(Alliance News) - London's FTSE 100 limped into a disappointing close Monday, after starting the session on the front foot, boosted by vaccine hopes and global M&A activity.
"After an initially positive start to the day European markets have struggled to make much in the way of progress, despite a huge amount of M&A news hitting the tape. It appears to be becoming much more difficult to separate the optimism around the chatter about progress on a vaccine, with the economic reality that tighter restrictions are likely to curtail the current rebound in economic activity across the bloc," CMC Markets analyst Michael Hewson said.
European stocks had been lifted at the start of trade by news that AstraZeneca has resumed clinical trials in the UK of its Covid-19 vaccine after a green light from the Medicines Health Regulatory Authority.
The FTSE 100 index closed down 5.84 points, or 0.1%, at 6,026.25 Monday. The mid-cap FTSE 250 index added 121.39 points, or 0.7%, closing at 17,677.26. The AIM All-Share index added 0.7% at 960.76.
The Cboe UK 100 index closed down 0.2% at 600.59. The Cboe 250 ended up 0.4% at 15,046.52, while the Cboe Small Companies closed down 0.6% at 9,476.24.
In mainland Europe, the CAC 40 in Paris closed up 0.4%, while the DAX 30 in Frankfurt closed lost 0.1%.
"The rising tide of coronavirus cases across the UK and Europe and the resultant tightening of restrictions, along with the announcement by the CEO of the world's largest vaccine maker, the Serum Institute of India, that it could take until 2024 before everyone is inoculated has helped to temper some of this morning's early enthusiasm," Hewson added.
Moving on from Europe, Wall Street got the week off to a positive start, with the Dow Jones up 1.4%, the S&P 500 up 1.8% and the Nasdaq up 2.4%.
SpreadEx analyst Connor Campbell said: "Europe may have wilted, but the US opened strong, lifted by the day's M&A-nia and a rebound in its volatile tech sector."
"A potential resolution to the US-China Tiktok tussle - with Oracle managing US user data, rather than Microsoft owning the American arm of ByteDance's business - has helped generate some goodwill, even though it wouldn't be a shock to see a compromise-averse Trump shoot the deal down," Campbell continued. "Nvidia's USD40 billion purchase of the Cambridge-based ARM Holdings from Softbank also boosted sentiment, the US firm rising 6% following the announcement."
Oracle shares were up 5.5% in New York after Microsoft said Sunday its offer to buy TikTok was rejected, leaving Oracle as the sole remaining bidder ahead of a looming deadline for the Chinese-owned video app to sell or shut down its US operations.
Meanwhile, NVIDIA shares gained 6.0% on its USD40 billion deal to buy UK-based chip designer Arm from Softbank. If approved, the deal will be one of the largest acquisitions anywhere in the world this year and will propel NVIDIA to the forefront of the semiconductor sector.
In London, the two oil majors were struggling as the price of oil fell.
Brent oil was trading at USD39.56 a barrel, lower than USD40.22 late Friday.
"The weakness in the oil price after OPEC downgraded their estimates for 2020 global demand has seen the oil and gas sector weigh on the FTSE100, with BP and Royal Dutch Shell dragging on the index, along with a firmer pound," CMC's Hewson said.
BP lost 1.9%, while Shell 'A' shares gave back 1.7% and the 'B' shares lost 1.1%.
In the FTSE 250, G4S added 25% to 182.45 pence as Garda World Security announced a possible GBP3 billion takeover offer for the security services firm.
Montreal-based GardaWorld announced a possible 190 pence per share offer for G4S, which is a 30% premium to its 145.90p closing price on Friday. GardaWorld noted that the potential offer is also an 86% premium to the G4S's share price on June 15, when it first made an approach to the company's board.
"GardaWorld's attempts to engage with G4S's board have now been summarily dismissed or ignored on three occasions. Consequently, GardaWorld now encourages G4S's shareholders to mandate their board's engagement in collaborative discussions towards a transaction that would be of clear and immediate benefit to G4S's shareholders, customers, employees and members of the company's pension schemes," GardaWorld said.
G4S noted that GardaWorld had made two separate offers of 145p and 153p back in June and September, respectively.
G4S said the new offer still "significantly undervalues the company and its prospects".
HgCapital Trust gained 4.0%, as its net asset value for the first half of 2020 rose despite a "very challenging environment" as it increased its dividend payout for the period.
The FTSE 250-listed company said NAV per share as at June 30 was 268.5 pence, rising 5.3% from 255.1p on December 31. The figure rose further as at August 31 to 282.2p. NAV total return for the six-month period to June 30 was 6.6%.
HgCapital Trust declared an interim dividend of 2.0p per share, up 11% from 1.8p the year prior.
"The trading performance demonstrated by the portfolio during a very challenging environment again reinforces our thinking and focus on software and service businesses selling critical and quality services. This focus has led to a very strong year-to-date for realisations, whilst also giving Hg the conviction to deploy significant capital during this period. We expect headwinds from lower global growth in 2020, but believe that the portfolio will continue to deliver growth over the long-term," said Luke Finch, partner & head of client services at Hg.
JD Wetherspoon lost 1.4%. The pub operator said trading was "very quiet" during this past weekend, denouncing newspaper claims that "Britons have promised to run riot" before new tighter government restrictions kick-in.
"In fact, trade was very quiet over the weekend, as the public weighed up the evidence about the alleged dangers of going out - Wetherspoon sales were 22.5% below the equivalent Saturday last year," Chair Tim Martin said.
Wetherspoon said it saw 32 million customer visits to its 861 open pubs in the 10 weeks since July 4. It reported 66 positive tests for Covid-19 among its 41,564 employees during the period. Wetherspoon said it has invested around GBP15 million in its social distancing and hygiene measures.
The pound was quoted at USD1.2888 Monday evening, higher than USD1.2783 at the London equities close on Friday. Sterling was staging a rebound Monday, ahead of a crucial vote in the Commons later today.
The UK Prime Minister is preparing to face down his critics as he looks to quell a growing rebellion over his plans to override the Brexit divorce deal.
Downing Street confirmed that Boris Johnson will open the debate on the Internal Market Bill in the House of Commons on Monday, taking the place of Business Secretary Alok Sharma.
Johnson will make the case to MPs that it is "critical" that the legislation, which the government has said would breach international law, is in place by the end of the year in order to act as a "safety net" if no trade deal is agreed with Brussels before the conclusion of the Brexit transition period.
The euro traded at USD1.1884 at London equities close Monday, higher versus USD1.1836 late Friday.
Against the yen, the dollar was lower, quoted at JPY105.64, down from JPY106.18 late Friday in London.
Gold was quoted at USD1,961.00 an ounce on Monday evening, up from USD1,950.07 late Friday.
The economics events calendar on Tuesday has Chinese industrial production and retail sales overnight. In the morning, there is a UK ILO unemployment rate reading at 0700 BST. There is ZEW survey economic sentiment for the eurozone and Germany at 1000 BST, with US industrial production at 1415 BST.
A busy UK corporate calendar on Tuesday sees online supermarket Ocado issue third quarter results and, among others, private client services firm JTC, concrete manufacturer Marshalls, plastic pipe manufacturer Polypipe Group and hormone therapeutics firm Diurnal will publish interim results.
By Paul McGowan; paulmcgowan@alliancenews.com
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