Spreadex Market Update
Sharp drop in Chinese imports drags down indices; SAB in party mode after agreeing AB InBev deal
A whopping 20% fall in Chinese imports in September didn’t get the day off to the best start, with that drop in demand sure to cause ripples of worry the world over. The implications of that decline likely explain the increasing losses posted by the majority of the European indices, with the DAX and CAC both falling 100 and 50 points respectively. The Eurozone also has the ZEW economic sentiment data to endure later on this morning; already seeing a sharp tumble last month, today’s figures will reflect the extent to which the Volkswagen scandal, the disastrous $7 billion loss from Deutsche Bank and continually disappointing (especially German and Spanish) data has weighed on the health of the region’s economic outlook.
The FTSE performed slightly better than its European cousins this morning, down only 30 points despite chunky China-inspired losses in its commodity stocks, for one reason and one reason only: the nascent success of the biggest takeover in UK company history. That’s right, after weeks of public hostility and multiple rejected bids, SABMIller and Anheuser-Busch InBev have agreed (‘in principle’) a £44 per share deal that values the former at £68 billion.
Of course any pact that would cause a single company to produce a third of the world’s beer is going to come under intense, potentially deal-ending, scrutiny from regulators. However, for now the drinks certainly are on SAB, which surged over 9% in light of the news, taking the pound higher with it. Those pound gains may not last for too long, though; the latest UK inflation figure arrive later this morning, with rumblings that the number could turn negative after last month’s 0% stagnation.
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