The UK may be something of a bystander amid the AI euphoria, but renewed M&A activity may be back on the agenda. US lender Castlelake confirmed that it was considering an offer for easyJet, although the complexity of the deal and the apparently thin premium to the current price seem to be significant hurdles.
The move would capitalise on a share price which has fallen by 31% over the last year, with the company flitting in and out of the . In addition, EasyJet (LON:) now has the traditionally loss-making first half of its year out of the way, while its holiday business continues to grow at pace, underlining its potential attractiveness. Such speculation was enough to lift the shares by around 11% at the open, and any further developments will now be in the spotlight.
Elsewhere, the premier index drifted as gains for Halma following a broker upgrade were more than offset by a broad markdown of stocks, with the defence sector taking a breather after recent gains, weighing on the prices of Babcock, Rolls-Royce and BAE Systems. Nonetheless, the FTSE 100 remains ahead by 4.5% so far this year, even if the pace of progress has slowed significantly as global investors have chosen to chase strong growth stocks elsewhere.
US markets rounded off the month in fine fettle, with each of the main indices capping strong gains and closing at new record highs.
For equity investors, the conflict has apparently become something of a sideshow. Bond and oil investors may have a different view, but the power of technology has brushed any inflationary concerns aside. This comes after another weekend which did little except confirming the ongoing impasse. The initial signs on Friday were promising, with an apparent agreement to extend the ceasefire by 60 days, but this has yet to be confirmed. In addition, there were reports that the US had struck Iranian targets with reciprocal moves against an American air base.
In any event, the fragility of the ceasefire is compounded by the two major sticking points which show no signs of resolution, namely Iran’s nuclear capability and the immediate and full reopening of the Strait of Hormuz. The rose again overnight, although at the current level of around $94 per barrel it is far from recent highs, although still some 33% higher than at the start of the conflict.
Elsewhere, the broadening of the AI trade has resulted in many other parts of the “technology stack” now being drawn into the fresh wave of optimism. Laptop maker Dell Technologies (NYSE:) saw its shares spike by 33% after reporting a quarterly beat on both top and bottom lines, alongside raising its guidance for the full year, while the likes of Micron Technology (NASDAQ:) and Qualcomm (NASDAQ:) took their gains for the month to 90% and 40% respectively.
The renewed tide of optimism has lifted all boats, with record closing highs for the , and which have now risen by 6.2%, 10.7% and 16% respectively in the year to date.
Asian markets were also high on AI enthusiasm, with markets in Japan and South Korea also hitting new records. The surpassed the 67000 level for the first time, with poster child SoftBank rising by more than 9% after itself reaching new records during the week. In South Korea, Samsung Electronics also spiked by more than 9%, while a separate report revealed that the country’s exports surged by 53% in May to almost $88 billion, underneath which were gains of 169% for semiconductors and 291% for computers.