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Barrick Gold Announces Plan to Acquire Newmont Mining - EMEA Brief 26 Feb

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  • Barrick Gold has announced an unsolicited plan to merge with Newmont Mining in a $19 billion all-share transaction. The merger, if successful, would create the world's largest gold mining company and could potentially re-shape the industry, along with gold prices. This comes after Barrick completed their $6.1 billion acquisition of Randgold Resources last month. 
  • Tesla shares fell almost 5% yesterday after the SEC asked a judge to hold CEO, Elon Musk, in contempt for failing to abide by a settlement deal that was agreed last year. This relates to a tweet last week from Musk about Tesla's production rate.
  • Theresa May is poised to open the way for delaying Brexit as it is reported that she will give MPs a vote on either continuing with a no-deal Brexit or to go for an extension to the Article 50 exit, should the revised deal be rejected on March 12th. Jeremy Corbyn has also yielded to back a potential second referendum. 
  • Asian Equities lose steam after a 5.9% surge at the start of the week as investors await further signs on improvement in trade relations. The CSI 300 was down 1.2%, the Hang Seng lost 0.7%, whilst the Nikkei traded 0.4% lower. The ASX also fell around 0.9%, weighed by key mining and energy stocks.
  • The Pound jumped to a near four-week high at $1.3149 in early trading on the back of reports that the May will allow the possibility of the Brexit deadline being extended. 
  • Oil prices fell as much as 3% as Trump called on OPEC to ease prices once again. US Crude was down to $55.16 a barrel whilst Brent was trading at $64.56.
  • Palladium hits a record high price above $1,550 as the supply squeeze from the car industry continues.
  • Gold is currently trading around $1,325.

Asian overnight: Asian markets lost their way a little overnight, with Japanese, Hong Kong, and Australian indices all trading in the red. The Chinese markets remained the leading light, yet the gains were significantly more muted in the wake of yesterday’s blockbuster 5.9% rally in the CSI 300. Data-wise, the Japanese have released the BoJ core CPI, which rose slightly to 0.5% (from 0.4%), falling short of the 0.6% market expectations.

UK, US and Europe: Today sees Donald Trump and Kim Jong-Un kick off a two-day meeting, after the North Korean leader arrived in Vietnam by train. As before, the rogue state’s weapons programme remains the hot topic, with Trump willing to ease sanctions and help the nation develop in exchange for further denuclearisation. In the UK, the BoE’s Mark Carney looks set to talk to the Treasury select committee about the inflation report, with both growth and inflation on the slide.

Economic calendar - key events and forecast (times in GMT)

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Source: Daily FX Economic Calendar

1.30pm – US housing starts & building permits (December): starts to fall 0.5% MoM and permits to fall 7% MoM. Markets to watch: US indices, USD crosses

Corporate News, Upgrades and Downgrades

  • Travis Perkins suffered a pre-tax loss of £49 million for 2018, compared to profits of £290 million a year earlier. A £246 million non-cash impairment against Wickes was taken. Adjusted pre-tax profit was up 1.2% to £347 million.
  • Fresnillo reported a 34.75 drop in pre-tax profit, to $483.9 million, for 2018, while revenue rose 0.5% to $2.1 billion. Higher costs, lower than expected output and falling commodity prices were blamed for the poor performance.
  • Persimmon said that pre-tax profit for 2018 was up 13% at £1.09 billion, while revenue was 4% higher at £3.74 billion. Interim CEO Dave Jenkinson has been appointed as the new permanent CEO.
  • Meggitt saw 2018 pre-tax profit fall 5.3% to £216.1 million, but underlying operating profit and revenue both rose by 4%.
  • General Electric shares surge after Danaher announces it will buy GE's pharmaceutical business for $21.4 billion. 
  • Berkshire Hathaway reported quarterly profit of $2.32 per share, above the $1.85 consensus estimate.
  • Twitter co-founder Evan Williams is stepping down as a member of the board at the end of the month.

CIE Automotive upgraded to hold at Kepler Cheuvreux
Elekta upgraded to hold at SEB Equities
Siemens upgraded to overweight at JPMorgan
Schoeller-Bleckmann upgraded to hold at Berenberg

BT downgraded to hold at Berenberg
SAS downgraded to neutral at SpareBank
SocGen downgraded to hold at Jefferies
Sainsbury downgraded to add at AlphaValue

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