Key Takeaways:
The FTSE 100 edged lower Monday as AstraZeneca's worst session since March 2020 offset gains from a retreat in oil prices.
The FTSE 100 slipped 0.1% to 10,857.49 points Monday as AstraZeneca shares fell 9% on reports of merger talks with Bristol Myers Squibb, while lower oil prices dragged energy heavyweights.
"The initial market reaction to the reports is highly circumspect, reflecting understandable caution about the scale of the deal," said Russ Mould, investment director at AJ Bell. "Major transactions of this kind often run into difficulties around integration and matching up different workplace cultures."
BP fell 1.6% and Shell dropped 0.8% as Brent crude slid about 5% to $83.40 a barrel after President Donald Trump called off planned strikes on Iran and said negotiations would resume Monday. Rate-sensitive housebuilders Vistry Group, Bellway and Persimmon climbed 4.8% to 6.9% as UK bond yields fell. The FTSE 250 rose nearly 1% to 24,206.25 points.
The broader market took comfort from lower energy prices, with the CAC 40 in Paris rising 1.0% and the DAX 40 in Frankfurt gaining 1.2%. The Financial Times reported the potential AstraZeneca-Bristol Myers combination could be valued at around $400 billion, creating the world's fourth-largest pharmaceutical company.
AstraZeneca's 9% plunge marked its largest single-day drop since March 2020, as investors questioned the logic of a merger with the New Jersey-based drugmaker. The company's direct listing in New York in June had already fueled speculation over its US strategy. A deal would combine two of the world's largest pharmaceutical companies, though analysts noted integration risks.
Clarkson topped the FTSE 250, surging 7.8% after reporting first-half underlying pretax profit of £61.5 million, up from £39.4 million a year earlier. The shipping services firm raised its interim dividend to 35 pence per share and said it expects full-year results "materially ahead" of market expectations.
easyJet rose 2.2% after extending the deadline for Castlelake to announce a firm takeover offer until Friday, bringing it into line with Apollo Management X's deadline under the UK Takeover Code. Apollo has offered 715 pence per share, valuing the carrier at around £5.7 billion.
Among smaller caps, BSF Enterprise soared 41% after signing binding heads of terms with US-based Imposter LLC to form a joint venture commercializing its T-Rex leather in North America.
Brent crude traded at $83.40 a barrel, down sharply from $90.12 late Friday, after Trump said fresh negotiations with Iran would begin Monday. He said Iran, together with US partners Saudi Arabia, the UAE and Qatar, had urged him to delay what he described as "the biggest attack since World War II." The talks would focus on reopening the Strait of Hormuz and ultimately on Iran's denuclearization.
The retreat in oil prices also supported global equities. In the US, the Dow Jones Industrial Average traded 546 points, or 1%, higher, while the S&P 500 gained 1.2% and the Nasdaq Composite advanced 1.9%. Meta Platforms rose nearly 7%, and Amazon gained more than 6%, hitting a record $3 trillion market capitalization.
Sterling traded at $1.3464, little changed, while the dollar fell to ¥156.75 from ¥159.31 after Trump confirmed Washington intervened alongside Japan to support the yen. Gold rose to $4,061.62 an ounce from $4,041.68. The yield on the US 10-year Treasury narrowed to 4.69% from 4.74%.
British manufacturing activity expanded for a ninth straight month in July but at the slowest pace in four months, according to S&P Global purchasing managers' data, pointing to renewed impact from the Iran war toward the end of last month.
In Asia, the Nikkei 225 closed down 0.9%, the Shanghai Composite fell 0.6%, and the Hang Seng rose 0.4%.
This article is for informational purposes only and does not constitute investment advice.
