It’s been a positive start to the week for markets in Europe as a positive Asia session and a flurry of activity in M&A has delivered a boost to risk appetite, and continued the positive theme from last week.
Having acquired US based Finish Line a year ago for $558m JD Sports (LON:JD) is on the acquisition trail again, this morning announcing it was acquiring the rest of the FootAsylum PLC shares it doesn’t already own for 82.5p a share, a 77.4% premium on the closing price from last week, at total cost of £74m, valuing FootAsylum at £90m. While other retailers are finding life difficult and peers like Sports Direct (LON:SPD) have seen their shares nosedive JD Sports has managed to maintain its presence and brand with a string of shrewd acquisitions which has seen its shares rise over 350% since 2015.
AstraZeneca (LON:AZN) is higher/lower after the US FDA granted orphan drug designation for saracatinib, a new drug for the treatment of pulmonary fibrosis, a type of lung disease.
Outsourcing companySerco (LON:SRP) this morning announced a A$115m contract with the South Australian government to operate its Adelaide remand centre.
The weekend reports that merger talks have begun between Deutsche Bank (LON:0H7D) and Commerzbank (DE:CBKG) has seen the respective share prices of both banks rise in early trading, over optimism that some form of deal might get done. This still remains a big ask, with many obstacles ahead to any sort of deal.
We already know from recent experience, how difficult it can be to make accurate assessments about valuations of complex derivative products on banks’ balance sheets, and that’s before we even look at the valuations or more traditional products like government bonds, as well as the number of non-performing loans. While investors may well be buying into the early narrative of some form of deal, the old saying that you can’t make a silk purse out of a sows ear has never been more true.
In other M&A news US based financial services technology company FIS has agreed to buy payment solutions specialist Worldpay Inc (LON:WPYa) in a $43bn deal, which would create a payments company with $12.3bn of revenues, with the company retaining the FIS name, and be based in Jacksonville Florida.
The pound has found further progress difficult after last week’s gains as the clock ticks down to another possible vote on Prime Minister May’s withdrawal agreement and this week’s EU Council meeting.
The US dollar has continued to slide ahead of this week's Fed meeting as expectations build that they will issue a downgrade to their projections for rate hikes over the next two years. In the last three months, US 10-Year yields have slid back sharply from levels above 3% to below 2.6%, which in turn has helped drive a strong counter rally in equity markets.
Boeing (NYSE:BA) shares could also see some movement in the wake of weekend reports that the US Department of Transport is set to begin an investigation into the company’s approval processes and its relationship with the FAA over the certification process.
US markets look set to pick up where they left off on Friday with a positive open, with the S&P500 breaking above a key resistance level last week at 2,820, a move that could well see further gains in the coming days.
Dow Jones is expected to open 4 points higher at 25,852
S&P500 is expected to open 4 points higher at 2,826
DISCLAIMER: CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.
No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.