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FTSE 100 boosted by M&A activity as TikTok deal stops the trade war clock


The FTSE 100 opened firmly in positive territory with M&A activity providing the lift.

Three multi-billion-dollar deals supported market confidence, the most important of which was Oracles technical collaboration with TikToks Chinese owner, which effectively averts as Sino-American trade war.

The computer giant beat off competition from Microsoft to land access to the US operations of the video streaming group.

Japanese investor Softbanks decision to sell ARM Holdings to chipmaker Nvidia for US$40bn provided further positive news in the tech sector, where investors have hit the reset button.

However, there will likely be resistance from the UK government who will want assurances around jobs at ARMs Cambridge headquarters.

In the drug sector, Gilead flexed its financial muscle as it unveiled plans to acquire cancer drug maker Immunomedics for US$21bn.

Stock in British Airways owner IAG (LON:IAG) was off 31% for purely technical reasons as it began trading “ex-rights” following its £2.5bn cash call. In laymans terms, this simply means investors are no longer entitled to purchase more equity in the IAG rights issue.

Shares in Ocado (LON:OCDO) were well bid in the early exchanges and up almost 2% ahead of Tuesdays investor update the focus for which will be its alliance with Marks & Spencer (LON:MKS).

Shell (LON:RDSA) and BP (LON:BP.) found some support as they both opened around 1.4% higher. The latter was further bolstered by an upgrade to outperform by Credit Suisse.

Among the tiddlers, Horizonte Minerals (LON:HZM) got off to a positive start after Peel Hunt initiated coverage with a buy recommendation and a 14p price target – almost double the current price. The shares advanced 6%.

6.50am: Positive start predicted

The FTSE 100 looks set to open the new trading week in positive territory, taking its cue from Asias main markets.

The spread betting firms expect the UK blue-chip index to kick-off 24 points to the good at 6,056.09.

A technical deal that will effectively give Oracle control of TikToks US operation was the catalyst for the early positivity.

While not a full-blown takeover of the video app group, the agreement addresses national security concerns and therefore prevents further deterioration in Sino-American trade relations, analysts said.

It has been a weekend dominated by M&A activity with the US$40bn sale of UK group ARM Holdings by the Japanese investment firm Softbank to chipmaker Nvidia vying with TikTok for top billing on the business pages.

In the drugs sector, Gilead has unveiled plans to splash US$20bn on a cancer drug maker Immunomedics.

Looking ahead, this week we have corporate updates from Ocado (LON:OCDO) – where interest will focus on its tie-up with Marks & Spencer (LON:MKS) – builder Redrow (LON:RDW), retailer Games Workshop (LON:GAW) and tickets service Trainline (LON:TRN).

The week will also see central bankers in Washington and London provide their pandemic commentary, though there is little likelihood of changes to interest rates either side of the Atlantic.

“With the latest Federal Reserve rate meeting later this week, there is a risk that in outlining their plans for their new policy of average inflation targeting that the US dollar might well weaken further,” said Michael Hewson of CMC Markets.

Around the markets:

  • Pound worth US$1.2819 (up 0.18%)
  • Gold US$1,947.56 an ounce (up 0.36%)
  • Brent crude US$39.92 a barrel (up 0.23%)

6.45 am: Early Markets – Asia Australia

Stocks in the Asia Pacific region were trading higher on Monday after Japanese conglomerate SoftBank Group Corp (TYO:9984) announced the sale of UK chip designer Arm to Nvidia in a $40 billion deal.

South Koreas Kospi jumped 1.19% and in Japan, the Nikkei 225 rose 0.61%.

Mainland Chinese stocks were higher with the Shanghai composite up 0.15% while Hong Kongs Hang Seng index added 0.60%.

Australias S&P/ASX 200 gained about 0.52% thanks to gains for miners Rio Tinto and BHP.

Proactive Australia news:[hhmc]

Blackstone Minerals Ltd (ASX:BSX) has received firm commitments from sophisticated, professional and institutional investors to raise up to $17.8 million through a placement of 42,426,356 fully paid ordinary shares at an issue price of 42 cents per share.

Jindalee Resources Ltd (ASX:JRL) has received firm commitments from sophisticated and professional investors to raise $1.23 million as part of a $1.85 million capital raising to primarily accelerate exploration and development at McDermitt Lithium Project in the US.

Roots Sustainable Agricultural Technologies Ltd (ASX:ROO) has signed a letter of intent (LOI) with smart technology provider, Humboldt CCTV, to distribute the Root Zone heat exchange device kits in Northern California.

Kingston Resources Ltd (Read More – Source