Gold rallied to a fresh record, and the FTSE 100 climbed near its all-time high early on Monday, buoyed by gains for GSK and AstraZeneca as the two pharma giants make long-term strategic moves. It’s a weak dollar day, which is usually good for stocks.
AstraZeneca, sometimes the largest listed name on the London Stock Exchange, will list its shares directly in New York. It’s being billed as a simplification of its listing structure and will undoubtedly improve liquidity, but it’s also a bit of a knock-back for London. Shares climbed on the news: can it get the best of both worlds? It wants to improve visibility and tap the deeper markets of the US while retaining its British and Swedish DNA. I think there is probably relief that it’s not pursuing a primary listing in New York, but the decision is hardly a ringing endorsement of London. It reflects the fundamental, structural issues in the UK for the largest globally-oriented stocks: the depth and liquidity of its capital markets is falling short. Read more on Astra here
Meanwhile, Emma Walmsley will step down as CEO at GSK after nine years in charge. Shares rose on the news. Walmsley copped flak for years, but the stock has traded sideways for two decades, and things have been improving. The business looks well-positioned after some notable progress in the year or so, particularly the spin-off of Haleon and strong cancer drug sales. Tariff uncertainty should start clearing, too. Seems like both GSK and AZN are laying down some long-term markers for the future.
Shares traded higher early doors in London with the FTSE 100 up 0.7 per cent to 9,352, led by GSK and supported by the precious metal miners, who again rallied along with gold to nudge the blue chips to within a fraction of a record high. Meanwhile, shares were broadly higher in Europe. Wall Street closed higher on Friday, ending a tough weak on a more positive note as PCE inflation printed in line. Futures are pointing higher again.
Chancellor Rachel Reeves speaks today at the Labour Party conference –watch for plenty of market-soothing talk after last week’s rise in yields. Prime Minister Keir Starmer refused to rule out a VAT hike…it’s all about not being in hock to the markets.
US
Shutdown fears: If Congress fails to pass a spending bill by midnight on 30 September, parts of the US federal government will begin shutting down. It would be the fifth shutdown this century. Donald Trump is set to meet top Republican and Democratic Congressional leaders; it’s still not clear if these talks will avert a shutdown.
Markets tend to look through these events, but it could be trickier this time. Spot gold hit a fresh record high above $3,800/oz and silver cleared a fresh 14-year peak while the dollar sank and Treasury yields slipped. Ultimately, the budget impasse holds a mirror up to longer-term concerns about fiscal deficits and unsustainable spending. Something we know all about here in Britain. Sterling jumped after hitting its weakest in two months at the end of last week, while the yen eased back from the important 150 level.
Usually, markets ignore shutdowns – most last only a few days, and investors seem to take a long-term view of the situation, and the short duration of most incidents has little impact on company profits. The average length of shutdowns is eight days. In 12 of the 21 shutdowns, the S&P 500 has risen during the event.
It could be different this time… arguably, the main annoyance could be to delay the BLS’s nonfarm payrolls report, which is due on Friday. It is the main event this week after a slate of US employment data, with the Jolts job openings report, ADP payrolls data and weekly unemployment claims. A very weak jobs report for August sealed the deal on the Federal Reserve’s rate cut in September. But more recent data has been positive, clouding the market outlook on how many cuts the FOMC will make this year. August saw just 22,000 jobs added, well below forecast, while the unemployment rate edged up to 4.3 per cent. Markets expect just 39,000 jobs to be added in September, with unemployment steady from the month before.
For everything else you need to know this week, click here
By Neil Wilson, investor strategist at Saxo UK