London close: Stocks finish firmer as deal fever continues
London stocks closed above the waterline on Monday, having been hit hard last week amid concerns about China’s tech crackdown, with deal news helping to lift sentiment.
The FTSE 100 ended the session up 0.7% at 7,081.72, and the FTSE 250 was 1.13% firmer at 23,208.67.
Sterling was in the red, meanwhile, last trading 0.12% weaker on the dollar at $1.3887, and losing 0.16% against the euro to €1.1696.
“The FTSE 100 has enjoyed a strong start to the week, with the index outperforming its US and German counterparts as traders head for value names once again,” said IG senior market analyst Joshua Mahony.
“Recent fears around how Covid deaths could continue to rise in the wake of the July reopening have been allayed after the Sunday death count fell to 65 from 71.”
Mahony said that, with the experiences of the UK being “key” in determining whether the vaccine provided enough protection to avoid another lockdown, Sunday’s decline in cases and deaths raised hope that the world could soon return to some form of normality.
“The UK has opened its borders to vaccinated visitors from the EU and US, with the removal of quarantine rules raising the hopes that travel will receive a big boost in the months ahead.”
On the economic front, UK manufacturing growth slowed in July amid supply chain issues and staff shortages, with the IHS Markit/CIPS manufacturing purchasing managers’ index falling to 60.4 for July from 63.9 in June, and from May’s record high of 65.6.
Although rates of expansion in output and new orders slowed, they remained among the best in the survey history amid "robust" sales to domestic and export clients.
Scarcities remained a prime concern, however, amid stretched supply chains and staff shortages.
“Manufacturing in July was once again unable to maintain the pace of output growth seen earlier this year following the re-opening of the UK economy, as supply gridlock resulted in a moderate deceleration in the rates of expansion of production, new orders and job creation,” said Duncan Brock, group director at the Chartered Institute of Procurement and Supply.
“A mismatch in global recovery rates following the pandemic meant some businesses abandoned their usual suppliers to seek new sources and avoid elevated lead times and the shortages gripping the sector.
“Disruption is a worldwide problem however, so there was likely to be limited success in re-modelling supply chains completely with the challenges too difficult to circumnavigate.”
In equity markets, shares in FTSE 250 defence and aerospace engineer Meggitt rocketed 56.68% after it agreed to be bought by US rival Parker-Hannifin for £6.3bn.
Under the terms of the deal, Meggitt shareholders will receive 800p per share, which is a premium of around 70.5% to the closing share price on Friday.
On the top-flight index, GKN owner Melrose and engine maker Rolls-Royce also rallied, rising 5.18% and 3.78%, respectively.
Elsewhere, fund administrator Sanne rose 7.58% after saying it was in advanced talks with Apex Group about a possible takeover.
“UK stocks have long been considered cheap and this year’s merger and acquisition spree shows that overseas investors have finally got enough confidence to pounce on opportunities after years of showing little interest in the market,” said Russ Mould, investment director at AJ Bell.
SSE was up 1.28% after agreeing to sell its entire 33.3% stake in gas distribution operator Scotia Gas Networks (SGN) for £1.23bn in cash.
Volution advanced 0.74% after saying it had bought Energy Recovery Industries, a maker and supplier of low-carbon, energy efficient heat exchanger cells, for an initial €23.4m.
On the downside, HSBC reversed earlier gains to close down 0.33%, after the bank said it would reinstate dividends as first-half profits more than doubled as an ongoing restructuring and pivot to Asia continues to pay off.
FTSE 100 - Risers
Melrose Industries (MRO) 167.80p 4.81%
Rolls-Royce Holdings (RR.) 103.76p 4.06%
Anglo American (AAL) 3,300.00p 3.43%
International Consolidated Airlines Group SA (CDI) (IAG) 173.46p 3.19%
Burberry Group (BRBY) 2,125.00p 2.96%
JD Sports Fashion (JD.) 923.00p 2.90%
M&G (MNG) 231.70p 2.80%
Rightmove (RMV) 719.00p 2.39%
ITV (ITV) 114.50p 2.05%
Rio Tinto (RIO) 6,216.00p 1.88%
FTSE 100 - Fallers
Pearson (PSON) 827.00p -4.88%
Smith & Nephew (SN.) 1,439.00p -1.57%
Admiral Group (ADM) 3,383.00p -0.50%
Unilever (ULVR) 4,133.00p -0.43%
Johnson Matthey (JMAT) 2,961.00p -0.37%
HSBC Holdings (HSBA) 396.15p -0.33%
Ashtead Group (AHT) 5,372.00p -0.26%
Ferguson (FERG) 10,065.00p -0.25%
Polymetal International (POLY) 1,561.00p -0.13%
Compass Group (CPG) 1,521.50p 0.03%
FTSE 250 - Risers
Meggitt (MGGT) 735.00p 56.68%
Sanne Group (SNN) 908.00p 7.58%
Cineworld Group (CINE) 66.60p 4.78%
Oxford Instruments (OXIG) 2,515.00p 4.36%
Essentra (ESNT) 294.00p 3.70%
Syncona Limited NPV (SYNC) 219.00p 3.55%
Morgan Sindall Group (MGNS) 2,420.00p 3.42%
Biffa (BIFF) 369.50p 3.36%
Moonpig Group (MOON) 385.00p 3.27%
Ninety One (N91) 235.00p 3.25%
FTSE 250 - Fallers
Convatec Group (CTEC) 224.60p -5.19%
Airtel Africa (AAF) 86.80p -2.75%
Trainline (TRN) 329.40p -2.66%
CLS Holdings (CLI) 248.00p -2.55%
C&C Group (CDI) (CCR) 231.00p -2.45%
TUI AG Reg Shs (DI) (TUI) 331.00p -2.39%
Premier Foods (PFD) 109.00p -2.15%
XP Power Ltd. (DI) (XPP) 5,030.00p -2.14%
Vesuvius (VSVS) 522.00p -2.06%
Liontrust Asset Management (LIO) 2,055.00p -1.91%