FTSE Closes Lower but Gradually Recovers From Initial Plunge

The FTSE 100 gradually recovered after its initial plunge on the first day of trading after Easter but still finished trading in the red, down 0.42% on the day.

UK Manufacturing PMI beats forecasts

Better-than-expected UK manufacturing figures propped up the overall market and helped the pound which traded above key levels. The manufacturing Purchasing Managers Index (PMI) rose in March to 55.1, slightly higher than the forecast 54.7. The equivalent services PMI index on Thursday should shed more light on the state of the UK economy as the services industry make up some 80% of the UK’s GDP. Markets will also closely watch the Eurozone unemployment rate and flash inflation estimates due out on Wednesday.

The Dow Jones Industrial Average recovered slightly during the course of Tuesday but US markets remain fragile after the S&P fell below its 200-day moving average on Monday and Nasdaq lost all of the gains made since the beginning of the year.

Sky rises 2% on Walt Disney Sky News bid

Broadcasting giant Sky was the biggest riser of the day, trading up by over 2% after Walt Disney offered to buy Rupert Murdoch’s Sky News. Sky News’ parent Sky is in the midst of an £11.7 billion takeover by 21^st Century Fox.

Disney has already agreed to buy the entertainment assets of Fox group including Sky but the bid Tuesday jumps over that to directly bid for the news channel Sky News. The UK Competition and Markets Authority is likely to block the Sky-21^st Century Fox deal because it would concentrate Murdoch’s influence over the cable news channel in the UK but it is expected to look more favourably on Disney’s bid.

Rio Tinto higher on Australia coal mine decision

Anglo-Australian mining giant Rio Tinto spiked up by 1.5% during the day’s trading but eventually closed at a more modest 0.55% higher in a delayed reaction to last week’s news that it has disposed of its last remaining coal mine in Australia. Rio’s stake in the Kestral mine was sold for a total of $4.15bn, or significantly more than analysts had forecast, to private equity managers EMR Capital and Indonesian group Adaro Energy. Coal is increasingly less liked by investors, particularly of a younger generation, because of its lack of green credentials.

Mediclinic and GKN among the top fallers of the day

Mediclinic International dropped 3.3% as investors took profits following a steep 5.5% increase at the end of March. Shares in the London and Johannesburg listed company rallied last Thursday after the company appointed Ronnie van der Merve as a new chief executive designate. Van der Merve, who is due to start in his new role in June, is a company veteran and has been with the firm since 1999.

UK engineering giant and government contractor GKN traded down 2.76% Tuesday after Melrose Industries emerged as the victor in its hostile takeover battle with the FTSE 100 group. Melrose investors now hold 52.43% of voting rights in the FTSE 100 group, forcing it to accept the specialist’s hostile bid.

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