3rd Aug 2026 17:05
(Alliance News) - The FTSE 100 underperformed European peers on Monday as heavy falls in AstraZeneca outweighed more optimistic noises in the Middle East.
The FTSE 100 index closed down 10.35 points, 0.1%, at 10,857.70.
The FTSE 250 ended up 249.75 points, 1.0%, at 24,224.77, while the AIM All-Share closed up 6.06 points, 0.8%, at 768.61.
The Cboe UK 100 was down 0.3% at 1,077.97, the Cboe UK 250 was 0.9% higher at 21,037.13, and the Cboe Small Companies was down 0.1% at 18,664.93.
Index heavyweight AstraZeneca, the second largest company in the FTSE 100 by market value, slumped 9.0% as the market gave a cautious reaction to reports of merger talks with US peer Bristol-Myers.
On Sunday, the Financial Times reported that the two pharmaceutical companies recently held talks about a USD400 billion merger.
If the deal went ahead, it would create the world's fourth largest pharmaceutical firm by market value, only trailing Eli Lilly, Johnson & Johnson and AbbVie.
Jefferies analyst Michael Leuchten said a deal "would be more than a head scratcher," adding: "Given the strength of AstraZeneca's growth and innovation profile, we are a bit perplexed by the news. Of course financial accretion can look good and maybe more cash generation would allow for more R&D.
"But if there is one company that doesn't need financial engineering, it's AstraZeneca in our view."
Bank of America analyst Sachin Jain suggested that investors could perceive a potential merger as a signal that AstraZeneca "lacks confidence" in its own pipeline.
The hefty falls in AstraZeneca kept a lid on the FTSE 100, which missed out on the gains seen elsewhere in Europe and the US which were spurred by falling oil prices.
In European equities on Monday, the CAC 40 in Paris closed up 1.2%, while the DAX 40 in Frankfurt ended up 1.5%.
Stocks in New York were higher. The Dow Jones Industrial Average was up 1.0%, the S&P 500 index was 1.1% higher and the Nasdaq Composite advanced 1.8%.
Brent oil for October delivery traded lower at USD83.92 a barrel on Monday afternoon, from USD90.12 late Friday.
The falls came after US President Donald Trump said he was holding off on new attacks on Iran.
Trump, who had last week threatened severe attacks on Iran, said Saturday that the "perimeters" of a deal were present, although Iran officials denied that there were ongoing talks with the US.
Kathleen Brooks, research director at XTB, said the oil price falls will "ease inflation fears and could also act as a dampener on bond yields, which rose sharply last week, especially at the long end."
The yield on the US 10-year Treasury narrowed to 4.69% on Monday from 4.74% on Friday. The yield on the US 30-year Treasury fell to 5.23% from 5.27%.
In the UK, figures showed growth in the manufacturing sector continued in July, although the headline purchasing managers' index eased to a four-month low.
The S&P Global UK manufacturing PMI slipped to 51.9 points in July from 52.5 in June. The reading came below the flash reading of 52.8 points for July.
The pound traded at USD1.3425 on Monday afternoon, down from USD1.3463 at the equities close on Friday. Against the euro, sterling fell to EUR1.1669 from EUR1.1702. The euro stood little changed at USD1.1505 against USD1.1503.
Against the yen, the dollar was lower at JPY156.78, compared to JPY159.31, after Trump confirmed Washington had intervened alongside Japan to support the Japanese currency, describing the move as "a signal of friendship" that would benefit both the US and the global economy.
ING analyst Chris Turner explained that forex intervention can "smooth disorderly market conditions and alter market psychology at the margin, but its primary function is typically to buy time rather than engineer a lasting shift in trend."
"The success of this latest intervention effort will depend less on how many yen authorities purchase and more on whether US economic data soften sufficiently to prevent further Fed tightening," he added.
"Ultimately, intervention can create an inflexion point, but it cannot overturn fundamentals. A sustained move lower in USD/JPY will require narrower US-Japan rate differentials and a softer US economic backdrop. Without that, even coordinated intervention risks being remembered as another attempt to slow the dollar's rise rather than reverse it," he continued.
Back in London, lower bond yields gave housebuilders a boost with Barratt Redrow up 3.8%, Persimmon up 2.2% and Vistry up 8.0%.
Smith & Nephew advanced 3.3%, ahead of half-year results on Tuesday.
JPMorgan analyst David Adlington said sell-side and buy-side expectations heading into the quarter are "low" with a "sizeable part of the market expecting a downward adjustment to FY26 guidance."
However, Adlington noted that so far this reporting season commentary elsewhere in the sector has generally been more upbeat.
Elsewhere, InterContinental Hotels Group fell 2.2% after mixed results and guidance from US peer, Marriott International.
On the FTSE 250, Clarkson climbed 9.0% as it said it expects full-year performance to be "materially" ahead of market expectations following an exceptional first half.
The optimistic outlook sent shares in the London-based shipping services company to an all-time high.
Clarkson said it reported a record first-half profit generated from strong trading conditions, accentuated by turbulence in the Strait of Hormuz, the key shipping route disrupted by the Middle East war.
"This disruption reshaped trade flows, driving an initial surge in freight rates and elevated hedging activity as clients sought to manage price and freight exposure. This was followed by a period of operational dislocation, with vessels repositioned and supply chains disrupted," Clarkson explained.
Gold was lower at USD4,036.96 an ounce on Monday from USD4,041.68 on Friday.
The biggest risers on the FTSE 100 were Barratt Redrow, up 11.20p at 304.50p, Metlen Energy & Metals, up 1.68p at 47.90p, Rentokil Initial, up 12.00p at 356.80p, Smith & Nephew, up 38.50p at 1,197.00p and ICG, up 61.00p at 1,949.00p.
The biggest fallers on the FTSE 100 were AstraZeneca, down 1,132.00p at 11,500.00p, IG Group, down 89.00p at 1,371.00p, Coca-Cola HBC, down 126.00p at 4,884.00p, British American Tobacco, down 104.00p at 4,466.00p and Intercontinental Hotels Group, down 3.55p at 157.15p.
Tuesday's economic calendar has the US trade balance and factory orders data, plus the job openings and labour turnover survey.
Tuesday's UK corporate calendar has half-year results from oil major BP, Asia-focused lender HSBC and medical technology company Smith & Nephew.
By Jeremy Cutler, Alliance News reporter
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Copyright 2026 Alliance News Ltd. All Rights Reserved.
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