Markets higher, but GKN battle is centre stage

The FTSE 100 has recouped some if its recent losses this week, but the index really has just scratched the surface and remains more than 10% down from January’s record high, and still firmly in correction territory.

Market fundamentals are sound and the global economy is growing nicely, but there is still plenty to make the bulls think twice, not least the unresolved tariffs issue, inflammatory US foreign policy, a weak tech sector and position-squaring ahead of both the Easter break and end of the first quarter.

Reaching some kind of compromise on tariffs would provide a welcome boost to flagging markets, but Trump must sell any deal as a win for the US, so investors will have to be patient.

Greater certainty around possible regulation of the US tech sector would also remove some of the guess work and allow markets to more accurately price in any impact.

Melrose's (MRO) hostile bid for GKN (GKN) has been the most bitter takeover battle in recent memory and is one that could well have a lasting impact on UK takeover rules.

GKN has used everything in its arsenal to fight off turnaround specialist Melrose, but it’s still far from clear whether it will be enough.

What is certain is that this will go to the wire. It may even be that the result is not publicly announced until after the market close, forcing investors to wait over the Easter holiday before being able to act on the outcome.

A GKN victory is widely tipped to trigger selling of its shares, as Melrose backers bet that benefits take far longer to feed through than they would have done had the bidder won.

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