Introduction: BHP proposes takeover of Anglo American
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
There’s takeover excitement in the mining world this morning after Australia’s BHP made a takeover approach for smaller rival Anglo American
The deal, if completed, would be one of the largest in the sector for years, and create the world’s biggest copper miner.
Anglo confirmed overnight that it had received an “unsolicited, non-binding and highly conditional” all-share buyout proposal from BHP Group, which it is currently examining.
The proposal is conditional on Anglo first splitting off its South African platinum and iron ore units, suggesting BHP is primarily interested in Anglo’s copper resources.
Anglo says:
The Board is currently reviewing this proposal with its advisers. There can be no certainty that any offer will be made nor as to the terms on which any such offer might be made.
Pending any further announcements Anglo American shareholders should take no action. A further announcement will be made as and when appropriate.
Mega commodity deal season is back after many years$AAL $BHP
BHP has proposed a takeover of Anglo American in an all-stock deal that would bring together two global mining companies and rank as one of the industry’s largest transactions in years.
BHP, the world’s ….
— Markets (@NewsoftheMarket) April 25, 2024
Anglo had been seen as a potential takeover target since late last year, when it warned that production had been weaker than expected. Shares are down around 10% over the last 12 months.
BHP’s interest in acquiring Anglo raises fresh concerns about an exodus of UK firms from London.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, explains:
‘’The buyout offer from BHP, the world’s largest publicly listed miner, for Anglo American, won’t just shake up the mining industry, but will send a fresh chill through the City of London
There are concerns that if the deal goes through it could be the tip of the iceberg and more giants could leave the exchange. It comes hot on the heels of speculation that Shell might up sticks and leave for New York, rumours that Ocado may be considering leaving for the Big Apple, and follows the crushing disappointment of home-grown chip designer Arm choosing the Nasdaq over the FTSE 100.
The agenda
-
9am BST: European Central Bank’s economic bulletin
-
11am BST: CBI’s distributive trades survey of UK retailers
-
1.30pm BST: US GDP report for Q1 2024
-
3pm BST: US pending home sales data for March
Key events
Closing post
Time to wrap up… here’s today’s main stories:
Rupert Neate
Back in the UK, seats on Centre Court at Wimbledon are being sold to the global super-rich for £116,000 – each.
A total of 2,520 of the “debentures” are on sale, offering a reserved seat for each of the 14 days of the tournament for five years from 2026-30. Applications to buy the exclusive seats – positioned on the same level as the royal box – close at midday on Friday.
Climate campaigners arrested at BP AGM
Jillian Ambrose
Back in the UK, BP’s annual shareholder meeting was marred by protest which led to the arrest of four climate campaigners outside the event in Sunbury-on-Thames in Surrey.
The oil giant’s investors were accused by Fossil Free London of having “blood on [their] hands” after “profiting from the ongoing genocide in Gaza and climate breakdown”.
Joanna Warrington, a spokesperson for the group, which organised the disruption, said:
“Shareholders should be hiding their bloody hands in shame today, not lifting them to vote for more ecocide and genocide.”
🚨BREAKING: FOUR ARRESTED! We’ve just disrupted BP’s AGM because they are profiting from the genocide in Gaza and from climate breakdown.
BP was awarded 1 of 12 Israeli licenses for gas exploration off the coast of GazaWe are in shock at this overreach of peaceful protest. pic.twitter.com/yV7DSKAyST
— Fossil Free London (@fossilfreeLDN) April 25, 2024
Warrington said all attendees of the event faced “intense security”, led by around 60 security staff and police officers, which included obscuring phone cameras with stickers and placing phones in sealed bags. BP faced similar scenes at its AGM last year.
A BP spokesperson said:
“Our priority continues to be the safety and security of all attendees.”
The company added that it had “received overwhelming support” for the board’s resolutions from its shareholders, which reflects “the strong level of confidence they have in our strategy”.
The AGM was BP’s first since the board sacked former chief executive Bernard Looney over relationships with his colleagues last year. He has been replaced by former chief financial officer Murray Auchincloss.
As feared, Meta’s shares have slumped in early trading as investors show their unhappiness about Mark Zuckerberg’ AI spending spree.
Shares in Facebook’s parent company have dropped by over 15% to $418.28.
That knocks around $190bn off the company’s valuation, bringing it down from $1.25 trillion to $1.06 trillion.
US growth slows: what the expects say
The US economy performed below expectations in the first quarter, says Nathaniel Casey, investment strategist at wealth management firm Evelyn Partners, with today’s GDP report growth slowing:
Real GDP growing at 1.6% on an annualised basis represents the weakest quarterly gain for nearly two years. This figure was lower than the 2.4% expected by the consensus of economist forecasts and the latest estimate from the Atlanta Fed, which estimated GDP at 2.7%.
Despite consumption remaining strong, inventory accumulation was subdued, subtracting 0.4 percentage points from the figure. However, if consumers keep spending and consumption remains strong, we expect this will increase during the coming quarters as businesses look to replenish stock. A narrowing in net exports took 0.9 percentage points off the headline figure, while government expenditure added 0.2 percentage points.
Robert Frick, corporate economist with Navy Federal Credit Union, suggests today’s data could well be revised in future:
“We knew the economy was weaning itself off government support, we just didn’t figure that would cause GDP to drop this quickly. With government spending down, and consumer spending moderating as Covid-era supports disappear, GDP fell below all estimates. But consumers continue to spend at a healthy rate, especially as evidenced by big spending on imports, which drove down the topline GDP number.
First quarter GDP is often squirrelly and heavily revised—just look at last year’s—so all-in-all this shouldn’t be taken as a fundamental downshift in the economy.”
Richard Flynn, managing director at Charles Schwab UK, suggests the GDP report could dampen market optimism:
“Today’s figures show that the economy has grown less than what was expected. Robust economic data in areas such as manufacturing and the job market have set market predictions for GDP on an upward trajectory for the past few weeks, the numbers released today indicate that spectators may have jumped the gun with these estimates.
Looking ahead, we might expect to see these figures temper the bullish narrative that pushed the market to record highs in the first few months of this year. But for inflation, today’s report may be a more positive signal. High levels of economic activity also keep inflation elevated and to cut interest rates, the Fed is awaiting substantial evidence that inflation is trending lower. While today’s report might not be the full story that the Fed is looking for, it may be the prequel.”
The US GDP report also shows that inflationary pressures remained solid in the first quarter of this year.
It shows that the price index for gross domestic purchases increased 3.1% in the first quarter, accelerating from the increase of 1.9% in the fourth quarter.
The personal consumption expenditures (PCE) price index increased 3.4%, compared with an increase of 1.8% in the previous three months.
The core PCE price index, which excludes food and energy prices, increased 3.7%, compared with an increase of 2.0% in Q4 2023.
US economic growth in the last quarter was dragged back by weak global demand.
Today’s GDP report shows that net exports and inventories dragged on growth.
Paul Ashworth, chief North America economist at Capital Economics, explains:
Exports ended up increasing by only 0.9%, illustrating the impact of weak global demand, while imports surged by 7.2%.
Altogether, net exports subtracted nearly 0.9% points from GDP growth, with inventories generating an additional drag of nearly 0.4 percentage points.
⚠️Breaking! 🇺🇸US GDP Slows More Than Expected
📉GDP 1.6% (est. 2.5%, prev. 3.4%)
📉Consumption 2.5% (est. 2.8%, prev. 3.3%)
📉Government Spending 1.2% (prev. 4.6%)
📈Investment 3.2% (prev. 0.7%)
📉Exports 0.9% (prev. 5.1%)
📈Imports 7.2% (prev. 2.2%)
📍More Details:… pic.twitter.com/Zwu6J5FchM— MacroMicro (@MacroMicroMe) April 25, 2024
Some snap reaction to the slowdown in US growth in the last quarter:
US GDP growth surprised slowing to 0.4%q/q in the March quarter, to 3% year-ended (from 3.1%). Weakest quarterly growth rate since Q2 2022. pic.twitter.com/mTCEZbRJcV
— James Foster (@JFosterFM) April 25, 2024
BREAKING: US Q1 2024 GDP comes in at 1.6%, BELOW expectations of 2.5%.
If 1.6% is the final reading, it will end 6 STRAIGHT quarters of 2%+ growth.
However, we still have not had 2 consecutive quarters with declining GDP since Q2 2022.
Is the economy beginning to weaken?
— The Kobeissi Letter (@KobeissiLetter) April 25, 2024
US growth slows to 1.6% per year
Newsflash: Growth across the US economy has slowed sharply this year, suggesting high interest rates are weighing on the economy.
US GDP grew at an annual rate of 1.6% in the first quarter of 2024, new data shows, meaning it only expanded by 0.4% in the quarter.
That’s a slowdown on the fourth quarter of 2023, when real GDP increased at 3.4% per year (or by 0.85% in the quarter).
It’s also weaker than the 2.4% annualised growth which analysts had expected.
The Bureau of Economic Analysis explains:
Compared to the fourth quarter, the deceleration in real GDP in the first quarter primarily reflected decelerations in consumer spending, exports, and state and local government spending and a downturn in federal government spending.
These movements were partly offset by an acceleration in residential fixed investment. Imports accelerated.
