Equities in London opened in the red on Monday morning, as AstraZeneca released disappointing trial results while REA upped the ante with a sweetened takeover bid for fellow property portal Rightmove.
Monday’s economic diary has several flash composite purchasing managers’ index releases including from the US and UK.
The FTSE 100 index traded down 6.78 points, 0.1%, at 8,223.21. The FTSE 250 was down 38.50 points, 0.2%, at 20,793.34, and the AIM All-Share was down 1.51 points, 0.2%, at 744.11.
The Cboe UK 100 was marginally higher at 823.89, the Cboe UK 250 was down 0.3% at 18,303.47, and the Cboe Small Companies was up 0.3% at 16,820.53.
The lack of a spark in London was despite a more positive session in China after the central bank lowered a key lending rate, the 14-day reverse Repo rate, by 10 basis points in a surprise move by the People’s Bank of China.
UK Chancellor Rachel Reeves will insist that ‘tough decisions’ on the public finances are needed to prevent economic ruin but she will attempt to persuade her critics that there will be ‘no return to austerity’, PA reports.
In her first Labour conference speech as chancellor, she will also promise action to tackle tax dodgers and claw back money from flawed Covid-era contracts. But her decision to strip winter fuel payments from ten million pensioners is likely to be the focus of a fierce debate at the party’s conference in Liverpool, with major trade unions demanding a U-turn on the policy.
Union sources indicated the issue would be debated on the conference floor after Reeves’ speech on Monday, although a vote on the call for a reversal of the policy could be pushed back until later in the week.
Deputy Prime Minister Angela Rayner meanwhile has said she intends to ‘fix’ the UK Right to Buy scheme and make it a ‘fair system’ for taxpayers and tenants.
Speaking at a Labour conference fringe event in Liverpool, the Deputy Prime Minister suggested that changes had to be made to the scheme to secure ‘social housing into the future’.
In European equities on Monday, the CAC 40 in Paris was down 0.4%, while the DAX 40 in Frankfurt was up marginally.
The pound was quoted at $1.3269 early in London, down compared to $1.3307 at the equities close on Friday. The euro stood at $1.1112, lower against $1.1164. Against the yen, the dollar was trading at JP¥143.78 down slightly compared to JP¥143.85.
In Asia on Monday, financial markets in Japan were closed for Autumn Equinox Day. In China, the Shanghai Composite was up 0.4%, while the Hang Seng index in Hong Kong was down 0.2%. The S&P/ASX 200 in Sydney closed down 0.7%.
In Sydney, REA Group closed down 2.5%.
The online property buying portal provider lifted its takeover bid for London-based fellow Rightmove to value the latter’s equity at £6.1 billion. The offer comprises 341 pence in cash and 0.0422 of a new REA share. Based on REA’s closing price on Friday, the bid values each Rightmove share at 770 pence.
REA said the new bid is a 9.2% increase on the initial offer it made earlier in September. Under the terms, Rightmove shareholders will own around 20% of the combined entity. REA noted it is yet to receive any ‘substantive engagement’ from Rightmove yet, however, save for its two prior offers being rejected.
Rightmove shares gained 2.4% on Monday morning in London.
It said it would respond to the bid in ‘due course’.
Rightmove Chair Andrew Fisher said: ‘Rightmove is an exceptional company with a very clear strategy, a consistent track record of delivery and a strong management team. The board is confident in the company’s short and long term prospects, and sees a long runway for continued shareholder value creation. Based on the implied value and structure of REA’s first and second indicative non-binding proposals, we considered these proposals to be uncertain, highly opportunistic and unattractive. Accordingly, the board unanimously rejected them.
‘The board will continue to act on behalf of our shareholders and respond to the most recent proposal in due course.’
Also in Australia, business activity declined in September, preliminary data published by S&P Global showed.
The flash Australia composite purchasing manager’s output index edged down to 49.8 in September from 51.7 in August. Falling below the neutral 50-points mark, it indicates activity fell in September.
The flash Australia services PMI business activity fell to 50.6 in September from 52.5 in August.
The flash Australia manufacturing PMI output index fell to a 52-month low of 44.2 in September from 46.0 in August. The flash Australia manufacturing PMI also declined to a 52-month low, to 46.7 in September from 48.5 in August.
The Reserve Bank of Australia will meet to discuss policy interest rates on Tuesday.
‘As the minutes of the August meeting indicated that the RBA considered hiking rates at that time, any thoughts of rate cuts at this meeting can be swiftly banished,’ commented ING. ‘There has been some more moderation in inflation, but it has made no progress in net terms since the beginning of the year.’
In the US on Friday, Wall Street ended mixed, with the Dow Jones Industrial Average up 0.1%, the S&P 500 down 0.2% and the Nasdaq Composite down 0.4%.
Back in London, Dunelm rose 2.6%. UBS raised the homewares retailer to ’buy’ from ’neutral’.
Elsewhere, Galliford Try advanced 2.8%. The construction firm has been appointed to two lots on a Wessex Water capital delivery framework.
The six-year framework is valued £3.7 billion in total, and is expected to be worth over £400 million for Galliford.
AstraZeneca lost 1.0%. It said a breast cancer drug failed to significantly extend patients’ lives, a second blow this month to hopes for the product.
Datopotamab deruxtecan, also known as Dato-DXd, is a targeted chemotherapy known as an antibody drug conjugate, developed with Japanese company Daiichi Sankyo.
In a statement, AstraZeneca, the Cambridge-based pharmaceuticals company, said high-level results from the tropion-breast01 phase III trial of datopotamab deruxtecan did not achieve statistical significance in the final overall survival analysis in patients with inoperable or metastatic hormone receptor-positive, HER2-low or negative breast cancer that had been treated with hormonal therapies.
Earlier in September, the drug failed to deliver overall survival benefits in patients with non small cell lung cancer.
Brent oil was quoted at $74.52 a barrel early on Monday, up from $74.43 late Friday.
UK fuel prices are falling faster than at any other point in 2024 so far, new figures show according to PA.
Average prices for petrol and diesel across UK forecourts are nearly seven pence per litre cheaper than a month ago, sinking to their lowest level in almost three years.
Typical per-litre petrol prices have fallen from 142.9p to 136.2p, while diesel has dropped from 147.7p to 140.9p. That means the cost of filling a 55-litre family car is almost £4 cheaper than a month ago.
Gold was quoted at $2,618.11 an ounce, lower against $2,622.00.
Still to come on Monday’s economic calendar, there are the flash composite PMI readings from the UK and US at 0930 BST and 1445 BST.
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