The FTSE 100 rose on Monday as M&A activity and optimism around the banking sector helped ignite optimism in UK equities.
The FTSE 100 was 0.1% higher at the time of writing, having traded as high as 7,916 earlier in the session.
Upbeat results from US banks on Friday improved the mood early on Monday as the banking crisis saga faded into the rearview mirror.
In addition to banking optimism, several M&A stories suggested business leaders were once more becoming confident enough to take additional risks.
“The FTSE 100 made brisk progress on Monday as a solid start to the US reporting season and a sprinkling of M&A activity helped buoy sentiment,” said AJ Bell investment director Russ Mould.
“Given all the drama around the sector in recent weeks it felt important that the big American banks which reported last Friday beat market expectations.
“While corporate announcements from the US are likely to continue to grab the headlines, a lot of the spotlight in macroeconomic terms is likely to be drawn by China with a raft of data set to be published imminently. For a FTSE 100 index teeming with resources stocks, this could have a big bearing given China is such a rapacious consumer of commodities.”
M&A
Two M&A stories had tongues wagging on Monday; Apollo’s approach for THG and the attempt by Sega to takeover Rovio and bring gaming titles such as Sonic and Angry Birds under one roof.
THG shares flew on the news, gaining more than 38% to 87p at the time of writing. However, THG shares are down substantially since their 500p IPO in 2020, and private equity group Apollo clearly feels they can do a better job taking the company private.
Sega’s approach for Rovio has little implications for UK markets apart from raising hopes some of the UK’s well-valued prospects may soon receive approaches from interested parties.
Although Sega’s move comes at a time the Angry Birds title moves into maturity, Rovio’s revenue has grown over the past two years representing a loyal customer base.
“Sega Sammy Entertainment clearly believe there is life in the old birds yet, and are confident that there could be more eggs nesting at Rovio which are yet to hatch. Angry Birds flew onto the gaming scene 14 years ago, attracting swarms of mobile gamers who became obsessed with the catapult characters, including the then UK Prime Minister David Cameron,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
FTSE 100 top risers
Ocado was the FTSE 100’s top riser as the online retailer bounced off support at 500p. Ocado shares were up 2.7% at the time of writing.
RS Group was not far behind, adding 2.2% to 867p, after RBC analysts upgraded the electronics group to ‘outperform’ with 1,000p target.
FTSE 100 top fallers
After a strong rally on Friday, FTSE 100 banks were weaker on Monday and the Barclays was the top faller, down 2.5%. Hargreaves Lansdown fell 0.5% after Barclays analysts cut their price target to 1,170p from 1,240p.