O2 Merger Takes BT Breath Away, Pound Up After BOE
London Capital Group | May 07, 2020 09:41
The British pound has popped higher after the Bank of England decided to keep interest rates on hold. A surprising annual rise in Chinese exports has bolstered overall sentiment but more heated language directed at China from US is a rising source of anxiety. Stock markets had taken a turn for the worse on Wednesday when private payrolls data showed over twenty million Americans lost their jobs in April.h2 Bank of England/h2
The Bank of England has held rates at a record low of 0.1%. The decision not to expand bond-buying with more printed money gave the pound a small uplift. Two dissenting votes for an extra £100 billion in quantitative easing capped the gains. It’s a wait-and-see for now but the path of least resistance at the BOE seems to be for more stimulus.
h2 Shares/h2Shares of Telefonica (MC:TEF) rose in reaction to its deal with Liberty Global (NASDAQ:LBTYA) to merge O2 and Virgin Media in the United Kingdom. It creates a new telecoms power house to compete with BT. The combination will bring extra bargaining power to potentially achieve what the two entities by themselves never could. Ofcom might finally order the breakup of BT and Openreach.
It was a double whammy for BT shareholders: the emergence of a huge new rival and the suspension of dividends for two years.
h2 Forex/h2The pound has risen over Gold is holding steady near $1700 per oz before Friday’s big US jobs report. Copper just hit a 1-week high helped by China exports.
h2 Opening calls/h2Dow Jones is set to open 182 points higher at 23,846
S&P 500 is set to open 25 points higher at 2873
h2 Chart: GBP/EUR/h2Upside in the British pound has been capped at 1.15/152 for the last three weeks.
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