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Prudential pops on demerger plans

Equities are bouncing back after the political uncertainty in the US spooked some traders yesterday. 

The mood is cautiously optimistic, with some traders still tetchy about the departure of Rex Tillerson as US secretary of state, and the possible trade war that could be waged.

The London market is being helped along by mining companies, on the back of respectable industrial production figures from China.

Shares in Prudential are up 5% after the company revealed plans to demerge M&G Investments from the group. Shareholders in the company will receive shares in both companies once the demerger is complete. The motive behind the breakup is to allow M&G Prudential to focus on Europe, while Prudential will specialise in Asia and the US. This should allow the two new companies to pursue their own distinctive paths. Prudential is also selling £12 billion of its shareholder annuity portfolio to Rothesay Life in order to fund the demerger. 

Morrisons shares opened higher on the back of good results, but the bullish move didn’t last long, and the stock has since moved into the red. Revenue and profit were up 6% and 11% respectively and net debt was trimmed by 18%. Total dividend was increased by 12.2% to 4.4p, and a special dividend of 4p was also declared. This set of figures is a major improvement on the company’s results in recent years.

Mario Draghi, head of the European Central Bank, was speaking in Frankfurt this morning Covering the usual bases, Mr Draghi said the strength of the euro might weigh on inflation, which remains subdued. EUR/USD was nudged lower by his update, but the currency pair is recouping the loss.

We are expecting the Dow Jones to open up 118 points at 25,125 and we are calling the S&P 500 up 13 points at 2765.

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