FTSE-100 rises as mega takeover trend sees Twitter enter bidding for TikTok

Shares started with a jump today, building on last week’s positive momentum as hopes grow for the US economy, which continues to defy the doommongers.

A week of healthy news on the US was capped on Friday with a decent set of job numbers, pushing the world’s biggest economy to a fourth straight week of gains.

That came even as talks between Republicans and Democrats for a covid bailout deal continued to stuck in stalemate and US-China relations continue to be deeply fractious.

Those worries hit some Asian markets this morning, but the FTSE-100 still rose 30.9 to 6063.08 by this afternoon.

With little scheduled news in the UK, traders were taking their direction from broader signals on the market.

News of a rival bid to Microsoft’s for the US operations of TikTok was set to spark another surge in global tech shares – already at or near record highs. Twitter emerged last night with a rival potential bid for the Chinese video sharing app’s business. Analysts said Microsoft’s offer was still more likely to succeed but it showed the increased appetite of tech companies with sky high valuations for deals. Microsoft is valued at $1.6 trillion compared with Twitter’s $29 billion.

The new interest in TikTok comes as eight deals around the world worth more than $10 billion have been launched in the past six weeks according to data from Refinitiv. Companies have been either taking advantage of lowly valuations or pitting their interests together in the hope of shoring themselves up against a long period of difficult economic conditions. Companies merging often do so to cut duplicated costs – largely jobs.

That report came on the same day that the Chartered Institute of Personnel and Development reported that one in three UK businesses were planning job cuts in the third quarter of the year as the furlough scheme comes to an end.

Warren Buffett, the so-called Sage of Omaha, declared at the weekend that only a vaccine for Covid could cure the crisis hitting the world aerospace sector. Rolls-Royce, Meggitt and other UK engineers feel his pain. Berkshire Hathaway, his legendary investment company, had to take a $10 billion hit to the value of its Precision Castparts aircraft components business. As it happens, today was a session where the aviation industry did fairly well in the markets, with British Airways owner IAG up 5% and Melrose and Rolls-Royce both gaining more than 2%, but all have seen their stock get battered since Covid struck.

Shares in the AA leaped 15% after its biggest shareholder, Albert Bridge Capital, warned that private equity bidders stalking the group could be trying to buy it too cheaply. The organisation is heavily indebted as a result of its last period of private equity ownership but Albert Bridge fears its bidders are attempting to strike at an opportunistic moment due to the Covid impact on its share price.