FTSE weaker on AstraZeneca merger talks and disappointing Chinese data

“The healthcare sector pulled the FTSE 100 down as AstraZeneca was marked lower on reports it had approached Gilead Sciences about a possible merger,” says Russ Mould, investment director at AJ Bell.

Investors are unlikely to welcome a large M&A deal at a time when both companies are trying to fight coronavirus as it could prove to be a distraction to management. The timing seems wrong when both companies have such important work to do.

“The FTSE 100 dipped 0.5% to 6,450 with AstraZeneca down 2.1% to £82.46. Also weighing on the index was weakness in rival pharma GlaxoSmithKline, down 1.1% to £16.19, and banking group HSBC which saw its shares fall 1.8%.

“Asian markets fared better than the UK and Europe with Japan’s Nikkei 225 up 1.4% and India’s S&P BSE Sensex rising by 0.5%. However, Hong Kong’s Hang Seng index was flat, and Shanghai’s SSE Composite only managed a 0.2% gain, with markets overall struggling to sustain recent optimism as new trade data disappointed.

“China’s exports fell 3.3% in May year-on-year while imports fell 16.7%, implying that consumption is still weak and the country’s recovery efforts from the pandemic are still somewhat fragile.

“On the commodities market, Brent Crude oil increased by 1.2% to $42.82 per barrel after oil producers’ cartel OPEC+ extended production cuts. That drove a 2.7% advance in Royal Dutch Shell to £14.63, putting the stock at highs last seen since early March."

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