The FTSE 100 in London and the CAC 40 in Paris opened lower on Monday morning, while the DAX 40 in Frankfurt was up a bit after the centre-right conservative party in Germany won the federal election.
The FTSE 100 index opened down 2.07 points at 8,657.30. The FTSE 250 was up 3.54 points at 20,617.43, and the AIM All-Share was down 0.70 points, 0.1%, at 717.32.
The Cboe UK 100 was down at 866.71, the Cboe UK 250 was up 0.1% at 17,953.12, and the Cboe Small Companies was down at 15,837.65.
GSK was the third-biggest FTSE 100 winner, jumping 2.0%.
The pharmaceutical firm said it has completed the acquisition of Boston, Massachusetts-based precision therapeutics firm IDRx Inc, adding to its growing portfolio of treatments for gastrointestinal cancers.
It also announced the start of the £2 billion buyback programme that it announced earlier this month, starting with an initial £700 million tranche.
XPS Pensions was among the FTSE 250 winners, gaining 1.5%.
The pensions consulting and administration firm has agreed to acquire Polaris Actuaries & Consultants, expecting the deal to conclude on Friday.
It said cash consideration for the deal totals £23.4 million, with further contingent consideration of up to £35.0 million to follow over the next three years.
Among smaller caps, EnergyPathways soared 40%.
The energy infrastructure project company announced progress on its MESH energy storage project, having signed a non-binding memorandum of understanding with a clean energy fund for a cornerstone equity financing, ‘effectively minimising shareholder dilution’.
The MoU funding provides capital for MESH’s growth plans in gas storage, hydrogen and decarbonised gas power generation, EnergyPathways said, and ‘provides further demonstration to the [UK] government of MESH’s ability to attract private capital to the UK energy transition’.
In European equities on Monday, the CAC 40 in Paris was down 0.6%, while the DAX 40 in Frankfurt was up 0.1%.
In Germany, the conservative Christian Democratic Union and Christian Social Union bloc secured a clear victory in Sunday’s elections, winning around 28.6% of the vote. The far-right Alternative for Germany climbed to second place with a record 20.8%.
The results contributed to an uncertain European political climate, while Russian aggression remains on the horizon three years after its invasion of Ukraine.
CDU leader Friedrich Merz has pledged to relax fiscal rules, increase defence spending and invest in and revive the nation’s stagnating economy.
Investors have reacted positively to the prospect of a revived German economy and bolstered collective European defence.
The euro stood higher at $1.0482 early on Monday, against $1.0450 at the equities close on Friday.
Meanwhile Swissquote’s Ipek Ozkardeskaya noted that Germany’s election ‘didn’t bring major surprises...The kneejerk reaction is a swift rebound of the euro and the equity futures on hope of higher spending by the new German government would tackle the economic weakness of past years.’
She continued: ‘Trend and momentum indicators are positive for the European stocks that have been performing beautifully since the start of this year on the convergence trade, also supported by encouraging earnings, a more supportive European Central Bank stance than the Federal Reserve’s and also on thinking that the global easing in financial conditions would benefit to the European cyclical stocks.’
The pound was quoted flat at $1.2642 early on Monday in London, compared to $1.2641 on Friday. Against the yen, the dollar was trading lower at JP¥149.37 compared to JP¥149.45.
In Asia on Monday, Japanese markets were closed to mark the emperor’s birthday. In China, the Shanghai Composite was down 0.2%, while the Hang Seng index in Hong Kong was down 0.5%. The S&P/ASX 200 in Sydney closed up 0.1%.
In the US on Friday, Wall Street ended lower, with the Dow Jones Industrial Average down 1.7%, the S&P 500 down 1.7% and the Nasdaq Composite down 2.2%.
Ozkardeskaya commented: ‘Across the Atlantic, things were looking pretty bad last Friday. The US stocks were hit by an ugly selloff on weaker-than-expected economic data and exploding inflation expectations...on prospects of massive tariffs from Trump government and worsening trade relations with the rest of the world...Small and mid-cap indices were hit heavier: the S&P400 for example tanked nearly 2.40% and is down by almost 10% since the November peak while the small caps tumbled nearly 3% and are down by more than 10% since the November peak – meaning that they are now in the correction territory – as the Trump optimism is being eaten by the tariffs and explodes costs (and cost expectations) to an extent that small businesses could hardly afford.
‘And the Fed is no longer looking like it could continue to lower interest rates as inflation expectations are exploding. So yes, the aggressiveness of Trump’s America First policies could backfire.’
Brent oil was quoted lower at $74.33 a barrel early in London on Monday from $74.89 late Friday.
Gold was quoted higher at $2,940.73 an ounce against $2,935.51.
Still to come on Monday’s economic calendar, the eurozone has consumer price inflation while the US has Chicago Fed national activity and the Dallas Fed manufacturing indices.
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