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FTSE 100 Index closes higher over Micro Focus-HPE mega-deal

Published 08/09/2016

The FTSE 100 was up 40.2 points at 6886.6
The FTSE 100 was up 40.2 points at 6886.6

UK stocks shrugged off inaction from the European Central Bank (ECB) on Thursday and climbed higher on the back of a mega-deal between Micro Focus International and Hewlett Packard Enterprise (HPE).

The UK's top-tier FTSE 100 index closed higher by 0.18% or 12.1 points at 6858.7 following news that the British technology firm was buying HPE's software arm for 8.8 billion US dollars (£6.6 billion).

The deal includes Autonomy Corp, which HPE acquired for 11 billion US dollars (£8.3 billion) in 2011, before writing off three-quarters of its value.

The combined entity will have annual revenues of 4.5 billion US dollars (£3.4 billion), creating one of the biggest software firms in the UK.

Micro Focus International was the biggest gainer on the FTSE 100, closing higher by 14.7% or 288p at 2243p.

In currencies, sterling lost ground against the euro after the ECB stood pat on its stimulus package and left interest rates unchanged at 0% at a meeting of the Bank's governing council.

It was the ECB's first interest rate decision since the Bank of England cut its own key rate to record lows of 0.25% as part of a stimulus package in response to the Brexit vote.

Bank governor Mario Draghi said that he anticipates the eurozone's economic recovery to proceed at a "moderate but steady pace".

The ECB cut growth expectations for 2017 and 2018, from 1.7% to 1.6%, but raised forecasts for 2016 from 1.6% to 1.7%.

It knocked sterling to a one-week low against the euro, dropping 0.4% to hover around 1.18 euro.

The pound also struggled to win back losses against the US dollar, trading about 0.25% lower at 1.329.

In oil markets, Brent crude prices jumped over 2.1% to 49.56 US dollars per barrel after data showed that US oil stocks dropped by 12.1 million barrels last week. Analysts had expected crude stocks to jump by 200,000 barrels.

On the UK stock market, electricals and mobile phones giant Dixons Carphone also towed the FTSE 100 higher.

The company reported that the Brexit vote had not put consumers off from hitting the shops as it cheered "strong" trading. The Currys and PC World owner notched up a 4% rise in like-for-like sales across the UK and Ireland in its first quarter to July 30.

Shares in Dixons Carphone closed higher by 14.8p at 389p.

The biggest gainers on the FTSE 100 were Micro Focus International up 288p at 2243p, International Consolidated Airlines Group (IAG) up 16.10p at 422.1p, Dixons Carphone up 14.8p at 389p, and easyJet up 43p at 1197p.

The biggest fallers on the FTSE 100 were Pearson down 66.5p to 797p, Mediclinic International down 33p to 964.5p, Burberry Group down 31p to 1285p, and Rolls-Royce down 17p to 750p.

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