UK Markets open in 4 hrs 13 mins

What to Watch: PMI boost, Just Eat probe, European stocks rebound

Tom Belger
Finance and policy reporter
Bank of England governor Mark Carney. Photo: FABRICE COFFRINI/AFP via Getty Images

Here are the top business, market and economic stories you should be watching today in the UK, Europe, and abroad:

PMI boost ‘kills off’ chances of Bank slashing rates

Better-than-expected economic data has dampened speculation that the Bank of England will cut interest rates next week.

IHS Markit on Friday released its first estimates of manufacturing and service sector growth in January, as well as an estimate of overall economic growth. The private sector surveys, known as purchasing managers’ indexes (PMIs), are keenly watched signals of economic activity.

IHS Markit said it observed “a decisive change of direction for the private sector economy at the start of 2020”. Manufacturing and service sector growth both beat forecasts and overall economic growth hit a 16-month high.

The data points to a ‘Boris bounce’ for the economy in the wake of the prime minister’s decisive election win last month. IHS Markit said expectations for future growth had also hit their highest level since 2015.

“It seems likely that the rise in the PMI kills off the prospect of an imminent rate cut by the Bank of England, with policymakers taking a wait and see approach as they assess the performance of the economy in the post-Brexit environment,” said Chris Williamson, chief business economist at IHS Markit.

Trade and invest with confidence on global multi-asset investment platform eToro. Join over 11 million users who invest in stocks, indices, commodities, ETFs, cryptos and currencies. Your capital is at risk.

Takeaway.com deal for Just Eat faces probe

A Just Eat courier. Photo: Nicolò Campo/LightRocket via Getty Images

The UK competition regulator said on Friday that it had launched a probe into Takeaway.com’s £6bn acquisition of London-based Just Eat (JE.L).

The Competition and Markets Authority (CMA) said that it was investigating whether there could be “a substantial lessening of competition” within UK markets as a result of the deal.

Parties have until 6 February to comment on the early stage probe. The CMA has not yet indicated when it will decide whether to open a more in-depth investigation into the deal.

Takeaway.com (TKWY.AS), which does not operate in the UK, said on Friday that more than 90% of Just Eat shareholders had accepted its offer to acquire the company, but that the merging of the two companies would now be delayed by a week due to the CMA probe.

UK firms demand a say over immigration reforms

Britain’s five largest business lobbies and over 30 business groups have signed a letter sent to Home Secretary Priti Patel calling for the creation of a “fair and sustainable immigration” system.

Signatories of the letter include the Confederation of British Industry (CBI), the Institute of Directors (IoD), the British Chamber of Commerce (BCC), and industry groups covering everything from motorsports to Scotch whisky.

The alliance of industry, which collectively represents millions of UK employees, offered to help the government craft a new immigration system after Britain leaves the EU.

Earlier this week, the Times reported that Boris Johnson is planning to scrap the £30,000 threshold. This has “increased optimism” among businesses, the letter said.

European stocks rebound despite fears over coronavirus

European stock markets rebounded on Friday, despite rising concerns about the spread of the deadly coronavirus.

The FTSE 100 (^FTSE) rose 1% in early trade, the CAC 40 (^FCHI) in Paris climbed 0.9%, and the German DAX (^GDAXI) bounced 1%.

Stocks had sold off sharply around the world on Thursday, after China put two cities on lockdown in response to the rapid spread of pneumonia-like coronavirus.

“Markets have been cautious over the last 24 hours as concerns over the coronavirus grew,” Deutsche Bank strategists Jim Reid, Craig Nicol, and Henry Allen wrote in a note to clients on Friday.

However we’re notably off the lows from yesterday perhaps due to news from the World Health Organization yesterday that they were not yet declaring a PHEIC (public health emergency of international concern).”

The Nikkei (^N225) was up 0.1%, but concerns about the virus disrupting business continued to hit the Hong Kong Hang Seng Index (^HSI), down 1.1%, and China’s Shanghai Composite index (000001.SS), which plunged 2.8%.

What to expect in the US

US stocks also looked set to rise, with Dow Jones futures (YM=F) and S&P 500 futures (ES=F) both up 0.2%, and Nasdaq futures (NQ=F) 0.3% higher.