13th Jun 2016 16:02
LONDON (Alliance News) - Mounting concerns about the possibility of a UK exit from the European Union hit London-listed stocks Monday, while tech giant Microsoft made the headlines in the US with an agreement to acquire LinkedIn in a deal valuing the professional social network at USD26.2 billion.
The FTSE 100 ended the day down 1.2%, or 70.79 points, at 6,044.97. The FTSE 250 ended down 1.5%, or 253.11 points, at 16,574.34, and the AIM All-Share closed down 1.2%, or 9.2 points, at 730.42. In mainland Europe, stocks also ended lower. The CAC 40 in Paris down 1.9% and the DAX 30 in Frankfurt down 1.8%.
On Wall Street at the London equities close, the DJIA was flat, the S&P 500 down 0.1% and the Nasdaq Composite down 0.3%.
Microsoft will buy LinkedIn at USD196 per share in an all-cash transaction. The deal values LinkedIn at a 50% premium to its last closing share price of USD131.08.
LinkedIn will retain its distinct brand and independence, and will continue to be led by Chief Executive Officer Jeff Weiner, who will report to Microsoft Chief Executive Officer Satya Nadella. Microsoft shares traded down 2.6%.
In London, an empty economic calendar meant focus was sharply on the UK's referendum on EU membership next week. The latest poll from YouGov showed the Leave campaign edge ahead of Remain before the June 23 vote, whilst a new poll from the Brexit-backing Bruges Group showed a significant lead for Leave.
The new findings reinforced poll results reported by the Independent on Friday showing a 10-point lead for Leave.
A poll by YouGov for the Sunday Times showed a one-point lead for the Leave campaign, with 43% saying they will back Brexit compared to 42% backing Remain and 11% undecided. This is a reversal from the previous poll, which had 43% for Remain, and 42% for Leave.
Meanwhile, polling commissioned by Bruges Group showed a much bigger shift towards Brexit, with 52% of those polled planning a Leave vote and only 33% choosing to Remain, with 15% still undecided.
"The pre-referendum tantrum appears to be setting in among investors. The parallel with the Scotland vote in 2014 is eerie; as the vote looms markets have become increasingly jittery, but with IG clients still expecting a 'Remain' victory (with the binary currently on 68%), it is still highly plausible that the market is preparing for a pleasing relief rally should the UK opt for the status quo," said Chris Beauchamp, senior market analyst at IG.
The threat of a Brexit caused the pound to drop to a two-month low against the dollar early Monday, at USD1.4113. However, in the afternoon, sterling spiked and traded at USD1.4262 at the London stock market close, but still lower than the USD1.4336 seen at the close on Friday.
The euro moved higher against the dollar, trading at USD1.1295 at the close Monday versus USD1.1274 on Friday.
The price of gold gained support with investors flocking to the safe haven asset amid the Brexit fears. The precious metal was quoted at USD1,283.52 an ounce at the London equities market close on Monday, versus USD1,268.40 at the same time on Friday.
This saw gold miners Fresnillo, up 1.6%, and Randgold Resources, up 1.1%, closed among the best FTSE 100 performers, while mid-cap peers Centamin and Acacia Mining closed up 2.7% and 0.5% respectively.
Brent oil dipped below the USD50 a barrel mark briefly, but at the London equities close traded at USD50.62 a barrel, down versus USD50.88 at the close Friday.
In UK merger and acquisition news, engineering software company AVEVA Group confirmed it received a revised, conditional proposal from French industrials group Schneider Electric, after a previous deal between the two collapsed in December last year.
AVEVA said it received a conditional proposal from Schneider to combine AVEVA with Schneider's software business in exchange for new AVEVA shares to be issued to Schneider Electric. Similar to the previous discussions, the proposal also includes a "significant cash payment", which would be distributed to AVEVA's current shareholders upon completion.
The proposed transaction would constitute a reverse takeover, and if consummated would result in Schneider Electric owning a majority stake in the enlarged AVEVA, which is intended to remain listed on the London Stock Exchange.
As such, AVEVA's shares have been suspended from trading, and will recommence at either the publication of updated financial information on Schneider's software business, or confirmation from AVEVA it is not proceeding.
Before they were suspended, shares in AVEVA were leading the FTSE 250, up 5.0% following a report by the Financial Times on the potential deal.
Inmarsat closed the day up 1.0%. The satellite communications company said it entered a strategic partnership with Australia-based satellite services provider SpeedCast International to deliver Inmarsat's Fleet Xpress maritime broadband service.
Under the partnership, SpeedCast will integrate the Fleet Xpress service within its own maritime services portfolio, and over the next five years will roll out Fleet Xpress to around 2,000 vessels. Inmarsat said the two-way partnership will enable Inmarsat to use SpeedCast's "unrivalled" global Ku-band satellite network for its Xpress link customers.
G4S was one of the worst performers in the FTSE 250, down 5.0%. The security services company said Omar Mateen, the man who perpetrated a mass shooting in a nightclub in Florida early Sunday, killing 50, had been employed by the company since September 2007. G4S said that Mateen was off-duty at the time of the incident.
"Mateen underwent company screening and background checks when he was recruited in 2007, and the check revealed nothing of concern. His screening was repeated in 2013 with no findings," the company said in a statement.
In the economic calendar for Tuesday, Japanese industrial production is at 0530 BST and UK inflation data is at 0930 BST, just before eurozone industrial production and employment change at 1000 BST. US retail sales follow at 1330 BST, business inventories at 1500 BST and API crude oil stocks at 2130 BST.
The highlight in the UK corporate calendar is full-year results from FTSE 100-listed industrial equipment rental company Ashtead Group. There are also full-year results from transport operator FirstGroup, safety, health and environmental technology company Halma and multi-utility provider Telecom Plus.
There are also interim results from housebuilder Crest Nicholson Holdings and a trading statement from fashion retailer Ted Baker.
By Neil Thakrar; [email protected]; @NeilThakrar1
Copyright 2016 Alliance News Limited. All Rights Reserved.
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