Supermarket merger carries London stocks higher

A deal by Sainsbury's to buy rival Asda to become the top UK supermarket group helped carry London stocks higher

London (AFP) – The prospect of a supermarket mega-merger helped carry the London stock market higher on Monday thanks, while Wall Street rose despite investors spurning the announcement of plans by T-Mobile and Sprint to unite.

Earlier, Hong Kong led a rally across most Asian markets as traders brushed off a slowdown in the US economy, while the boost from last week’s historic North-South Korea summit continued to support Seoul and the won.

“A genuinely game-changing deal in the supermarket sector was the main highlight” for London’s benchmark FTSE 100 index, said Spreadex analyst Connor Campbell.

Britain’s second and third biggest supermarket chains Sainsbury’s and Walmart-owned Asda have agreed to merge, the pair said Monday, hoping to create a £13-billion ($18-billion, 15-billion-euro) retail king and leapfrog UK number one Tesco.

Sainsbury’s stock shot up 16.3 percent to 313.80 pence in London afternoon deals, while Tesco was down 1.0 percent at 235.80 pence. Asda is not listed. Walmart shares slid 0.7 percent in opening trading in New York to $87.29.

Shares in T-Mobile and Sprint tumbled at the opening bell as investors got cold feet over the prospects US regulators would approve allowing the number of national network operators to drop to three. 

T-Mobile shares fell 3.4 percent to $62.32 while Sprint shares slumped 10.9 percent to $5.79.

A previous effort by the firms to merge in 2014 was abandoned after the Obama administration signaled it was unlikely to approve.

Investors across the globe meanwhile continued to react to data Friday that showed US growth had slowed in January-March.

Despite the update, tech firms on Wall Street won pre-weekend support after healthy earnings figures from Amazon, Microsoft and Intel.

The positive lead from New York provided some much-needed help Monday to Asian tech firms, which had been hammered in recent weeks by worries about the lucrative smartphone market.

Hong Kong-listed AAC Technologies and Tencent each posted healthy gains, while in Taipei Apple suppliers TSMC was also sharply higher.

On broader markets Hong Kong ended 1.7-percent higher, with a better-than-forecast Chinese factory activity reading also providing support as it eased concerns about a slowdown in the mainland economy.

Seoul added 0.9 percent while Sydney gained 0.5 percent.

Tokyo and Shanghai were closed for public holidays.

– Geopolitical glow –

South Korean traders remain upbeat after Friday’s meeting between President Moon Jae-in and Kim Jong Un, which fuelled hopes for peace on the peninsula and for Pyongyang’s possible denuclearisation.

Adding to the positive news, Kim said he would shut the North’s atomic test site within weeks and invite American weapons experts to verify its closure. And new US Secretary of State Mike Pompeo said Washington had an “obligation” to pursue peace.   

The developments, which come weeks before a planned summit between Kim and US President Donald Trump, have helped push the won up more than one percent against the dollar.

Attention this week turns to the Federal Reserve’s latest policy meeting. While the Fed is not expected to raise borrowing costs, its statement Wednesday will be scanned for clues about future moves.

That is followed by the release Friday of US jobs figures for April, which will provide a fresh look at the economy and give an idea about the Fed’s monetary policy plans.

 – Key figures around 1335 GMT – 

New York – Dow: UP 0.5 percent at 24,433.28 points

London – FTSE 100: UP 0.09 percent at 7,509.23 

Frankfurt – DAX 30: DOWN 0.06 percent at 12,573.67

Paris – CAC 40: UP 0.2 percent at 5,495.70

EURO STOXX 50: UP 0.05 percent at 3,520.49

Hong Kong – Hang Seng: UP 1.7 percent at 30,808.45 (close)

Seoul – Kospi: UP 0.9 percent at 2,515.38 (close)

Tokyo – Nikkei 225: Closed for a public holiday

Shanghai – Composite: Closed for a public holiday

Euro/dollar: DOWN at $1.2072 from $1.2125 at 2100 GMT on Friday

Pound/dollar: DOWN at $1.3734 from $1.3778

Dollar/yen: UP at 109.38 yen from 109.13

Oil – Brent North Sea: DOWN 52 cents at $74.12 per barrel

Oil – West Texas Intermediate: DOWN 67 cents at $67.43