FTSE retests last week's highs

The week has got off to a good start for markets, with the FTSE 100 rising 20 points.

6724 marked the FTSE’s high watermark last week, and renewed merger and acquisition activity is leading us back in that direction once again. Pfizer has laid its cards on the table in a bid for pharma-titan AstraZeneca, but so far the UK firm is being decidedly coy in its response. Traders have responded positively to the news, sending Astra’s shares another 15% higher to a fresh all-time high of around £47. Merger news is all the rage in the sector at the moment, but over-eager corporate executives should heed the words of GlaxoSmithKline’s chief executive, Sir Andrew Witty, who noted that major deals in the sector often result in firms acquiring unwanted elements along with the core business. This makes integration a longer and messier business. The current breakdown in the Publicis/Omnicom merger, which was supposed to be a done deal, is also a salutary lesson for those keen on making their name through empire building.

Friday was a disappointing end to the week for US markets, but futures have turned positive. With so much going on this week, including a Federal Reserve meeting and non-farm payrolls, there is much to play for. It seems the bulls are keen to get an early start and get some gains on the scoreboard before major macro events move in to provide potential disruption. There is also earnings season to consider, with Twitter and eBay the next big names to report. Ahead of the open, we expect the Dow Jones to start 95 points higher at 16,456.

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