The FTSE 100 gave up ground on Monday morning but outperformed more severe selling across Europe before a broad rally saw most major European indices turn positive.
The FTSE 100 was down 0.17% at 7,014 in early trading on Monday whilst the German DAX and French CAC were down 0.65% and 0.74% respectively.
By lunch time, the FTSE 100, DAX and CAC were all in positive territory.
“There may still be 27 days to go until Halloween, but the fear factors are out in force and investors are not in the mood to be spooked,” says Russ Mould, investment director at AJ Bell.
A culmination of rising energy prices, prospects of higher interest rates and ongoing concerns around Evergrande dented investor optimism.
“Inflation, the energy crisis, supply chain issues, economic growth stuttering, concern that interest rates could go up sooner rather than later and China’s ongoing Evergrande debt problem remain at the forefront, clouding investment decisions and muddying the waters for anyone trying to make money on the market,” said Mould.
Central banks have began to hint at tighter monetary policy which has the potential to derail equities if markets perceive any action to be a policy mistake.
“The FTSE 100 fell 0.2% to 7,012, dragged down by weakness in banks and BT, the latter following media reports that it is set to face growing competition from Virgin Media which is reported to be in talks to receive investment from Sky for its full-fibre broadband rollout.”
Morrisons takeover
Morrisons shares eased slightly after the group received final offers from US parties. CD&R upped their offer to 287p which surpassed a final offer from Fortress of 286p.
“The lively bidding war for Morrisons has come to an end, with CD&R trumping Fortress at the final hurdle. The larger offer values Morrisons at a heady £7.1bn, and is the offer recommended by the Board. That price sounds steep but is a reflection of the significant growth opportunities ahead. In particular, the supply and delivery partnerships with Amazon will have caught the attention of potential buyers,” said Sophie Lund-Yates at Hargreaves Lansdown.
Sainsbury’s and Tesco shares were the FTSE 100 top risers on Monday as investors positioned for the possibility of further buyout activity in the sector.