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LONDON MARKET EARLY CALL: Stocks Buoyed By Softbank, Gilead M&A Deals

Mon, 14th Sep 2020 06:57

(Alliance News) - Stocks in London are set to open higher on Monday with markets boosted by merger-and-acquisition dealmaking in Japan and the US.

IG says futures indicate the FTSE 100 index of large-caps to open 24.61 points higher at 6,056.70 on Monday. The FTSE 100 closed up 28.77 points, or 0.5%, at 6,032.09 on Friday.

"European stocks managed to eke out a gain last week, and look set to open higher again as we start a new week, driven largely by M&A activity over the weekend," said Michael Hewson, chief market analyst at CMC Markets.

"M&A appears to be the main focus as we start a new week with US pharma company Gilead Sciences buying cancer drug maker Immunomedics for USD21bn, while Softbank appears to have finally agreed a price with US graphics chip maker NVidia, for UK chip company ARM Holdings of USD40 billion."

Japan's SoftBank Group Corp said it is selling British chip designer Arm to US chip company NVIDIA for up to USD40 billion, potentially creating a new giant in the industry.

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. The announcement also renewed speculation about SoftBank Group's future, with Bloomberg News reporting it is set to revive talks about going private via a management buyout plan.

Softbank shares were up 8.8% in Tokyo.

Meanwhile, US pharmaceutical company Gilead Sciences confirmed Sunday that it is buying American biotech firm Immunomedics, which makes a breast cancer drug, for USD21 billion.

Under the transaction, to be finalized in the fourth quarter of 2020, Gilead will buy Immunomedics at a price of USD88 per share, more than double the current value of USD42.25. The California drug giant plans to fund the transaction with USD15 billion in cash and USD6 billion in new bonds.

Sterling was quoted at USD1.2820 early Monday, higher than USD1.2783 at the London equities close on Friday.

The coronavirus "rule of six" came into force in England on Monday, meaning any social gatherings of more than six people will break the law.

People face fines of up to GBP3,200 if they do not abide by the new measure, which applies to both indoor and outdoor settings and follows a rapid increase in the number of daily positive cases.

More than 3,000 Covid-19 cases were recorded in the UK for the third day in a row on Sunday – the first time since May that cases were above 3,000 on three consecutive days.

Meanwhile, Austrian Chancellor Sebastian Kurz told citizens the country was already facing "the beginning of the second wave" as new daily infections climbed towards 1,000.

France reported 10,000 new infections Saturday, close to the peak of the first wave in April. Prime Minister Jean Castex declined to announce any new major restrictions Friday despite noting a "clear worsening" in the country's outbreak.

The euro traded at USD1.1850 early Monday, firm on USD1.1836 late Friday.

On a positive note on the vaccine front, regulators have given AstraZeneca and Oxford University the all-clear for clinical trials to resume.

Researchers had "voluntarily paused" their vaccine trial after a UK volunteer developed an unexplained illness. Even during the pause, AstraZeneca said it remained hopeful that the vaccine could still be available "by the end of this year, early next year".

In the US on Friday, Wall Street ended mostly higher, with the Dow Jones Industrial Average ending up 0.5% and the S&P 500 up 0.1%, but tech-heavy Nasdaq Composite down 0.6%.

In Asia on Monday, the Japanese Nikkei 225 index is up 0.6%. Against the yen, the dollar was lower, quoted at JPY106.03 versus JPY106.18.

In China, the Shanghai Composite is up 0.2%, while the Hang Seng index in Hong Kong is up 0.6%.  

Gold was quoted at USD1,947.05 an ounce early Monday, down from USD1,950.07 on Friday. Brent oil was trading at USD39.93 a barrel, lower than USD40.22 late Friday.

The economic events calendar on Monday has eurozone industrial production figures at 1000 BST.

The UK corporate calendar on Monday has annual results from Abcam and MJ Gleeson. There are also interim results from Costain Group and MP Evans.

By Lucy Heming; lucyheming@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.

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