LONDON (Alliance News) - UK stocks indices are mixed Monday, with little in the economic calendar to provide direction and developments in Ukraine weighing on sentiment, but with a significant shot-in-the-arm provided by continued merger and and acquisition activity in the pharmaceutical sector.
By mid-morning Monday, the FTSE 100 is up 0.4% at 6,710.00, and the FTSE 250 is down 0.2% at 15,927.68.
New tax rules, announced in last year's budget, come into effect Monday, which abolish the tax paid on transactions involving AIM-listed shares. Investors appear to be taking initial advantage of the rule change for selling purposes rather than rather than buying, as the junior market is underperforming Monday, currently down 0.4% at 815.88.
Quindell PLC, the second-largest AIM shares is once again one of its leading fallers, down 16%, after responding last week to a scathing report by short sellers Gotham City Research.
In Europe, major equity markets are performing better, with the CAC 40 up 0.7%, and the DAX 30 both up 0.9%.
"Its general takeover M&A boosting sentiment, with the General Electric bid for Alstom getting a counter bid from Siemens, while the pharmaceutical story looks set to continue after Pfizer confirmed its interest in AstraZeneca, while Bayer announced it was considering options for a couple of its smaller units," said CMC Markets chief market analyst Michael Hewson
The gains come despite the strong possibility of further sanctions against Russia being announced by western allies Monday, with both US and EU officials meeting for crisis talks. Sanctions are likely to be targeted at at President Vladimir Putin's "inner circle". According to a report in the New York Times, they could include restrictions on the head of the state-run oil company Rosneft and the world's largest extractor of natural gas, Gazprom.
Both the pound and the euro are higher against the dollar, with the pound reaching a fresh high since November 2009 of USD1.6854.
The euro has reached a two week high of USD1.3876, boosted in part by rising Italian consumer confidence which jumped unexpectedly to a near three year high in April. The consumer confidence index rose to 105.4, up from 101.9 in March and exceeding economists expectations of a slight drop to 101.5.
AstraZeneca is the clear leader on the FTSE 100, shares in the pharmaceutical company are up by more than 15% following the confirmation that US peer Pfizer is interested in a takeover. Pfizer confirmed that it made a takeover offer, at a 30% premium to the share price at the time, back in early January. Having gone back to AstraZeneca and been told that management are not interested in negotiations, Pfizer is now thought increasingly likely to make a hostile takeover bid.
The possibility of a bumper buy-out has now seen the AstraZeneca share price rise by almost 25% since the start of trading last week. According to takeover rules, Pfizer has until May 26 to make its move or declare its intention not to bid.
Hikma Pharmaceuticals and GlaxoSmithKline are both higher Monday, by 1.4% and 0.8% respectively.
BG Group is the biggest blue chip faller, down 3.7% after saying that its Chief Executive Chris Finalyson has resigned with immediate effect for personal reasons. The natural gas company said that Non-Executive Chairman Andrew Gould has appointed as interim executive chairman until a replacement has been found. BG Group also warned that it continues to face challenges with falling production volumes in Egypt.
There's just some second tier US data still to come Monday, with pending home sales at 1400 GMT, followed by the Dallas Fed manufacturing index for April at 1430 GMT.
Ahead of that the US futures market indicates a positive open, with the S&P 500, the DJIA, and the Nasdaq Composite all up by 0.5%.
While there is little of note in the economic calendar Monday, data releases ramp up significantly as the week goes on. Tuesday brings the initial reading of first quarter UK GDP, which is expected at 0.9%, with a year-on-year rate of 3.2%. An early guide to second quarter activity will be provided by the UK's Markit manufacturing PMI for April, due out Thursday and expected to show continues expansion.
It is data from the US this week that will likely be the broader driver however. On Wednesday, US first quarter GDP numbers are due, with economists expecting an acceleration to 1.7%. Later on the same day, the Federal Reserve will announce their latest policy decision, with no change to interest rates but a further USD10 billion reduction in monthly bond buying to USD45 billion widely expected.
Federal Reserve Chair Janet Yellen is due to speak from Washington on Thursday, ahead of a raft of US data including the Markit manufacturing PMI for April and the latest initial jobless claims data, ahead of the monthly non-farm payroll report on Friday. Economists currently expect an extra 205,000 jobs to have been added in April, while the headline unemployment rate is expected to fall to 6.6% from 6.7%.
By Jon Darby; jondarby@alliancenews.com; @jondarby100
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Astrazeneca (AZN)
Hikma Pharmaceuticals (HIK)
Glaxosmithkline (GSK)
