Traders have stumbled back to their desks this morning after an indulgent long weekend of chocolate consumption. Whilst the economic day has gotten off to a slow start, there has been bid activity that has seen the premier index rise to its highest level in around two weeks. Last week’s price action witnessed a significant turnaround in market direction, as earnings season provided indices with the positive momentum needed to halt what had looked to be a wave of selling.
Reports in the weekend press suggested Pfizer had been interested in UK pharma giant AstraZeneca. The news has propelled AstraZeneca to the top of the leaderboard this morning, with sector peers GlaxoSmithKline and Shire following along in its wake. AstraZeneca briefly revisited £41 a share this morning, the highpoint of its recent rally, but since then the shares have dropped back. However, the development pipeline of drugs that would come with any acquisition of AstraZeneca means Pfizer may not be easily deterred. A purchase of AstraZeneca would make sense for Pfizer, given an overseas acquisition would avoid the need to repatriate assets back to the US.
The pace of earnings reports becomes frenetically busy this week, with many major names updating the market. However, the big events will be Facebook and Apple, as the tech giants look to recover from the momentum selloff we witnessed before Easter.
US indices have staged an impressive bounceback from the mid-April lows, with the Dow Jones seemingly back on course to retarget previous highs. Ahead of the open, we expect the Dow to start 18 points lower at 16,431, after yesterday’s modest gains.