and Marks & Spencer jumped 2.8%.

Despite both benefiting from lockdown, shares in UK supermarkets have languished while shares in US players have boomed. Morrisons’ US bidder has another month to improve its offer but it could be just the first of many suitors including Amazon, following its $13.4bn acquisition of the high-end US grocer Whole Foods in 2017.

This month the UK’s Competition & Markets Authority (CMA) approved the last details of October’s £6.8bn private equity takeover of Asda.

Ceri Breeze / Shutterstock.com

US oil stocks rally in line with oil prices

On Monday (21 June) Brent crude prices gained 1.9% while West Texas Intermediate (WTI) crude jumped 2.8%. The following day, a barrel of Brent crude hit $75 for the first time since April 2019, capping a month of price gains.

The gains are being driven by the pace of the global vaccine roll-out, its likely impact on summer travel – especially in the US – and political changes in Iran that will further delay the return of its oil to the international market.

The International Energy Agency (IEA) now predicts global oil consumption to rebound by 5.4m barrels per day (bd) this year after declining by a record 8.6m bd in 2020.

Last week, company analysts scrambled to revise their share price forecasts for companies in the sector.

On Monday (21 June), the revised forecasts helped push shares in US oil producers such as Hess, EOG Resources, Marathon Oil and Devon Energy up close to 7%, while Halliburton shares gained more than 6%.

Tony Webster / Wikimedia.org