Monday 14 September 2020 3:52 pm

US stocks jump but FTSE 100 stalls amid dealmaking frenzy

US stocks jumped but the FTSE 100 fell as investors digested a set of high-profile deals that would change the corporate landscape in the UK, US and China.

Wall Street’s tech-heavy Nasdaq index gained 2.1 per cent in early trading. The S&P 500 rose 1.7 per cent and the Dow Jones climbed 1.3 per cent.

London’s blue-chip index slipped 0.1 per cent to stand at 6,027 points in afternoon trading. The FTSE 250 of mid-cap stocks rose 0.5 per cent.

Read more: Nvidia to buy UK chip designer Arm for $40bn

Germany’s Dax fell 0.1 per cent into the red after rising in the morning. The continent-wide Stoxx 600 climbed 0.1 per cent.

Investors were digesting the news that short video app Tiktok has agreed on a “technology partnership” with US computer firm Oracle. The deal still needs approval, however, and US President Donald Trump is keen Tiktok sells its entire US business.

Meanwhile, US tech giant Nvidia has sealed the purchase of UK computer chip-maker Arm holdings from Japan’s Softbank for $40bn (£31bn). Softbank will become the biggest shareholder of Nvidia.

On top of this, US pharmaceutical firm Gilead is set to buy cancer drug-maker Immunomedics in a $21bn tie-up.

FTSE 100 lifted by vaccine trial restart

The FTSE 100 received an early boost from Astrazeneca and Oxford University restarting their coronavirus vaccine trials.

The trials were stopped last week after someone in the trial fell ill. But on Saturday Oxford said the trials had been deemed safe to continue.

“News that the trial is back on track is music to the ears of the market,” said Fiona Cincotta, market analyst at trading platform City Index. 

Yet there are no guarantees the Oxford trial will deliver. Astrazeneca’s share price was in fact lower in afternoon trading after the Trump administration moved to lower US drug prices.

And FTSE 100 investors’ worries over rising coronavirus and Brexit saw the index turn lower.

The pound recovered some of the ground it lost last week amid Brexit tension. It was up 0.6 per cent to $1.288, putting pressure on the FTSE 100 as it makes the overseas earnings of the indices’ firms worth relatively less.

Read more: AstraZeneca given green light to resume Covid-19 vaccine trials

Joshua Mahony, senior market analyst at trading platform IG, said: “News that the Astrazeneca vaccine trial has resumed has provided stocks with a lift. 

“Yet the Brexit vote should ensure volatility for the pound and FTSE. Meanwhile, a rise in cases globally dents sentiment around domestically-focused UK stocks.”

Wall Street recovers lost ground

Wall Street stocks had a torrid two weeks after investors second-guessed the recent tech rally, bringing the Nasdaq and S&P 500 back down to earth.

Yet both indices rallied strongly in morning trading, boosted by investor optimism about the blizzard of mergers and acquisitions.

Shares in tech giant Nvidia jumped 6.6 per cent after it cemented the Arm deal. Big tech stocks rallied strongly, driving the Nsdaq higher.

Read more: Softbank shares fall seven per cent on rising tech bets

“US markets have opened broadly higher, boosted by various M&A announcements that have come out over the weekend,” said Michael Hewson, chief market analyst at trading platform CMC Markets.

“Nvidia shares have moved higher on the back of this morning’s news.” Yet Hewson added: “Given the sway over the global chip market such a deal would give them global regulators may well have something to say about whether this deal goes through in its current form.”