UK stocks are expected to get the week off to a positive start following the long bank holiday weekend.
City sources predict the FTSE 100 will open around 25 points above Thursday's close of 6,625.25, lifted by a decent performance in the US last night, with the week's focus set to be largely on corporate earnings both at home and on the other side of the Pond.
Michael Hewson, Chief Market Analyst at CMC Markets UK, said: "Last week the S&P 500
posted its best week since July last year, and yesterday in the absence of European markets went on to close higher for the fifth day in succession for the first time this year as investors continued to put to one side concerns about geopolitics and slowing earnings, focusing instead on the prospects of further M&A activity as reports filtered through that US pharmaceutical giant Pfizer had been, and is still, exploring a potential offer of $101bn for UK pharmaceutical giant AstraZeneca."
Overnight, this speculation saw US shares
of AstraZeneca surge. The Sunday Times said informal talks between AstraZeneca and Pfizer had taken place in recent weeks, which saw the US pharma giant make a tentative approach for its British-Swedish rival.
The approach is said to have valued AstraZeneca at $100bn (£60bn), around a 25% premium to the current share price, which would make it the biggest deal in industry history and the largest foreign takeover of a UK business ever.
Although Hewson said investors are likely to focus on this news, he added that "if the situation in Ukraine escalates and prompts some form of Russian incursion on Ukraine's eastern border, where tensions remain high, then investor appetite for risk could well take a hit".
In other company news, GlaxoSmithKline (GSK) has announced a major three-part transaction with Swiss pharmaceuticals peer Novartis, which will see shareholders receive a £4bn capital return. The first part of the deal will see GSK and Novartis create a new Consumer Healthcare business with GSK holding a 63.5% equity stake. GSK will then acquire Novartis' global Vaccines business excluding influenza vaccines for an initial cash consideration of $5.25bn, and sell its marketed Oncology portfolio to Novartis for an aggregate cash consideration of $16bn.
Defence technology group QinetiQ has agreed to sell its US services arm and return the bulk of cash to shareholders. A cash consideration of $165m will be paid, plus a potential earn-out of up to $50m, with the FTSE 250 company proposing to return much of the value via a £150m share buyback.
Shaftesbury has arranged a new £134.75m, 15-year term loan with Canada Life Investments, which is due for repayment in May 2029. The loan will replace its £100m revolving credit facility with Bank of Scotland, which had been due to expire in September next year.
FTSE 250-listed telecoms provider Colt said margin pressures chipped away at quarterly earnings as it warned it now expects full-year earnings before interest, taxes, depreciation, and amortisation (EBITDA) before restructuring charges to range between 5% and 10% below current consensus estimates.
The group, which designs and supplies climate-related technology, said quarterly EBITDA fell to €74.1m from €80.5m the same quarter a year earlier and it now expects earnings for the year to be around €325m.