- FTSE 100 down 27 points at 10,651
- Pub shares rise after England World Cup win
- Deal news for easyJet, ITV and defence sector
- UK construction downturn continues
5:15pm: Slow start to the week
The FTSE 100 finished the day down 27 points at 10,651, as across the Atlantic, the tech trade appeared to be reviving.
“It has been a lugubrious start to the week for stock markets, particularly in the US and the UK, but things have begun to liven up, particularly for last week’s also-rans the Nasdaq and the Nikkei 225,” IG chief market analyst Chris Beauchamp said.
“Jitters about tech and normal rotation action within sectors took the wind out the rally for both indices, but they are leading the way once again in afternoon trading, an indication that the rally might be poised for another leg higher.”
4.01pm: Blue-chips still in red
London blue-chips are off their lows, with half an hour of trading still to go.
Primark owner AB Foods, down 3.4%, is the biggest faller, followed by catering group Compass, Mexican silver miner Fresnillo, Warhammer owner Games Workshop and drugmaker AstraZeneca.
Financials are top of the leaderboard, with IG Group, St James's Place, LSEG all gaining around 2%, with banks and insurers also in demand, namely Prudential, Barclays, Aviva, Standard Chartered, HSBC and Lloyds advancing 1.5-0.5%.
IAG added more than 1% amid renewed optimism towards airline stocks.
UBS has a note out today saying European airline shares could have further to rise as lower fuel costs and resilient travel demand improve the sector's earnings outlook.
3.33pm: Microsoft job cuts
Microsoft shares are down 1.7% after it told staff that around 4,800 jobs, or 2.1% of its global workforce, are being axed as it restructures to focus on its biggest growth priorities.
This is unusual, as stock markets usually like to hear about job cuts.
In a memo to staff, chief people officer Amy Coleman said the business "is changing because the world around it is changing," adding that Microsoft needed to "adjust resources and roles and shift how we operate".
2.47pm: Mixed in New York
US stocks have opened mixed, with the Nasdaq powering 0.9% higher, while the S&P is up 0.4%, but the Dow Jones has slipped 0.1% after closing at a record high before the Independence Day holiday.
Chip stocks are driving the Nasdaq higher in early trade, with storage groups Western Digital and Seagate jumping more than 5%, while Broadcom, ARM Holdings and AMD have posted solid gains.
Semiconductors are up too, with Intel, ASML, Micron, Texas Instruments and Applied Materials all advancing.
Defensive names are weighing on the Dow, with Nike off more than 3% and healthcare stocks Johnson & Johnson (NYSE:JNJ), Merck and Amgen lower.
The FTSE 100 has taken a little bend lower after the US open, down 40 points now.
1.41pm: UK biotech bought by Novartis
British biotech company Myricx Bio in a deal worth up to $1.5 billion, bolstering its push into next-generation cancer treatments.
The Swiss drugmaker will pay $1.1 billion upfront, with a further $400 million tied to milestones, to acquire the privately held company, which is developing a new class of antibody-drug conjugates, or ADCs.
The technology is designed to deliver cancer-killing drugs directly to tumour cells and could help overcome resistance to existing treatments.
Myrics is a 2019 spinout from Imperial College London’s Department of Chemistry, co-founded with the Francis Crick Institute, with seed funding of £4.5 million from Brandon Capital and Sofinnova Partners, with a later funding round of £90 million in 2024.
Fiona Marshall, president of biomedical research at Novartis, said there remained "a clear need for new payload mechanisms to overcome resistance and expand their impact for patients".
Other UK companies focused on ADCs include Fusion Antibodies, Avacta and UK-based but Nasdaq-listed Bicycle Therapeutics.
1.20pm: ITV deal is fair, say analysts
Deutsche Bank said the market should welcome the long-awaited sale of ITV's media and entertainment business to Sky, with greater clarity on valuation and a planned £950 million shareholder return.
Analyst Nizla Naizer says the £1.4-1.6 billion deal value broadly matches her own assessment of the business and equates to 5.6-6.4 times expected 2025 earnings, in line with sector peers.
The total will comprise £1.2 billion of initial cash on completion, contribution of Sky’s Love Productions business for an agreed enterprise value of £200 million, and contingent cash consideration of up to £200 million payable in the second half of 2028 based on the performance of total ad revenue in 2027 and other trading balance adjustments.
ITV also announced a long-term strategic partnership between ITV Studios and the business it is selling to Sky, including a content supply agreement with a minimum spend commitment of £2.1 billion over 2028-2032, with the addition of Love Productions expected to boost ITV Studio's creative capabilities and enhance its portfolio breadth.
Dan Coatsworth, head of markets at AJ Bell, says ITV breaking itself into two has been talked about for years, "but no-one thought it was possible".
He says it "looks like a win-win situation for both ITV and Sky and is the biggest shake-up of the UK’s media landscape in decades".
The many moving parts of the deal is why it has taken so long to reach an agreement on the terms and conditions, he says, adding that ITV’s shareholders "should benefit from the separation in several ways", not least the £950 million returned by an expected mixture of share buybacks and dividends.
"ITV’s shares might trade on a higher multiple of earnings as historically the linear TV operations acted as a drag on its valuation," he says, adding that a slimmed-down business "would be an attractive takeover target for someone like Netflix looking to acquire production facilities and a rich library of content" or ITV could be an acquirer itself, making bolt-on deals.
12.12pm: FTSE under fire, US futures mixed
The FTSE is on the back foot now, conceding ground after a positive start this morning.
Falls of 1%-plus for heavyweights including AstraZeneca, Rolls-Royce, Compass, Coca-Cola Europacific, SSE, IHG are weighing, while banks, oilers and miners are also in the red.
Biggest fallers are Mexico's Fresnillo, down 2.5%, and health & safety products specialist Halma, tabletop games chain Games Workshop and fluid engineer IMI.
US futures are still a bit uneven looking, with the Nasdaq predicted to rise around 1%, while Dow Jones futures are slightly in the red. S&P 500 futures are up 0.4%.
As last Friday was a public holiday, with stock and bond markets closed, investors are still going to be reacting to the US jobs market data on Thursday.
Non-farm payrolls grew 57,000 last month, much less than expected, with downward revisions for the two months prior.
"Combined with the ongoing decline in the oil price, Brent crude is back below $72 per barrel, this has dramatically reduced the chance of a Fed rate hike in the near term, although cuts also appear to be off the table," says market analyst Kathleen Brooks at XTB.
"After the soft labour market data, the FOMC minutes this week will be worth watching as the battle between FOMC members who are worried about sticky inflation, including the new governor Kevin Warsh, and those who are worried about the jobs market, continues to play out."
Treasury yields "could retreat", she adds, after rising last week. "So far, European yields are flat, which suggests the bond market may look to the US for direction later today."
11.46am: Close Bros tumbles
Shares in Close Brothers have fallen almost 9% this morning on the back of being downgraded by RBC Capital Markets, which says the shares could drift lower after developments in the long-running motor finance saga
The downgrade follows a decision by the Upper Tribunal court last Thursday to hear judicial review challenges to the Financial Conduct Authority's motor finance redress scheme.
Analyst Benjamin Toms expresses surprise the case was granted, arguing that the regulator had faced an impossible task in designing a scheme to satisfy all parties.
He has cut his rating to 'sector perform' from 'outperform' and slashed his price target to 470p from 625p.
11.17am: More cash returns from UK banks?
Britain's biggest banks could see their capital rules eased this week, when the Bank of England sets out the next stage of a review that could free up cash for lending and shareholder returns.
The central bank's Financial Policy Committee publishes its half-yearly Financial Stability Report on Tuesday at 10.30 am, with a press briefing to follow later in the day.
Attention will focus on two technical measures that determine how much loss-absorbing capital lenders must hold against their assets.
The first is the common equity tier one ratio, a core gauge of a bank's financial strength relative to its risk-weighted assets.
The second is the leverage ratio, a simpler backstop that measures capital against total assets regardless of how risky they are.
Expectations are rising that the committee will float fresh proposals on both, following a series of consultations launched late last year.
10.43am: Construction sector analysis
The UK construction sector is not yet seeing signs of a 'Burnham boost’ in the PMI, despite the incoming premier’s apparent emphasis on investment spending, says Rob Wood at Pantheon Macroeconomics.
"We estimate that the headline activity index is consistent with construction sector output falling by around 3.0% three-months-on-three-months, the same signal as in May."
The signals from the PMI have "dramatically undershot" actual activity in the construction sector recently, with output rising by 1.7% three-months-on-three months in April, so Wood says he is continuing to take the PMI with a pinch of salt.
"But we continue to think that construction sector output will rise only slowly in any case, with the MPC keeping rates on hold as inflation rises, while input price pressures ease only slowly."
A positive was the future activity index jumping to 59.7, from 53.0 in May, while the new orders balance rose to 41.5, from 37.5.
"But the PMI continues to suggest that activity remains chronically weak across all main areas of construction sector activity," Wood notes, with price pressures "intense", despite a drop in energy prices.
"Easing energy costs should continue to weigh on price pressures, but the apparent stickiness of input costs in the construction sector suggests that the viability of projects will continue to weigh on activity for the coming months."
10.24am: AI carramba
Samsung's confidence over AI demand has provided a positive ripple through the chip sector this morning.
There was a telling quote from a senior executive at a pre-earnings meeting with staff, according to reports by local industry sources this morning: "This year's profit will exceed the cumulative profit generated over the past 40 years since we entered the semiconductor business."
This underlines the scale of the infrastructure spending behind the AI boom.
Samsung is expected to report second-quarter operating profit of 84.6 trillion won ($55bn/£41bn) tomorrow, potentially setting a new record for a technology company and reinforcing investor bets that the AI trade still has further to run.
10.03am: Early morning boost for high street
England's World Cup win over Mexico gave a "significant boost" for UK high streets, according to footfall data from MRI Software.
Footfall across UK high streets increased by 143.6% year on year, as supporters headed out to watch the Three Lions progress to the quarter-finals.
However, this is not surprising as the data measured footfall between midnight and 6am on a Monday, when last year there was no World Cup and this year, apart from pubs nothing else much was open.
Jenni Matthews, retail analyst, says market towns and historic towns "were the star players, suggesting supporters opted to stay local and soak up the atmosphere in nearby pubs, bars and community venues".
"For the hospitality sector, this is exactly the kind of result they’ll have been hoping for.
"At a time when consumers remain selective about where they spend, the World Cup is proving to be a powerful footfall driver, creating a welcome boost for the night-time, and local economy.
"As England prepares for its next game, we expect these uplifts to gather momentum, especially as they enter the quarter finals. For retailers and operators, the game plan is clear: align staffing, promotions and trading hours with key matches to make the most of the increased footfall, longer dwell times and celebratory spending that major sporting moments can bring."
9.40am: UK construction activity remains subdued
UK construction activity improved slightly last month, according to the latest PMI survey.
The construction PMI rose to 38.4 in June, from 38.2 in May, which was below the consensus forecast 40 and still well below the 50 mark that separates expansion from contraction.
"The downturn in UK construction output lost some intensity in June amid a softer reduction in commercial building work," says Tim Moore, economics director at S&P Global Market Intelligence.
"House building and civil engineering activity nonetheless registered sharper declines than in May, with the latter seeing its weakest performance since the start of the pandemic.
"New work decreased to the least marked extent since March, despite widespread reports of challenging market conditions.
"Construction companies commented on headwinds from subdued housing sales, elevated interest rates and squeezed consumer finances, alongside cutbacks to business investment plans.
"Some firms noted delays with infrastructure work and fewer public sector tender opportunities, but energy markets were cited as an area of positivity.
"Supply chain challenges appear to have receded, with vendor delivery times lengthening to the smallest degree since March.
"Construction companies also reported a slowdown in input price inflation from the near four-year peak seen in May.
"June data indicated a recovery in business activity expectations across the construction sector since May, although confidence levels remain well short of historic trends. A number of survey respondents suggested recent new contract awards and an expected improvement in broader market conditions had underpinned optimism."
9.11am: FTSE at four-month high, European stocks hit new records
After over an hour of trading, the Footsie is up almost 50 points at 10,729, pushing further back towards levels last seen in the days before the US and Israel started bombing Iran.
Mainland European markets have opened mostly higher too, led by with Italy's FTSE MIB up 0.6% and Germany's DAX up 0.4%, both at a new record highs.
France's CAC 40 is up 0.6%, while Spain's IBEX has bucked the trend, falling 0.3%.
The pan-European Stoxx 600 up 0.2%, setting fresh all-time highs. Topping the risers is easyJet, followed by gains for defence stocks Leonardo, Saab and Renk, mirroring moves in London.
Deals are lifting various sectors, with defence helped by news that US giant Lockheed Martin will acquire naval group Ultra Maritime in a $3.5 billion deal.
Technology stocks are lagging with semiconductor equipment makers BE Semiconductor, ASM International and VAT Group all down sharply.
"Stocks keep grinding higher with European shares at records this morning on the back of a positive week," says market analyst Neil Wilson at Saxo.
He notes that ships are transiting the Strait of Hormuz, which has seen Brent crude prices fell 1.2% to $71.25 a barrel.
"Now we look to earnings," says Wilson. "Q2 was a bumper quarter for the stock market, but we’ll find out soon enough if the optimism over earnings is justified.
"Samsung reports tomorrow, the first of the AI tests. Earnings season proper doesn’t start on Wall Street until 14 July, when Citigroup and JPMorgan report, though this week we have PepsiCo and Delta Air Lines. Shell reports its Q2 trading update tomorrow."
FactSet says 111 S&P 500 companies have issued EPS guidance for the second quarter, of which 48 have issued negative EPS guidance and 63 have issued positive guidance, with the proportion of positive guidance well above the five-year average of 44 and the 10-year average of 41.
Ten of the eleven sectors are forecast to report year-on-year EPS growth, led by energy, IT and materials, the FactSet data reveals, with only health care expecting a decline.
"Earnings growth has been central to the market’s broad advance this year," says Wilson. "Expectations for earnings growth are so strong that we’re in a kind of bubble - the market seems priced for perfection.
"A drop in Treasury yields after the softer-than-expected nonfarm payrolls report was a lift but I think this a market that is more dependent on earnings delivering very high expectations than on short-term interest rates."
8.39am: Airlines and pubs in good mood
Shares in easyJet have flown almost 10% higher to 610p but are still well below the 690p potential offer price.
Sector peer Jet2 is up 3.8% too, while long-haul peer IAG has risen 2.1%.
The FTSE 100 and FTSE 250 are both on the front foot, up 0.4% and 0.3%.
Market analyst Susannah Streeter at Wealth Club says London shares have moved lightly higher, "with little on the economic calendar to fully jolt markets awake".
Pub company shares are raising a glass to Jude Bellingham, Harry Kane and the brave late defensive battling from Dan Burn et al, with Wetherspoons up 2.2%, Mitchells & Buttlers, and Young's both up just under 2%.
"England's stunning World Cup victory over Mexico will be seen as a big win for the hospitality industry, with bars and pubs set to cash in further on the team's progress as fans celebrate," says Streeter.
"The tills were ringing all night at establishments which stayed open for the game, and the tournament is expected to provide a multi-million-pound boost to the industry as England's run continues."
Spending at pubs and bars was already running 17.3% higher during the first two weeks of England's World Cup campaign than in the preceding fortnight, according to payments company Dojo, with July's takings expected to swell further.
"Football fever is also likely to trigger a fresh wave of spending on party food, cold drinks and barbecue essentials, as fans make the most of the good weather in the run-up to the game against Norway on Saturday," says Streeter.
"With the mood turning euphoric towards the England team, it could help provide a short-term lift to consumer confidence.
"However, if England's run is cut short next weekend, the feel-good factor could fade just as quickly, leaving any boost to spending likely to prove temporary rather than the start of a sustained improvement in household optimism."
8.15am: FTSE's coming home?
The FTSE 100 has started higher in early deals, confounding futures traders.
It's up 22 points to 10,701, with a mix of sectors contributing to the move.
Top of the leaderboard are RELX, IAG, Babcock, Aberdeen, Experian, Barratt Redrow and BAE Systems.
At the bottom is Mexican precious metals miner Fresnillo.
7.59am: Financial services slumped last quarter, says CBI
The mood in the City turned sour last quarter, following the outbreak of the war in the Middle East, a closely watched CBI survey has revealed.
Unsurprisingly, given the spike in oil prices causing jitters about inflation and worries about interest rates, financial services activity slumped in the quarter, with business volumes swinging from strong growth at the start of the year to a sharp contraction.
Profitability also fell heavily, to -65% in June from +38% in March, and sentiment deteriorated from a +31% measure in March to -34% in June.
There were a couple of brighter spots. The staff headcount measure increased for the first time in two years and plans for spending on IT are the strongest since 2021, suggesting companies are still prepared to invest in technology.
Even so, the industry does not expect a quick rebound, with business volumes and profits forecast to keep falling in the current quarter, albeit at a slower pace.
Louise Hellem, CBI Chief Economist, said: "The political transition underway must not slow delivery of the government’s Financial Services Growth and Competitiveness Strategy at a time when activity has deteriorated and firms are facing a more uncertain outlook.
"Maintaining momentum on reforms – including continuing work with the FCA and PRA to deliver a more growth focused regulatory framework – will be essential to strengthening the UK’s competitiveness and supporting investment.
"The forthcoming Mansion House speech provides an important opportunity to boost confidence in the reform agenda by demonstrating progress already made and setting out clear next steps for delivery."
7.53am: easyjet likes new offer and Avon Tech NATO contract win
A couple of other stories.
The board of easyJet says it "would be minded to recommend" a new and improved takeover offer from investment firm Castlelake if a firm bid is made, as the parties agreed an extension to takeover talks.
Castlelake submitted a fifth proposal on Saturday to buy the shares it does not already own for 690p in cash, alongside a partial unlisted share alternative. This is up from a 650p bid a week and a half ago.
Avon Technologies has won a $10.8 million order to supply respirators to a European Nato member.
The order was placed by an existing customer through the framework contract run by the Nato Support and Procurement Agency (NSPA), which buys equipment on behalf of the alliance.
7.42am: European investor confidence improves
Euro zone investor confidence improved far more than expected in July, with the Sentix index rising to -3.1 from -13.4, marking its third straight monthly gain and comfortably beating forecasts of -10.0.
Sentix says: "The slump in sentiment caused by the Iran conflict is slowly being overcome. The German government's latest reform efforts are having an impact."
Economic expectations turned positive for the first time since March, adding to signs that confidence in the region's outlook is improving.
7.31am: ITV agrees deal to sell broadcast arm to Sky
ITV has finally reached a deal to sell its broadcasting business to Sky for up to £1.6 billion, resulting in shareholders getting a cash return of around £950 million.
The sale covers the arm behind ITV's television channels and its ITVX streaming service, alongside shows including Coronation Street, Emmerdale, Love Island and I'm a Celebrity…Get Me Out of Here!.
Sky, the pay-television group owned by the US media company Comcast, will pay £1.2 billion in cash at completion.
FTSE 100 Live pre-open
London's blue-chip shares are expected to make a sleepy start to the week, mirroring happy but weary England fans who stayed up to watch the World Cup victory over Mexico in the early hours.
The FTSE 100 is indicated to fall around 10 points on the futures market, having last week added 171.01 points and notched its highest level since the Iran war started.
Asian markets are mixed this morning, while US futures are modestly positive after a long weekend, with the S&P 500 and Nasdaq pointing 0.3% and 0.7% higher respectively and the Dow Jones indicated just above flat.
Here's market analyst Ipek Ozkardeskaya at Swissquote to sum things up: "Last week ended on a positive note for European equities, as US markets were closed for the July 4th holiday."
In Europe, the Stoxx 600 advanced to a fresh record high despite a slight rebound in bond yields after Friday’s PMI data showed stronger-than-expected activity in June, she adds, with FTSE 100 also approaching its own record highs levels (just above 10,900 reached back in February) despite drags from oil and mining stocks.
"Speaking of oil, Friday’s data showed that several OPEC+ producers increased production, and the group also announced that it would raise output by 188K bpd, further unwinding the restriction strategy put in place back in 2023," she says.
"The increase won’t materially change global supply, but it comes at a time when supply-glut talk is resurfacing, pulling oil prices lower (along with the Middle East de-escalation), and after the UAE quit OPEC, hinting at an upcoming battle for market share rather than cartel-boosted profits."
Brent crude is up 0.3% at $72.30 this morning, amidst some news in the Strait of Hormuz suggesting that some tankers made U-turns, but eventually crossed the Strait.
"So, the new week starts on a mixed note. European futures are pointing to a cautious start, while tech-heavy US futures are leading gains before the European open, despite mixed sentiment toward tech in Asia."
Korea's Kospi slightly in the red after news that Samsung would increase the prices of its memory chips by another 20%.
"Remember, high triple-digit percentage rises in memory chip prices have started to squeeze profits at hardware makers, making the demand outlook cloudier for memory chip makers and investors anxious and undecided about whether the news is good or bad," says Ozkardeskaya.
Hon Hai Precision, also known as Foxconn, Apple’s main iPhone assembler and a manufacturing partner for Nvidia, reported an almost 40% jump in quarterly sales, beating estimates, but its share price barely reacted to the news.
Elsewhere, SpaceX has entered the Nasdaq 100 index, which is expected to increase the benchmark's volatility, and this week also marks the end of the quiet period for the company as Wall Street firms will start publishing their first research notes.
This week also brings the first breadcrumbs of the US earnings season, with consumer-facing names including PepsiCo and Levi’s, while macro news includes FOMC minutes.
UK data today includes a CBI report, new car sales and the S&P Global construction PMI.
