BAE Systems on shopping spree, Anglo American and Sirius agree on takeover
London open
The FTSE 100 is expected to open six points higher on Monday, having closed up 0.85% at 7,674.56 on Friday.
Stocks to watch
BAE Systems said it was buying Collins Aerospace's Military Global Positioning System business for $1.925bn (£1.48bn) and Raytheon's Airborne Tactical Radios business for $275m. The company on Monday added that the Collins purchase would produce a $365m tax benefit and the Raytheon deal $50m.
AstraZeneca announced on Monday that ‘Imfinzi’ (durvalumab) and tremelimumab, an anti-CTLA4 antibody and potential new medicine, have both been granted ‘orphan drug designation’ by the Food and Drug Administration (FDA) in the United States for the treatment of hepatocellular carcinoma - the most common type of liver cancer. At the same time, the FTSE 100 pharmaceuticals giant and its partner MSD said that a supplemental new drug application for ‘Lynparza’ (olaparib) has been accepted and granted priority review in the US, for patients with metastatic castration-resistant prostate cancer and deleterious or suspected deleterious germline or somatic homologous recombination repair gene mutations, who had progressed following prior treatment with a new hormonal agent.
Anglo American and Sirius Minerals have reached agreement on the terms of a recommended cash acquisition, they announced on Monday, under which Anglo American Projects UK will acquire Sirius via a scheme of arrangement. The companies said that, under the terms of the acquisition, Sirius shareholders would receive 5.5p in cash for each Sirius share held. Anglo American said the offer price represented a premium of 34.1% to the closing price on 7 January, and valued the entire issued and to-be-issued share capital of Sirius at about £404.9m.
Newspaper round-up
The world’s energy watchdog has warned the oil and gas industry that it risks a public backlash by failing to act on the climate crisis in favour of making short-term profits. The International Energy Agency (IEA) said oil companies must balance their desire for near-term returns and a long-term future by playing a much more significant role in combating the climate crisis. – Guardian
UK house prices rose over the last month at the fastest rate on record for the time of the year, as sellers felt more confident about the outlook for the housing market after the general election, according to Rightmove. The average price of properties coming on to the market jumped by 2.3%, the biggest rise for the period since the property website started its house price index in 2002. Nearly 65,000 UK properties were marketed over the month, with an average asking price of £306,810. – Guardian
Flybe is preparing to launch services on the lucrative route between Heathrow and German industrial heartlands, threatening to enrage further airline executives left fuming by a Government rescue last week. The planned Dusseldorf service is part of a route overhaul that includes an additional service between Newquay and Amsterdam, according to industry sources. – Telegraph
Britain’s biggest construction companies have warned Boris Johnson that scrapping HS2 would cause “irreparable damage” to the sector and would jeopardise an “industrial renaissance” in the Midlands and northern England. The chief executives of Balfour Beatty, Skanska, Morgan Sindall, Costain, Mace and Sir Robert McAlpine are among signatories of a letter to the prime minister seen by The Times urging him to approve construction of the full high-speed rail project. – The Times
More than a thousand European financial firms have applied to enter Britain despite the uncertainty surrounding Brexit, data has revealed. The Financial Conduct Authority received a total of 1,441 applications between 2018 and 2019 from firms to use its temporary permission regime, which it put in place to allow European companies to operate after Brexit while they seek full authorisation. – The Times
US close
US stocks closed higher on Friday following the release of some economic data out of China overnight and a strong start to earnings season.
At the close, the Dow Jones Industrial Average was up 0.17% at 29,348.10, while the S&P 500 was 0.39% firmer at 3,329.62 and the Nasdaq Composite saw out the session 0.34% stronger at 9,388.94.
The Dow closed 50.46 points higher on Friday after ending the previous session in the green when stocks surged to new records when investors continued to cheer the signing of the US and China's 'phase one' trade agreement earlier in the week.
Underlining sentiment on Friday was news that China's economy grew 6.1% in 2019, matching economists' expectations but still the slowest growth rate for the nation's economy since 1990 and a drop from 2018's 6.6% expansion.
Trade was still in focus, with the US-Canada-Mexico trade agreement being passed by the Senate on Thursday, helping markets breathe a sigh of relief yet again.
On the data front, homebuilding activity in the States blew the doors of economists' forecasts in December, but economists were quick to point out that such strength was just not sustainable and some of the underlying data appeared to point in that direction too.