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Market overview, GKN cash-return plan and Galliford picking up from Carillion

U.S. markets reversed opening losses and traded higher whilst European markets ended higher
U.S. markets reversed opening losses and traded higher whilst European markets ended higher

U.S. markets reversed opening losses and traded higher on Wednesday as investors tried to shake off inflation jitters after a reading of January consumer prices showed the strongest monthly rise in five months. The U.S. oil benchmark also edged higher, erasing an earlier loss, after government data showed a smaller-than-expected rise in crude inventories last week. The Dow pivoted into positive territory and gained 253 points to 24,893.

European markets ended higher following more volatile trading with the UK’s FTSE escaping losses that came after the release of U.S. inflation data. The blue-chip index finished up by 0.6% at 7,213.97 with the biggest contributions from Sky PLC whose shares tacked on 2% and Coca-Cola HBC AG’s 4.8% gain. Germany’s DAX 30 index traded up 0.3% to 12,236.53, and France’s CAC 40 index gained 0.4% to 5,130.31.

GKN cash-return plan

Engineering giant GKN says it will sell off non-core parts of its business and return £2.5bn in cash to its shareholders over the next three years. Its new strategy and transformation plan includes the sale of various businesses over the next 12-18 months as part of its defence against a £7.4bn hostile takeover bid from Melrose Industries.

GKN chief executive Anne Stevens said: "The new strategy brings clarity, accountability and focus to GKN's world class businesses and will allow the group to attain world class financial performance." Last month, GKN rejected the bid from Melrose, saying it "fundamentally undervalued" the firm. Both GKN and Melrose saw their shares rise following publication of the turnaround plan.

Galliford picking up from Carillion

Building firm Galliford Try plans to raise £150m from investors after Carillion's demise left a cash shortage on the Aberdeen Bypass project. Bypass partners Galliford Try and Balfour Beatty must now cover the costs arising from Carillion's collapse. Carillion went into liquidation in January, after talks between the company, its creditors and the UK government failed.

Galliford Try announced the plan in its half-year results, as "additional joint venture contributions arising from Carillion Plc (Carillion) failure prompt exceptional charge of £25m." The 58km long Aberdeen bypass is scheduled to open later this year. It is one of the biggest infrastructure projects in Scotland with an estimated cost of £745m. Other major projects involving Carillion, which went into liquidation in January, include the HS2 high-speed rail line, as well as managing schools and prisons.

Disclaimer:

This article was issued by Peter Petrov, Junior Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.

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