French impasse fails to dent enthusiasm for European stocks / Image Source: Adobe

Stocks in Europe were in positive territory early Monday afternoon, as investors weighed up political developments in the UK, France and the US.

The UK is entering its first full week with a Labour government, after winning Thursday’s general election. Across the channel, France is contending with uncertainty and the prospect of a hung parliament.

The FTSE 100 index was up 14.85 points, 0.2%, at 8,218.78. The FTSE 250 was up 14.90 points, 0.1%, at 20,801.55, and the AIM All-Share was up 1.14 points, 0.2%, at 775.53.

The Cboe UK 100 was up 0.4% at 818.48, the Cboe UK 250 was up 0.2% at 18,135.05, and the Cboe Small Companies was up 0.4% at 17,092.89.

In European equities on Monday, the CAC 40 in Paris was up 0.3%, while the DAX 40 in Frankfurt was up 0.4%.

‘So much for the summer lull. Just as you thought the UK going to the polls was enough drama, political twists and turns in France and the US have put investors in a spin as they try to work out the lay of the land in those geographies,’ said Russ Mould, investment director at AJ Bell.

French voters have divided their legislature among the left, centre and far right, with no single political faction getting close to the majority needed to form a government.

President Emmanuel Macron had gambled on his decision to call snap elections giving France a ‘moment of clarification’ – but the outcome showed the opposite, less than three weeks before the start of the Paris Olympics focuses international attention on the country.

According to the second-round results tallied early on Monday, a leftist coalition surged to take the most seats in parliament. This has raised prospects of a hung parliament in France.

In the US, President Joe Biden heads back out on the campaign trail, desperate to salvage his re-election bid as senior Democrats meet to discuss growing calls that he quit the White House race.

The 81-year-old Democrat kicks off a gruelling week with two campaign rallies in the battleground state of Pennsylvania, before hosting the Nato leaders’ summit in Washington.

The pound was quoted at $1.2816 at midday on Monday in London, higher compared to $1.2806 at the equities close on Friday. The euro stood at $1.0829, virtually unchanged against $1.0828. Against the yen, the dollar was trading at JP¥160.94, down compared to JP¥161.70.

In corporate news, Carlsberg grabbed headlines on Monday, by securing two deals.

Britvic accepted a £3.3 billion takeover approach from Denmark’s Carlsberg.

The Hemel Hempsted-based soft drinks manufacturer said the deal values each Britvic share at 1,315 pence per share. This comprises 1,290p per share in cash and a special dividend of 25p.

The deal values Britvic, which makes Robinsons, J2O and Tango, at around £3.3 billion on a fully diluted basis with an implied enterprise value of around £4.1 billion.

Meanwhile, Marston’s said it had sold its 40% interest in Carlsberg Marston’s Ltd to a subsidiary of Carlsberg for £206 million in cash.

Wolverhampton-based pub chain and hotel operator Marston’s said the deal is an ‘attractive result’ for shareholders with the outcome earnings accretive.

Britvic rose 4.9%, whilst Marston’s jumped 16%.

Elsewhere in the FTSE 250 index, Hiscox jumped 13%.

An article from Insurance Insider reported that Hiscox has attracted takeover interest and could be set for a sale.

Insurance Insider noted that sources have said that Sompo and Generali are eyeing the firm.

Ocado rose 6.1%, after it announced an expansion to its partnership with Japanese retailer Aeon Next.

The Hatfield, England-based online grocer and technology licensor entered into an exclusive partnership in 2019 to develop the online operations of Aeon’s grocery business using the Ocado Smart Platform.

On London’s AIM, Biome Technologies surged 43%, after it warned full-year revenue will be ‘materially below current market expectations’.

Biome Technologies said a recovery in revenue at its Bioplastics division is now likely to occur later in 2024 than previously anticipated.

In addition, the company highlighted signs that the wider coffee packaging market in North America, to which Biome is exposed, is not as buoyant as in previous periods.

Stocks in New York were called lower. The Dow Jones Industrial Average, the S&P 500 index, and the Nasdaq Composite are all called down marginally.

Brent oil was quoted at $85.85 a barrel at midday in London on Monday, down from $87.85 late Friday.

Gold was quoted at $2,373.70 an ounce, lower against $2,385.01.

Still to come on Monday’s economic calendar, there is US consumer inflation expectations data.

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Issue Date: 08 Jul 2024