London stocks are set to open higher on the first trading day of August, buoyed by falling oil prices and major corporate news.
FTSE 100 futures point to a gain of 25 points on Monday, following a strong July that saw the index climb 3.5% and peak at 10,989.45 on Friday.
The biggest corporate story of the morning centres on AstraZeneca (AZN), which is reportedly in merger talks with Bristol Myers Squibb that could create the world’s fourth-largest drugmaker by market value.
The Financial Times reported the potential deal, which would combine AstraZeneca’s £264.9 billion valuation with BMS’s roughly $133 billion market cap, pushing the combined entity close to $400 billion.
The deal structure remains unclear but would likely involve both cash and shares, according to the report, with AstraZeneca declining to comment on the discussions.
Significant obstacles remain, including both companies holding large cancer-drug portfolios with directly competing lung cancer treatments, alongside expected antitrust and political scrutiny on both sides of the Atlantic.
On the geopolitical front, oil prices dropped sharply after Donald Trump said planned US strikes against Iran had been cancelled, with Brent crude falling 5.1% to $83.41 a barrel.
Trump said he held off at the urging of Gulf allies Qatar, the United Arab Emirates and Saudi Arabia, adding that any proposed deal would include the “immediate, complete and total” reopening of the Strait of Hormuz.
Iranian officials said negotiations with Oman over a new shipping route through the strait were nearing completion, though Tehran stressed any agreement would not restore access to pre-conflict conditions.
Jim Reid at Deutsche Bank said markets had welcomed the prospect of a “diplomatic off-ramp”, with US Treasury yields falling by between three and five basis points.
In aviation, easyJet has given private equity group Castlelake until Friday 7 August to decide whether to make a firm takeover offer, aligning its deadline with that of rival bidder Apollo.
Apollo entered the race on 10 July, agreeing a possible £7.15-a-share cash offer with easyJet’s board, valuing the airline at approximately £5.4 billion.
The calmer start to August follows a turbulent July in which oil prices surged more than 20%, pushing up government borrowing costs and weighing heavily on investor sentiment.
A reassessment of the artificial intelligence trade also rattled technology stocks last month, with the Philadelphia Semiconductor Index falling more than 20% during the period.
Asian markets are trading mixed, with South Korea’s Kospi tumbling 5.2% and Japan’s Nikkei falling 1.2%, while India’s Sensex gained 0.8% and Hong Kong traded flat.