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London stocks opened slightly higher on Monday morning as dealmaking again dominated the corporate headlines and investors attempted to erase last week’s losses.
The FTSE 100 was up 17.55 points or 0.25% at 6,939.49, having fallen 3.3% the previous week. Blue chips were higher in spite of stronger sterling, which weighs against the index’s predominance of overseas earnings, up 0.3% on the dollar to 1.4179 and 0.12% versus the euro to 1.1452.
Aside from central bank speakers, there is not much major macroeconomic data to move markets and a sparse corporate diary this week, meaning volumes are likely to be thin ahead of the Easter break. On Monday, UK property investors may be watching out for mortgage approvals data at 0930 BST, while markets are also likely to be watching to see how the nascent ‘trade war’ unfolds.
Market analyst Rebecca O’Keeffe at Interactive Investor said: “A turnaround in Asian markets has seen US futures rise and eased the pressure on European equity markets.
“The last two months have seen global sentiment become more fragile, but the one thing that has kept markets going is the reliance on investors to buy on the dips. The last week had undermined that position in what was a worrying sign for the wider markets, but investors appear to be feeling slightly more resilient this morning.”
On the trade tensions, O’Keefe noted that White House Treasury Secretary Steve Mnuchin had taken on the task of attempting to resolve the trade dispute between the US and China via negotiation.
“The idea that, as one of the largest holders of US treasuries, China will be expected to help finance the growing US fiscal deficit but is also expected to reduce its trade surplus with the US by as much as $100bn to satisfy Trump’s demands appears to be a major contradiction. The question for investors is whether this adds up,” she said.
Michael Hewson at CMC Markets said China’s initially measured response to the President Donald Trump’s announcement of tariffs appeared to offer “some hope” in terms of a possible stabilisation this week, but sentiment is likely to remain volatile, particularly if Chinese authorities follow up with further large scale measures which target, larger US corporations like Boeing or Apple.
“The speed of the declines seen in the past two weeks are certainly a far cry from all the recent optimism about global growth that we saw from bodies like the OECD and the IMF at the beginning of the year, and it appears to be a change in sentiment which is likely to be very difficult to turn around, particularity where equity investors are concerned,” Hewson said.
In company news, Smurfit Kappa‘s shares were down after the Irish packaging group rejected an increased offer from US-based International Paper Company (IPC) that valued it at €37.54, saying it “fundamentally undervalues the group”.
IPC offered €25.25 in cash and 0.3028 new shares of IPC common stock for each Smurfit Kappa ordinary share. Smurfit said the revised offer did not offer Smurfit Kappa shareholders “much more than compensation for the fall in International Paper’s share price since since IPC’s first offer”.
GKN was slightly higher as the Thursday’s deadline loomed for shareholders’ decision over its potential hostile takeover by Melrose. Monday morning was mixed, with GKN receiving an increased cash offer for its Driveline business from US-based Dana, while also being forced to retract directors’ statements on shareholder support, which had been quoted in Sunday newspapers. Melrose shares were down slightly.
JD Sports Fashion was higher as it agreed a “transformational” $558m acquisition of Nasdaq-listed retailer The Finish Line in a deal that would add a 556-store estate across 44 US states.
Precious metals miners Fresnillo and Randgold Resources were near the top of the leaderboard as gold prices remained elevated.
“Geopolitical uncertainty is gathering further momentum as president Trump is preparing a meaningful number of Russian diplomats from the US,” said Naeem Aslam at Think Markets.
“Gold traders are watching the developments around this carefully and despite a massive move in the gold price last week, the odds are still skewed in favour of another similar move this week. Having said that, the gold price is taking some rest before it firmly breaks the resistance of $1350.”
Shire climbed on the announcement that it and biotechnology company NanoMedSyn have entered into a preclinical research collaboration to evaluate a potential enzyme replacement therapy using NanoMedSyn’s proprietary synthetic derivatives named AMFA.
Car seller Inchcape was revving on news it had bought Suzuki-focused Central American dealer Grupo Rudelman for $284m (ã201m), on a cash-free and debt-free basis.
In small cap news, publication of a 95% success rate for a blood test for ovarian cancer made by UK medical technology company Angle sent its shares up 17%.
