Renewed stimulus hopes drive global market rally and TalkTalk attracts takeover interest

“Investors have responded positively to signs from Donald Trump that he hasn’t turned his back on stimulus measures until after the US Presidential election,” says Russ Mould, Investment Director at AJ Bell.

“Having originally said stimulus talks would be paused until the election was done, Trump yesterday used Twitter to encourage Congress to pass various aid packages for the airline sector, small businesses and consumers. That has reignited hope in the market that stimulus measures could still be coming soon, thus driving risk appetite for equities.

“US stocks enjoyed a strong session on Wednesday, rising by nearly 2%. This positive tone extended across parts of Asia on Thursday including a 1.3% gain from India’s Bombay Sensex index and a 1% rise from Japan’s Nikkei 225 index.

“In the UK, the FTSE 100 nudged up 0.2% with tech, consumer cyclicals and industrials leading the charge. Miners and packaging companies were out of favour, suggesting there is still a lot of uncertainty about the direction of the global economy.”

TalkTalk

“It looks like TalkTalk’s ultimately unhappy stay on the markets could be coming to an end given the positive noises it has given on the 97p per share bid from asset manager Toscafund.

“This is less than a third of the share’s peak level in the mid-2010s and materially below the price it traded at following its demerger from Carphone Warehouse in 2010.

“Having been building in stake in TalkTalk in recent years Toscafund may have not unreasonably decided it could do a better job of managing the assets itself out of the glare of public markets.

“Notably TalkTalk’s potential exit from the UK market comes months after its former parent Carphone Warehouse saw the last of its stores shuttered a few years on from its own merger with Dixons. It seems both businesses were eventually left behind by changes in their respective markets and shifting consumer behaviour

“TalkTalk was always positioned as the cheaper alternative to the likes of BT, Sky and Virgin Media for broadband and other services but ultimately it struggled to gain traction in a highly competitive marketplace and growth has really stalled in recent years. Efforts to create its own nationwide fibre network so it didn’t have to rely on BT’s infrastructure have also failed to come to fruition.

“Problems of the company’s own making haven’t helped including a high-profile cyber-attack in 2015 which was highly damaging to the brand. Poor ratings for customer service and reliability have also undermined the proposition.”

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