8.21am: Tate & Lyle jumps, Audioboom fizzles
Tate & Lyle shares have opened up 13% to 554.45p after directors recommended a takeover offer from a US rival.
Meanwhile, on AIM, Audioboom is down 17% after saying it had turned three suitors away after their offers were deemed insufficient.
8.15am: Tech funds and airlines lead FTSE lower at open
The FTSE 100 has opened lower than expected, as oil giants Shell and BP have combined with defensive names to offset wider losses.
In opening trades, the index dropped over 40 points, but has already cut this to a loss of 32 points at 10,336.19.
Biggest fallers are Polar Capital Technology Trust, down 3.3% as it plays catch-up after the sizeable falls on the Nasdaq at the end of last week, along with the Asian sell-off this morning.
Scottish Mortgage is down 2.3%, while Aberdeen Asia, Allianz Technology and Pacific Horizon investment trusts are all down over 2%.
Aerospace and airlines are also hit this morning, with suppliers Melrose Industries and Rolls-Royce down 2.5-2%, with a similar fall for British Airways owner IAG.
7.56am: Two takeover stories
Two takeover stories to start the morning’s company news.
First is that Tate & Lyle has agreed to a £2.7 billion takeover by US ingredients group Ingredion, confirming a deal that was first announced a month ago.
Including allowed dividends, the offer is worth up to 615p per share, which is the same as was tabled last month.
Elsewhere, podcasting group Audioboom has ended its strategic review and terminated discussions with potential bidders after concluding that indicative takeover proposals failed to reflect its value and growth prospects.
It said three parties that had been carrying out due diligence submitted non-binding cash offer proposals since February. However, following strong trading in recent months, the board decided the approaches undervalued the business.
A short but upbeat trading update was also issued, saying the strong momentum reported in the first quarter has continued into the second.
7.31am: US rates also exerting pressure on markets
Aftyer the sharp selloff in stocks at the end of last week saw the Nasdaq endure largest daily drop in a year, and an Iran-Israel ceasefire potentially in ruins, many investors will be asking if the stock market sell-off will continue this week, says Kathleen Brooks at XTB.
The Nasdaq lost nearly 5% and the S&P 500 plunged 2.6% on Friday, with the US benchmark losing 2% over the week, bringing an abrupt end to its nine-week winning streak.
“The selloff came after US markets made record highs earlier in the week, and was triggered by jitters about AI stock valuations, and a rapid repricing of interest rate expectations for the Federal Reserve, after May’s blowout jobs report,” says Brooks, after new payroll numbers rose by 172,000, far exceeding the 85,000 expected.
While Asian stocks have fallen sharply, Brooks notes “signs of stabilization in the US”, with Nasdaq futures are currently pointing to a positive open and the S&P and Dow Jones both poised to open only slightly lower, while European indices are pointing to losses.
“We expect European and Asian indices to take their cue from the US later today,” she says.
“There is now a 50% chance of a rate hike from the Fed by the end of the year, even though a large increase in jobs was accompanied by cooling annual wage growth from 3.6% to 3.4%.
“The market is focusing on the job number rather than wage growth, and this has shifted the dial for financial markets. While stocks sold off, US Treasury yields jumped last week.
“The 2-year Treasury yield rose by 13bps, while the 10-year yield rose 10bps. The sell off in Treasuries spread to other sovereign bonds, with UK and Europe joining in the selloff.”
FTSE 100 market pre-open
Blue-chip indices in London and across Europe are set to fall sharply at the start of the week as oil prices have spiked and stocks in Asia plunged after Israel and Iran exchanged strikes.
The FTSE 100 has been called 84 points lower for Monday’s open, after it ended last week on a mildly positive note, up around eight points at 10,368.05, finishing roughly flat over the five days of trading.
Germany’s DAX and France’s CAC are set for even larger falls, while Asian markets have tumbled overnight and this morning, with the Kospi plunging 8.2% in Seoul, the Nikkei plummeting 4.2% in Tokyo, and the benchmarks for Shanghai and Hong Kong sliding 2.1% and 1.7%.
Brent crude prices were ramped up 4.7% to $97.47 a barrel so far this morning after Israel launched airstrikes on several sites in Iran, defying public calls from Donald Trump after he urged Jerusalem not to respond to Tehran’s attacks on Lebanon that were a retaliation to Israel bombing a target in southern Beirut.
It was the first direct strikes between Iran and Israel since a ceasefire of sorts was agreed in April, with the Revolutionary Guard warning yesterday of “a full week of continuous strikes”.
However, pointed out Deutsche Bank’s Jim Reid, “there are also signs that the sides are looking to avoid a full escalation,” with a report from Axios that Israel’s strikes were “relatively limited” and Iranian state media denying that it launched a strike towards a US airbase in Saudi Arabia.
“The de-escalatory tone appears particularly evident from the US side, with Trump reportedly urging Israel not to strike back earlier last night,” says Reid.,
Recent quotes from Trump “sound like a President who really doesn’t want this war to escalate any further and is trying to find all ways to avoid it”, though events of the past 24 hours “have further complicated the chances of an imminent deal”.
