London midday: Stocks flat as AstraZeneca tumbles on merger report; oil prices slide

(Sharecast News) - London stocks were flat by midday on Monday, held back by heavy losses for AstraZeneca, and with oil giants BP and Shell under the cosh as oil prices fell on optimism over fresh US-Iran negotiations.

The FTSE 100 was steady at 10,863.50, erasing earlier small losses, while Brent crude was down 4.9% at $83.62 a barrel and West Texas Intermediate was 6% lower a $79.61.

Prices fell back as Donald Trump said talks with Iran will resume on Monday after the US refrained from carrying out new strikes against Tehran over the weekend.

The US President said on Truth Social that at the request of Iran and other Middle Eastern countries, he held off on the biggest attack "since World War II", "subject to being able to rapidly make a deal". A deal would include the "immediate, complete, and total opening of the Hormuz Strait, and an end to Iran's nuclear threat," Trump said.

Speaking to reporters on Air Force One on Sunday, he said: "They knew the extent of the attack because they saw it forming.

"We're talking to them in the form of a negotiation. It begins tomorrow afternoon."

Iranian media denied that Tehran had asked for the strikes to be called off, while Iran's foreign ministry said it was not in discussions with the US but rather talking to Oman about establishing a temporary safe route through the Hormuz Strait.

Russ Mould, investment director at AJ Bell, said: "News Washington has cancelled strikes and will resume talks with Tehran, apparently after pressure from its allies in the Gulf, has seen Brent crude oil drop below $84 per barrel. But the market has been here before and a more concerted fall in crude and in government bond yields will require greater evidence that a lasting resolution can be forthcoming this time round."

On home shores, a survey showed that growth in the manufacturing sector eased in July.

The S&P Global manufacturing purchasing managers' index fell to a four-month low of 51.9 from 52.5 in June, coming in below the flash estimate of 52.8. Still, it was the ninth month in a row that the index was above the 50.0 mark that separates contraction from expansion.

Rob Dobson, director at S&P Global Market Intelligence, said: "July brought further encouragement for the UK manufacturing sector, as rates of growth in output, new orders and new export business all accelerated. The increase in production was the fastest in almost two years, as improving market conditions led to better hit rates in securing new contracts.

"There was also positive news on the price and supply fronts. The rate of increase in input costs slowed sharply to a five-month low as supply chain delays eased to their lowest since the outbreak of the war in the Middle East. Better resource availability and supplier reliability will hopefully provide further respite to squeezed supply chains in the months ahead, though developments in the Middle East will be key to supply and price developments in the coming weeks.

"These positive price and demand trends were not fully reflected in the labour market, with the upturn in manufacturing hirings grinding to a near halt in July, but the first rise in backlogs of work in over four years suggests employment could pick up in the coming months. This would be assisted if business optimism recovers from its current subdued level. Hopefully progress relating to geopolitics, global trade tensions and the direction of the new UK government's industrial and tax policies will aid, and not hinder, this process."

Elsewhere, EY nudged up its 2026 UK growth forecast but warned of a potential recession if the Strait of Hormuz stays closed until early-mid 2027.

In equity markets, AstraZeneca tumbled following a report it's in talks to combine with US rival Bristol Myers Squibb in a deal that would create one of the world's biggest pharmaceutical groups, valued at nearly $400bn.

According to the Financial Times, citing people familiar with the matter, the companies have held discussions about a tie-up in recent months. It was understood the talks could yield a deal in the near future but may be delayed or fall apart.

The FT said the exact structure of any deal could not immediately be determined, but would probably require both cash and shares.

Russ Mould at AJ Bell said the fear will be that such a move, coming on top of the company's recent direct listing in New York, "would pull its centre of gravity across the Atlantic and ultimately see the UK stock market lose one of its crown jewels".

He added: "The initial market reaction to the reports is highly circumspect, reflecting understandable caution about the scale of the deal. Major transactions of this kind often run into difficulties around integration and matching up different workplace cultures.

"Getting a deal across the line could be as difficult as putting together a 10,000-piece jigsaw with the companies' overlapping focus in oncology likely to attract scrutiny from competition authorities. Political pressure might also be brought to bear, particularly on these shores given the importance of AstraZeneca to UK plc."

IG Group suffered heavy losses again, having fallen sharply on Friday on news it will buy US daily fantasy sports and prediction markets operator Underdog for up to $1.3bn.

BP and Shell gushed lower in tandem with oil prices. Shell was also in focus after agreeing to sell its European onshore renewables portfolio to TotalEnergies for an undisclosed sum.

Housebuilders rallied, with Persimmon, Barratt Redrow, Vistry and Bellway all up as investors scaled back rate hike expectations after the slump in oil prices.

Takeover target easyJet flew higher after saying it had extended the 'put up or shut up' deadline for both competing offers from private equity firms Castlelake and Apollo to 7 August. More broadly, airlines were higher amid the prospect of lower fuel costs, with IAG and Wizz Air both up.

Shipping services group Clarksons surged after saying it expects full-year results "materially ahead" of market forecasts following a record first-half profit as it benefited from the volatility caused by disruptions in the Strait of Hormuz.

Market Movers

FTSE 100 (UKX) 10,863.50 -0.04%

FTSE 250 (MCX) 24,206.69 0.97%

techMARK (TASX) 6,065.50 0.46%

FTSE 100 - Risers

Persimmon (PSN) 1,145.50p 3.52%

Burberry Group (BRBY) 1,225.00p 3.12%

St James's Place (STJ) 1,086.00p 3.08%

Melrose Industries (MRO) 467.30p 3.08%

Smith & Nephew (SN.) 1,194.50p 3.02%

Kingfisher (KGF) 318.50p 2.98%

Rolls-Royce Holdings (RR.) 1,509.80p 2.94%

Barratt Redrow (BTRW) 301.60p 2.86%

ICG (ICG) 1,942.00p 2.81%

The Sage Group (SGE) 998.00p 2.75%

FTSE 100 - Fallers

IG Group Holdings (IGG) 1,377.00p -5.82%

AstraZeneca (AZN) 11,972.00p -5.40%

British American Tobacco (BATS) 4,450.00p -2.58%

Imperial Brands (IMB) 2,761.00p -2.19%

Airtel Africa (AAF) 326.00p -2.16%

Glencore (GLEN) 532.70p -1.90%

Coca-Cola HBC AG (CDI) (CCH) 4,932.00p -1.56%

Centrica (CNA) 152.25p -1.55%

BP (BP.) 544.20p -1.41%

Rio Tinto (RIO) 7,077.00p -1.20%

FTSE 250 - Risers

Clarkson (CKN) 5,090.00p 7.82%

XP Power Ltd. (DI) (XPP) 1,706.00p 5.69%

Genuit Group (GEN) 286.20p 5.53%

Vistry Group (VTY) 306.40p 5.48%

Wizz Air Holdings (WIZZ) 1,115.00p 4.99%

Trainline (TRN) 246.80p 4.30%

Michael Page (PAGE) 189.40p 4.24%

Shawbrook Group (SHAW) 341.25p 4.04%

Bellway (BWY) 2,068.00p 4.02%

Foresight Group Holdings Limited NPV (FSG) 482.50p 3.99%

FTSE 250 - Fallers

Plus500 Ltd (DI) (PLUS) 3,786.00p -3.17%

Helios Towers (HTWS) 190.80p -2.91%

Raspberry PI Holdings (RPI) 640.00p -2.82%

Ithaca Energy (ITH) 236.00p -2.19%

Drax Group (DRX) 723.50p -1.76%

Applied Nutrition (APN) 318.00p -1.70%

Trustpilot Group (TRST) 266.40p -1.48%

Currys (CURY) 165.70p -1.31%

TP Icap Group (TCAP) 338.40p -1.23%

ICG Enterprise Trust (ICGT) 1,420.00p -1.11%