Sky News: Bain Capital targets £1bn listed defence group Chemring
Shares in UK defence company Chemring have suddenly jumped, following reports that it has received a takeover approach from private equity firm Bain Capital.
Sky News are reporting that in recent weeks BainCapital has lodged at least one proposal to acquire Chemring, which manufacturers products used in defence kit and by organisations including Elon Musk’s SpaceX.
An initial bid “may have been tabled at 390p-a-share”, Sky adds. That would be around 9% more than Friday’s night’s closing price of 358p.
Shares in Chemring have jumped as high as 408p, up 15%, which suggests traders expect a higher offer.
Chemring designs, develops and manufactures “advanced expendable countermeasures” to protect aeroplanes, boats and land-based combat vehicles, supplying 85% of NATO air fleets and 60% of NATO naval fleets.
Chemring say they are also a “key supplier” to NASA, SpaceX and Martin-Baker, and supplied more than 230 parts on the Mars Perseverance mission.
Writing on his Truth Social site, the US president says Apple was making the investment because of “faith in what we are doing”, before thanking the company.
BREAKING: Trump celebrates the announcement by @Apple that the company will be investing $500 billion in the U.S. Trump said the reason Apple is doing this is simply, ‘faith in what we are doing, without which, they wouldn’t be investing ten cents.’ pic.twitter.com/hu8Iur2yxw
Trump met with Apple’s CEO, TimCook, last week – after which he claimed Apple was planning to shift manufacturing from Mexico to the US, to avoid tariffs.
Apple announces plans to create 20,000 US jobs in $500bn investment splurge
Apple has announced a massive $500bn (£400bn) investment plan across the US over the next four years.
The tech giant is planning to hire around 20,000 people, of which the vast majority will be focused on R&D, silicon engineering, software development, and AI and machine learning.
Apple says it will expand its facilities, and hire more staff, in Michigan, Texas, California, Arizona, Nevada, Iowa, Oregon, North Carolina, and Washington.
The plan includes building a new factory in Texas, doubling the U.S. Advanced Manufacturing Fund, opening a manufacturing academy in Detroit, and accelerating its investments in AI and silicon engineering.
“We are bullish on the future of American innovation, and we’re proud to build on our long-standing U.S. investments with this $500 billion commitment to our country’s future.
“From doubling our Advanced Manufacturing Fund, to building advanced technology in Texas, we’re thrilled to expand our support for American manufacturing. And we’ll keep working with people and companies across this country to help write an extraordinary new chapter in the history of American innovation.”
Here’s a chart showing how the euro lost ground against the US dollar towards the end of last year, before a small pick-up this morning after the German election:
Sky News: Bain Capital targets £1bn listed defence group Chemring
Shares in UK defence company Chemring have suddenly jumped, following reports that it has received a takeover approach from private equity firm Bain Capital.
Sky News are reporting that in recent weeks BainCapital has lodged at least one proposal to acquire Chemring, which manufacturers products used in defence kit and by organisations including Elon Musk’s SpaceX.
An initial bid “may have been tabled at 390p-a-share”, Sky adds. That would be around 9% more than Friday’s night’s closing price of 358p.
Shares in Chemring have jumped as high as 408p, up 15%, which suggests traders expect a higher offer.
Chemring designs, develops and manufactures “advanced expendable countermeasures” to protect aeroplanes, boats and land-based combat vehicles, supplying 85% of NATO air fleets and 60% of NATO naval fleets.
Chemring say they are also a “key supplier” to NASA, SpaceX and Martin-Baker, and supplied more than 230 parts on the Mars Perseverance mission.
In the energy sector, BP are reportedly poised to ditch a key green target later this week.
Reuters are reporting that BP’s chief executive, MurrayAuchincloss, will scrap a target to increase renewable generation 20-fold by 2030 when he updates investors on the companies plans.
Reuters says:
On Wednesday, when BP holds a capital markets day, CEO Murray Auchincloss will tell investors the company is abandoning its target to grow renewable generation capacity 20-fold between 2019 and 2030 to 50 gigawatts, two sources close to the matter said.
The plan to drop the target has not been previously reported.
One big question is whether Germany’s next government can relax its fiscal rules sufficiently to lift defence spending.
Tom Bailey, head of research at HANetf, says:
“The centre-right Christian Democrat party emerged as the winners of Germany’s election. The expected next chancellor of Germany, Friedrich Merz, wasted no time in addressing Europe’s most pressing issue: defence. Merz was frank in his comments, arguing that the Trump government does “not care much about the fate of Europe” and speculated whether NATO will continue to exist in its current form.
“Such stark comments come following the Trump government raising serious doubts about the US’ continued commitment European security. Merz’s comments suggests the new Germany government is now serious about boosting defence spending to fill the gap potentially left by the US pivoting away from European defence.
“The next question will be whether the new coalition government in Germany can sufficiently loosen its fiscal rules to boost defence spending. Germany currently spends a little over 2% of GDP on defence. While this meets the 2% target set by NATO in 2014, it is increasingly seen as inadequate in the current geopolitical climate. Mark Rutte, the current head of NATO, has noted spending will have to go higher than 3%, while the Trump administration is demanding 5%.
But with the risk of US disengagement from Europe now so acute, this question moves beyond reaching pre-agreed spending targets and instead becomes: how Europe can develop the capability to defend itself without an American defence backstop?
Neil Shearing, group chief economist at CapitalEconomics, agrees that European governments are likely to face “significant pressure” to lift defence spending.
The head-spinning events of the past two weeks – including the suggestion last night by German Chancellor-elect Friedrich Mertz that Europe should seek “strategic independence” from the US – have led many to declare the end of the post-war trans-Atlantic alliance and the start of a new period of geopolitical realignment.
However, thinking through what “strategic independence” might mean in practice reveals the extent of the ties between the US and Europe. While the risks of a trans-Atlantic fissure have clearly increased, these ties will be difficult to sever altogether. The most likely outcome is that in four years’ time the US and Europe will remain geopolitically aligned.
The greatest consequence of the past week’s events from a macro perspective may be that European governments are going to face substantial pressure to significantly increase their defence spending.
Germany’s MDAX index on track for best day in 14 months
Shares in medium-sized German companies are rallying harder this morning, as investors continue to welcome the prospect of a grand coalition between election winners CDU/CSU and the centre-left SPD.
The MDAX index, which tracks 50 German companies smaller than those in the blue-chip DAX index, is up 2.6% today – on track for its best day since mid-December 2023.
Nearly every stock on the MDAX is higher, with real estate, healthcare and technology the top rising sectors.
Traders seem to be calculating that companies on the MDAX will benefit from potential reforms, a recovery in German growth, and more political certainty.
The larger DAX index, which tracks Germany’s largest companies, is up almost 1%, faster than rival European indices.
Joshua Mahony, analyst at ScopeMarkets, says:
The DAX is leading the way in early trade today coming off the back of a weekend election that saw the CDU/CSU take first place despite a notable showing from the far right AfD party.
With the US pushing back against European interests, there is a desperate need for greater clarity and confidence in the German economy given its position at the head of the table in any trade negotiations. Notably, incoming Chancellor Merz has stated that Europe needs to become independent of the US, with Trump’s efforts to turn the tables on his allies bringing a greater need shift reliance away from the US when it comes to energy, trade, and military independence.
Trump appears to prioritise short-term economic benefits for the US over the desire to carry favour with nations that favour the US ethical standpoints. While this may ultimately prove beneficial for US economic growth, it does highlight a tough time ahead for US allies like Europe or Taiwan.
Euro dips back from one-month high
The euro has lost some of its initial vigour against the US dollar, and has now dipped back to $1.047, a little higher today.
Laura Cooper, head of macro credit and global investment strategist at investment firm Nuveen, suggests caution about how much the next German government will be able to change:
Despite a market friendly outcome, prevailing uncertainty on the fiscal front warrants caution. A meaningful change to the long-standing debt brake could remain elusive in the near-term with key barriers remaining – namely, enacting a change that is still amenable to fiscal hawks.
“The absence of a blocking minority for Constitutional reform is a welcome relief for markets anticipating debt-fueled fiscal spending in the near-term. Yet while pressure to strengthen defense independence could expedite the formation of a two-party ruling coalition and at the margin, improve the outlook for Europe, turning up the fiscal taps could prove more challenging.
Deutsche Bank chief urges ‘fundamental reforms’
The boss of Deutsche Bank, Germany’s largest lender, is hoping that the country’s next government can crack on and fix the ailing economy.
Christian Sewing, who is also president of the association of German banks, says:
“Germany now needs a government that is able and willing to act – and quickly.
“The challenges facing our country are enormous: The economy urgently needs a fresh start with fundamental reforms.”
Christian Bruch, CEO of power equipment supplier SiemensEnergy, hopes a coalition will be formed quickly so politicians can rebuild Germany’s competitiveness.
“Actions in energy policy are crucial for this.
The expansion of gas-fired power plants, the strengthening of wind energy, and the modernisation of electricity grids are essential, as is a secure supply of raw materials.”
This morning’s Ifo index doesn’t provide any boost for Germany’s incoming government, reports analysts at ING.
Carsten Brzeski, ING’s global head of macro, told clients:
Germany’s most prominent leading indicator, the Ifo index, just signalled that the next government cannot count on any cyclical tailwind, yet. Coming in at 85.2 in February, from 85.1 in January, the Ifo index suggests that the German economy is still in stagnation. The current assessment component weakened significantly (from 86.0 in January to 85.0 in February), while expectations improved somewhat.
Germany’s economic problems should be well-known by now. In the short run, possible US tariffs as well as increased energy prices should continue weighing on economic activity. At the same time, renewed geopolitical tensions and the US administration’s changed stance on defence and security in Europe are likely to weigh on consumer spending. This is why all eyes will now be on the upcoming coalition talks, hoping for some breakthrough and at least a confidence boost.
German companies have high hopes for the new government after the election, as shown by the Ifo Business Climate Index. While Ifo business expectations have improved, the assessment of current conditions has declined sharply, keeping the overall Ifo index unchanged at 85.2. pic.twitter.com/xEdqPQYDhM
Back in London, share in discount retailer B&M have tumbled 8% after it cut its profit forecasts and announced the departure of its chief executive.
B&M blamed “an uncertain economic outlook” and a possible hit from exchange rate volatility on its stock valuations.
It now expects adjusted core earnings this year of between £605m and £625m, down from £620m-£650m before.
B&M also revealed change at the top – CEO Alex Russo will retire form the company on 30 April 2025.
Yesterday’s German election highlights that populism remains ascendant, says Bill Blain, market strategist at Wind Shift Capital Advisors.
Blain writes:
The electoral numbers show new, young voters are increasingly attracted to the populist parties, voting for the Left, the AfD or Greens. They have given up on the traditional parties. They vote according to how they hear and translate the political noise, and where they pick up their political affiliations and news. That’s the new battlefield for votes; social media and podcasts – it’s ground traditional parties just don’t know how to play.
He also cautions that less may change in Berlin now than investors hope:
The German elections highlight the dangers of coalition politics – swimming in a sea of treacle to agree policy choices as the likelihood of bad compromises rises.
Even as Trump and Ukraine roil and destabilises the European Union, Germany is set for the distinct possibility nothing much changes. It is not strong and stable leadership at a time when it is desperately needed.
The German elections highlight the dangers of coalition politics – swimming in a sea of treacle to agree policy choices as the likelihood of bad compromises rises. Even as Trump and Ukraine roil and destabilises the European Union, Germany is set for the…
Bank of Ireland’s UK business, which includes its operations in Northern Ireland and Britain, has reported an underlying profit of £303 million in 2024 - up
More than two-thirds of hospitality businesses will reduce staffing as a result of tax changes taking effect in April, according to research by industry bodiesc
For Delhi, the trade talks have assumed renewed significance on the back of US President Donald Trump's decision to impose reciprocal or tit-for-tat tariffs on
Ms Madden said: "The government has accepted that 1950s-born women are victims of maladministration, but it now says none of us suffered any injustice."With no
