Shire leads FTSE lower

In mid-morning trading the FTSE 100 is sharply lower once more, with Shire Pharmaceuticals providing the catalyst.

Shire headquarters
Source: Bloomberg

Any hope of today seeing a continuation of yesterday’s small gains was wiped out by the news that Shire’s deal with AbbVie was under threat of being undone. The news took around 30 points off the index, representing the majority of early losses, but the selling gathered pace as the morning continued.

Fellow tax-inversion takeover target AstraZeneca was in retreat as well, but the 3.5% loss was as nothing to the 25% slump in Shire that wiped out all the gains made since mid-June. Astra’s deal looks equally uncertain now, since the loss of tax benefits will result in Pfizer lowering its price, diminishing the attractiveness of the deal to Astra shareholders.

One spot of good news was the drop  in the UK unemployment rate to a fresh post-crisis low. Even average earnings rose faster than expected and with inflation falling UK consumers can feel marginally more confident about the future. Sterling’s bounce on the news was short-lived however, with the impact of yesterday’s inflation data still weighing heavily.

The rush to buy up US Treasuries is still the driving force at present, while gains in US indices are still proving to be fleeting.

Intel’s earnings helped to stabilise the situation late yesterday evening, but with Europe in full retreat again US stocks are unlikely to escape unscathed. Unguarded talk about QE4 is now doing the rounds, which is an indication of how nervous investors are rather than any actual indication that the Federal Reserve is moving in that direction. After five years, the economic recovery is still not self-sustaining, a fact that should be more worrying than any drop in oil prices or the fresh woes in the eurozone. 

Ahead of the open, we expect the Dow Jones to start 18 points lower  at 16,297.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Find articles by analysts

Een artikel zoeken

Form has failed to submit. Please contact IG directly.

  • Ik wens per e-mail informatie van IG Group bedrijven te ontvangen over handelsideeën en IG's producten en diensten.

Voor meer informatie over hoe wij uw gegevens mogelijk kunnen gebruiken, bekijkt u ons Privacy- en toegangsbeleid en onze privacy website.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.