Markets started the new week in positive spirits with both UK and European stocks higher on Monday morning. The weekend’s G20 summit was, as usual, more bureaucrat wine-quaffing than disruptive decision-making.
As US and European markets build on record and 2016 peaks respectively, the fear of missing out is becoming a driving force for investors. Whether stocks can maintain their recent run of good form is a function of earnings and liquidity. If this week’s corporate earnings continue to defy expectations and the Bank of Japan delivers new stimulus, markets should have what they need to keep gaining strength.
More merger activity in post-Brexit Britain is fuelling some of the gains on the FTSE 100 on Monday. Mid-caps were outperforming blue chips after online gaming companies 888 Holdings (LON:888) and Rank Group (LON:RNK) approached FTSE 250-listed high street bookie William Hill Plc (LON:WMH) about a possible takeover.
The merger is a sign of the times in betting markets where online companies are increasingly dominant. William Hill’s CEO James Henderson departing last week and a general pickup in merger activity post-Brexit has given Rank and 888 the opening they needed to make an offer. The argument put forward for the deal is the “complementary online and land-based operations.” The choice for William Hill stakeholders is between continuing to develop the company’s own online operations or turning over its own high street shops to the already well-established online presence of 888 and Rank.
FTSE-100 listed airlines EasyJet (LON:EZJ) and IAG (LON:ICAG) received little uplift after Ryanair (LON:RYA) skirted a profit warning but suggested the significant risks of Brexit meant the firm would shift focus away from UK airports.
US stocks look set to open slightly weaker as investors get set to digest another week of second-quarter earnings and prepare for the latest Federal Reserve policy decision on Wednesday.
USA pre-opening levels
S&P 500: 2 points lower at 2,173
Dow Jones: 11 points lower at 18,559
Nasdaq 100: 5 points lower at 4,661
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