London Ends Lower After a Mixed Session
The FTSE 100 closed 27 points lower at 10,651, reversing an earlier advance as investors shifted attention back toward technology shares in the United States and parts of Asia. The session began with London near four-month highs, but gains faded as blue-chip weakness in consumer, healthcare and industrial names outweighed support from financial stocks.
Tech Momentum Returns Across Global Markets
IG chief market analyst Chris Beauchamp said: “It has been a lugubrious start to the week for stock markets, particularly in the US and the UK, but things have begun to liven up, particularly for last week’s also-rans the Nasdaq and the Nikkei 225.”
He added: “Jitters about tech and normal rotation action within sectors took the wind out the rally for both indices, but they are leading the way once again in afternoon trading, an indication that the rally might be poised for another leg higher.”
Financials Support the FTSE
Financial stocks were among the strongest areas of the London market. IG Group, St James’s Place and LSEG gained around 2%, while Prudential, Barclays, Aviva, Standard Chartered, HSBC and Lloyds also advanced between 0.5% and 1.5%.
AB Foods Leads the Fallers
Primark owner AB Foods was the weakest FTSE 100 performer, falling 3.4%. Compass, Fresnillo, Games Workshop and AstraZeneca also weighed on the index. Earlier in the day, declines of more than 1% in AstraZeneca, Rolls-Royce, Compass, Coca-Cola Europacific, SSE and IHG had pushed the FTSE further into negative territory.
Airlines Gain on Fuel Cost Optimism
Airline shares found support from improving sentiment toward the sector. IAG rose more than 1%, while easyJet gained almost 10% to 610p, still below Castlelake’s potential offer price of 690p. Jet2 added 3.8%. UBS said European airline shares may have further upside as lower fuel costs and resilient travel demand improve earnings prospects.
Microsoft Falls After Job Cuts
Microsoft shares dropped 1.7% after the company told employees it would cut around 4,800 jobs, equal to 2.1% of its global workforce. The move forms part of a restructuring focused on its biggest growth priorities. In a memo, chief people officer Amy Coleman said the business “is changing because the world around it is changing,” and that Microsoft needed to “adjust resources and roles and shift how we operate”.
Nasdaq Rises While Dow Slips
US markets opened mixed. The Nasdaq rose 0.9%, the S&P 500 gained 0.4%, while the Dow Jones slipped 0.1% after closing at a record high before the Independence Day holiday. Chip and storage stocks led the Nasdaq higher, with Western Digital and Seagate up more than 5%, while Broadcom, ARM Holdings and AMD also gained. Intel, ASML, Micron, Texas Instruments and Applied Materials advanced as well.
Defensives Weigh on the Dow
The Dow was held back by weaker defensive names. Nike fell more than 3%, while healthcare stocks Johnson & Johnson, Merck and Amgen also moved lower.
Novartis Buys UK Biotech Myricx Bio
Novartis agreed to acquire British biotech company Myricx Bio in a deal worth up to $1.5 billion. The Swiss drugmaker will pay $1.1 billion upfront, with another $400 million linked to milestones. Myricx is developing antibody-drug conjugates designed to deliver cancer-killing treatments directly to tumour cells and help overcome resistance to existing therapies.
Myricx was spun out of Imperial College London’s Department of Chemistry in 2019 and co-founded with the Francis Crick Institute. It received £4.5 million in seed funding from Brandon Capital and Sofinnova Partners, followed by a £90 million funding round in 2024. Fiona Marshall, president of biomedical research at Novartis, said there remained “a clear need for new payload mechanisms to overcome resistance and expand their impact for patients”.
ITV Agrees Sale of Broadcast Arm to Sky
ITV reached an agreement to sell its media and entertainment business to Sky for up to £1.6 billion. The transaction includes ITV’s television channels, ITVX and shows such as Coronation Street, Emmerdale, Love Island and I’m a Celebrity…Get Me Out of Here!. Sky, owned by Comcast, will pay £1.2 billion in cash at completion.
The total value includes Sky’s Love Productions business, valued at £200 million, plus contingent cash consideration of up to £200 million payable in the second half of 2028, depending on total advertising revenue performance in 2027 and other trading adjustments. ITV plans to return around £950 million to shareholders.
Analysts See ITV Deal as Fair
Deutsche Bank analyst Nizla Naizer said the £1.4 billion to £1.6 billion valuation broadly matched her view of the business and implied 5.6 to 6.4 times expected 2025 earnings. ITV also announced a long-term strategic partnership between ITV Studios and the business sold to Sky, including a content supply agreement with a minimum spend commitment of £2.1 billion from 2028 to 2032.
Dan Coatsworth, head of markets at AJ Bell, said ITV splitting itself in two had been discussed for years, “but no-one thought it was possible”. He said it “looks like a win-win situation for both ITV and Sky and is the biggest shake-up of the UK’s media landscape in decades”.
US Jobs Data Shapes Rate Expectations
Investors continued to digest US labour market data after Friday’s public holiday. Non-farm payrolls increased by 57,000 last month, below expectations, while the previous two months were revised lower. Kathleen Brooks at XTB said: “Combined with the ongoing decline in the oil price, Brent crude is back below $72 per barrel, this has dramatically reduced the chance of a Fed rate hike in the near term, although cuts also appear to be off the table.”
She added: “After the soft labour market data, the FOMC minutes this week will be worth watching as the battle between FOMC members who are worried about sticky inflation, including the new governor Kevin Warsh, and those who are worried about the jobs market, continues to play out.”
Close Brothers Hit by Downgrade
Close Brothers fell almost 9% after RBC Capital Markets downgraded the stock following developments in the motor finance redress case. The Upper Tribunal agreed last Thursday to hear judicial review challenges to the Financial Conduct Authority’s proposed scheme. Analyst Benjamin Toms cut the rating to sector perform from outperform and reduced the price target to 470p from 625p.
UK Banks Await Capital Rule Review
Britain’s largest banks could receive more clarity this week on capital rules that may free up cash for lending and shareholder returns. The Bank of England’s Financial Policy Committee is due to publish its half-yearly Financial Stability Report on Tuesday at 10.30 am. Investors will watch for updates on the common equity tier one ratio and the leverage ratio.
Construction PMI Remains Weak
The UK construction PMI rose only slightly to 38.4 in June from 38.2 in May, remaining below the 50 level that separates growth from contraction and under the consensus forecast of 40. Tim Moore, economics director at S&P Global Market Intelligence, said: “The downturn in UK construction output lost some intensity in June amid a softer reduction in commercial building work.”
He added that house building and civil engineering declined more sharply than in May, with civil engineering seeing its weakest performance since the start of the pandemic. Rob Wood at Pantheon Macroeconomics said the headline activity index was consistent with output falling by around 3.0% over three months, though recent PMI signals have undershot actual construction activity.
AI Demand Lifts Chip Sentiment
Samsung’s confidence in artificial intelligence demand supported the chip sector. A senior executive reportedly told staff: “This year’s profit will exceed the cumulative profit generated over the past 40 years since we entered the semiconductor business.” Samsung is expected to report second-quarter operating profit of 84.6 trillion won, equivalent to about $55 billion or £41 billion.
World Cup Win Boosts High Streets
England’s World Cup victory over Mexico lifted overnight footfall on UK high streets. MRI Software data showed a 143.6% year-on-year increase between midnight and 6 am on Monday as fans gathered to watch England reach the quarter-finals. Jenni Matthews said market towns and historic towns “were the star players, suggesting supporters opted to stay local and soak up the atmosphere in nearby pubs, bars and community venues”.
Hospitality shares also rose, with Wetherspoons up 2.2% and Mitchells & Butlers and Young’s both gaining just under 2%. Susannah Streeter at Wealth Club said: “England’s stunning World Cup victory over Mexico will be seen as a big win for the hospitality industry, with bars and pubs set to cash in further on the team’s progress as fans celebrate.”
European Stocks Reach Records
European shares advanced earlier in the session. Italy’s FTSE MIB rose 0.6% and Germany’s DAX gained 0.4%, both reaching fresh record highs. France’s CAC 40 added 0.6%, while Spain’s IBEX fell 0.3%. The pan-European Stoxx 600 gained 0.2% and touched a new all-time high.
Neil Wilson at Saxo said: “Stocks keep grinding higher with European shares at records this morning on the back of a positive week.” He added that investors were now turning to earnings, with Samsung due to report tomorrow and Wall Street earnings season beginning on July 14 with Citigroup and JPMorgan.
Sentix Confidence Improves
Euro zone investor confidence improved more than expected in July, with the Sentix index rising to -3.1 from -13.4. This marked the third consecutive monthly improvement and beat forecasts of -10.0. Sentix said: “The slump in sentiment caused by the Iran conflict is slowly being overcome. The German government’s latest reform efforts are having an impact.”
CBI Survey Shows Financial Services Slump
A CBI survey showed financial services activity weakened sharply last quarter following the outbreak of war in the Middle East. Profitability fell to -65% in June from +38% in March, while sentiment deteriorated to -34% from +31%. Staff headcount rose for the first time in two years and IT spending plans reached their strongest level since 2021.
Louise Hellem, CBI chief economist, said: “The political transition underway must not slow delivery of the government’s Financial Services Growth and Competitiveness Strategy at a time when activity has deteriorated and firms are facing a more uncertain outlook.”
She added: “Maintaining momentum on reforms – including continuing work with the FCA and PRA to deliver a more growth focused regulatory framework – will be essential to strengthening the UK’s competitiveness and supporting investment.”
Other Corporate Updates
easyJet’s board said it “would be minded to recommend” a new and improved takeover proposal from Castlelake if a firm offer is made. The investment firm submitted a fifth proposal on Saturday to buy the shares it does not already own for 690p in cash, up from 650p a week and a half earlier. Avon Technologies also won a $10.8 million order to supply respirators to a European NATO member through the NATO Support and Procurement Agency framework.
Oil, OPEC and Market Outlook
Brent crude traded around $72.30 in the morning after OPEC+ announced a 188,000 barrel-per-day output increase, continuing the unwinding of restrictions introduced in 2023. Ipek Ozkardeskaya at Swissquote said the move comes as talk of excess supply returns and Middle East tensions ease, keeping pressure on oil prices.
She said: “So, the new week starts on a mixed note. European futures are pointing to a cautious start, while tech-heavy US futures are leading gains before the European open, despite mixed sentiment toward tech in Asia.”
Earnings Become the Next Test
FactSet data showed that 111 S&P 500 companies had issued second-quarter EPS guidance, with 48 negative updates and 63 positive updates. The number of positive updates is above both the five-year average of 44 and the 10-year average of 41. Ten of the eleven S&P 500 sectors are expected to post year-on-year earnings growth, led by energy, information technology and materials, while healthcare is expected to decline.
Wilson said: “Earnings growth has been central to the market’s broad advance this year.” He added that expectations are so strong that “the market seems priced for perfection”.
