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Manufacturing growth in Germany was slightly weaker than indicated by preliminary ‘flash’ PMIs released last month, but a reading of 58.
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German manufacturing growth strongest since 2018

Manufacturing growth in Germany was slightly weaker than indicated by preliminary ‘flash’ PMIs released last month, but a reading of 58.3 still shwed the strongest expansion in activity since early 2018.

IHS Markit, which gathered the data, said production continued to rise and goods producers reported “strong optimism”. Less positively, factory workforce numbers continued to decline and cost pressures rose.

IHS Markit’s Phil Smith said the figures may have been flattered by supply bottlenecks giving the appearance of a higher-demand situation:

The German manufacturing sector, for the most part, continued to power on in December, with only consumer goods production showing any real weakness as a result of the fresh lockdowns at home and abroad.

The headline PMI remained in strong growth territory, though it should be highlighted that the improved reading compared to November owed in large part to the supplier delivery times sub-index, which is inverted for the calculation of the PMI and fell sharply to a near-record low as a result of growing supply bottlenecks. 

Meanwhile, the final French and pan-Eurozone reading were in line with the flash estimates:

  • France: 51.1 (estimate 51.1)
  • Eurozone: 55.2 (estimated 55.5)
Spanish and Italian manufacturing sectors experience moderate growth

Purchasing managers’ index data for Spain and Italy showed both countries’ manufacturing sectors picked up pace during December, albeit at a slightly slower pace than economists had hoped.

Italy’s PMI came in at 52.8, just above the growth threshold of 50 and marking a pickup in pace from November.

Lewis Cooper from IHS Markit, which gathered the data, said:

The Italian manufacturing recovery continued at the close of the year, with output expanding for the seventh straight month. Order books returned to growth, although barely, with gains coming mostly from foreign demand which saw a strong rebound from the slight fall in November.

Meanwhile, Spain’s reading was of 51, marking a return to growth after a slightly decline the prior month:

IHS Markit’s Paul Smith said:

December was a mixed bag for Spain’s manufacturing sector as a positive uplift in external demand was again offset by sustained domestic weakness. With tourism and hospitality struggling to cope in the face of the pandemic, there has been a considerable knock-on effect for producers supplying these sectors. 
AstraZeneca sells commercial rights to Atacand for $400m

Pharma giant AstraZeneca has reached an agreement to divest the commercial rights to Atacand, a treatment for hypertension, to German company Cheplapharm for a total payment of $400m.

Under the terms of the deal, Astra has received $250m already, with a further $150m in payments due in the first half of this year.

The deal allows Cheplapharm to sell the treatment in over 70 countries.

Astra said the proceeds would be used for “general corporate purposes”.

FTSE rises strongly

The FTSE 100 has risen strongly at the open, the strongest performer amid solid gains across Europe’s top indices.  The blue-chip index is currently on track for its best day since early November.

Bloomberg TV
Credit: Bloomberg TV
Brent pushes to $53/barrel

Amid a widespread risk rally across the markets today, Brent crude oil prices have broken through $53 a barrel, the highest level since early March.

Ferguson agrees £308m sale of Wolseley UK

Plumbing group Ferguson has agree the sale of Wolseley UK to private equity firm Clayton, Dubilier & Rice for £308m.

The transaction, which is expected to complete by the end of the month, is part of Ferguson’s efforts to concentrate its business on North America.

It said Wolseley UK generated revenues of $1.88bn in the year to the end of July, making an underlying trading profit of $8m.

Kevin Murphy, Ferguson’s chief executive, said:

The transaction further simplifies the Group and allows us to focus entirely on investing in and developing our business across North America where we have the greatest opportunities for profitable growth.

Fergunson was known as Wolseley until 2017, and traces its origins back to a sheep shearing business founded in Sydney in 1887.

Jefferies’ Priyal Woolf said the sale is likely to prompt a special dividend. She said the value of the sale looked “a bit light”, but added:

However, we think sentiment towards the value will be offset by the timing being earlier than expected by most, as it now paves the way for Ferguson to fully focus on its core North American division and further strategic initiatives.
Entain rejects MGM bid
Entain, owner of Coral and Ladbrokes, was formerly known as GVC Holdings Credit: Matt Alexander/PA Wire

Ladbrokes owner Entain has rejected a takeover offer from US casino giant MGM Resorts worth around £8.1bn, saying the proposal “significantly undervalues” the FTSE 100 gambler and its prospects. 

My colleague Simon Foy reports:

The company, formally known as GVC, asked MGM to provide additional information for the strategic rationale for a combination of the two companies.

Based on its closing price on Dec 31, the rejected offer valued each Entain share at £13.83 – a premium of 22pc. Its stock market value was £6.6bn at the close on Thursday. 

Entain said: “Shareholders are encouraged to take no action. There can be no certainty that any offer will be made for the company, nor as to the terms on which any such offer might be made.”

  • Read more: Ladbrokes owner Entain rejects bid from MGM
Gold and silver make strong start to 2021

Precious metal have come out of the gate strong on the first full trading day of the new year. Gold is up about 1.3pc currently as investors look for ‘safe’ alternatives to poorly-yielding bonds.

The rise puts gold around a two-month high.

 Meanwhile, silver has jumped around 3pc:

Agenda: FTSE tipped to open hjgher 

Good morning and happy New Year. The FTSE 100 is set to rise despite the threat of another national lockdown in England and other parts of the UK.

On Sunday, Boris Johnson said restrictions were likely to get tougher to stem the spread of the virus, raising fears that large swathes of the hospitality sector could be kept shut for months. 

5 things to start your day 

1) Bitcoin price tops $34,000 for the first time as interest spikes: The price of the digital currency Bitcoin has surged to a new record, pushing above $34,000 (£24,870) just hours after reaching $30,000 for the first time.

Markets in 2020 - Bitcoin

2) Crunch talks on London's relationship with the EU loom: The City’s trading relationship with the European Union will be subject to crunch talks this week as ministers race to secure a deal within two months.

3) Revolut outpaced Monzo and Starling in downloads during 2020: Revolut, the digital banking app, grew more quickly last year in terms of total downloads than its competitors Monzo and Starling Bank, as the rivalry between Britain’s financial technology start-ups intensified.

All three fintech banks saw increased net losses in 2019 compared with 2018

4) Amazon promotes listings for ‘anti-radiation’ stickers: Amazon has been promoting “anti-radiation” stickers, which claim to reduce the “harmful effects” of mobile phones, through sponsored shopping listings on its website and even named one as “Amazon’s Choice”, The Telegraph has found.

5) Working at home brings happiness: Britain’s workers are generally happier since the pandemic because the disruption to their working lives has given them more flexibility and better relationships with their managers, new data suggests.

What happened overnight 

Shares jumped in South Korea and Australia, but underperformed in Japan after Prime Minister Yoshihide Suga said he’s considering declaring a state of emergency for the Tokyo area to stem a surge in virus infections. 

The dollar fell against all its Group-of-10 peers amid optimism about a global growth recovery. The offshore yuan strengthened to the highest since mid-2018.

Equity indexes in China and Hong Kong advanced, shrugging off the New York Stock Exchange’s move to delist China’s three biggest telecommunication companies. The firms themselves, China Mobile, China Telecom and China Unicom Hong Kong, all declined.

Coming up today

Economics: UK manufacturing PMI; M4 money supply; money and credit; global manufacturing PMI (Dec).

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