The FTSE 100 ended slightly lower on Monday as weakness in AstraZeneca overshadowed gains across several sectors, leaving the UK index trailing stronger performances from European markets.
The blue-chip index fell 0.1%, while the FTSE 250 climbed 1.0% as investors reacted to company updates and a decline in bond yields that supported interest-rate-sensitive areas of the market.
AstraZeneca was the main drag on the FTSE 100, falling more than 8% after reports emerged that the pharmaceutical group had held discussions with US rival Bristol-Myers Squibb over a potential $400 billion merger.
The prospect of such a large deal prompted a cautious response from investors, with analysts questioning whether combining two major drugmakers would add significant value given AstraZeneca’s existing pipeline and growth prospects.
While a transaction could provide additional resources for research and strengthen future investment capacity, concerns remain that investors could interpret the move as a lack of confidence in the company’s own drug development strategy.
Housebuilders gain as yields fall
The decline in AstraZeneca shares outweighed strength elsewhere, particularly among housebuilders, which benefited from lower bond yields. Barratt Redrow gained 3.8%, Persimmon rose 2.2% and Vistry jumped 8.0% as borrowing cost expectations improved.
Smith & Nephew also moved higher, gaining 3.3% ahead of its half-year results, while InterContinental Hotels Group slipped 2.2% after mixed updates from US hotel operator Marriott International affected sentiment across the sector.
Clarkson reaches record high after shipping boost
On the FTSE 250, Clarkson was the standout performer, rising over 8% after the shipping services group said it expects annual performance to come in well ahead of market forecasts.
The company’s shares reached a record high after Clarkson reported its strongest-ever first-half profit, helped by disruption in global shipping routes caused by tensions around the Strait of Hormuz.
The company said the disruption initially pushed freight rates higher as customers increased hedging activity, before creating wider operational challenges as vessels and supply chains were affected.
US technology stocks recover
European markets recorded stronger gains, with France’s CAC 40 rising 1.2% and Germany’s DAX 40 adding 1.5%.
Across the Atlantic, US stocks started August on a stronger footing as technology shares drove markets higher ahead of a busy week of earnings and employment data.
The Nasdaq Composite led the advance, climbing 2%, while the S&P 500 rose 1.5% and the Dow Jones Industrial Average gained 1.1%.
Nvidia was among the biggest contributors, rising 3% and pushing its market capitalisation above $5 trillion as the artificial intelligence chipmaker reclaimed its position as the world’s largest listed company. The stock has now recovered 7% since last week’s sell-off following the Federal Reserve’s decision to leave interest rates unchanged.