With US markets closed for Labor Day, traders had to look elsewhere for inspiration and to some extent they found that in London.
Online property site Rightmove was the centre of attention as Rupert Murdoch's REA Group confirmed it was considering making a cash bid for the business after the story broke in the weekend press. Rightmove traded up by 27.43% on the day to close at £7.08, though that is still below the all-time high of £8.10, posted back in January 2022.
UK aerospace and defence stocks moved in the opposite direction to Rightmove on Monday, with Rolls-Royce falling by almost 6.5% as Cathay Pacific identified an engine component failure and instigated an inspection of its entire Airbus A350 fleet. BAE Systems fell by 2.9% as the UK government cancelled certain defence export licenses to Israel. The move was seen as more of a gesture than an outright embargo, though perhaps it was a warning shot across the bows of the defence sector. Housebuilder Barratt Developments rallied by 3.1% on an upgrade from Swiss Bank UBS, while insurance broker Beazley was up by 2% on the day.
In Europe, French pharmaceuticals group Sanofi was the biggest gainer in the Euro Stoxx 50, up by 3.6%. The company announced that its treatment for multiple sclerosis has passed a key trial, potentially opening a path to approval of the drug.
Real-estate group Vonovia added 2%; the stock has tried to move higher on several occasions of late but hasn't been able to hang on to its gains. Airbus fell by 1.4% because of the news from Cathay Pacific. In the DAX, Delivery Hero continued to make headway, adding 1.8% to take its gains over the last week to 17.7%. The food delivery business is the clear leader when the 40 stocks in the DAX are ranked by weekly performance, though Adidas has added 5.1%, and insurer Munich Re has put on 4.3% over the last week.
Germany's economic problems remain however, and comments from Volkswagen CEO Oliver Blume are only likely to add fuel to the flames. Mr Blume said: “The economic environment has become even tougher and new players are pushing into Europe. Germany in particular as a manufacturing location is falling further behind in terms of competitiveness.”
The comments were made as Volkswagen suggested it may need to close a German manufacturing plant, which would bring the business into conflict with unions representing around 300,000 German employees, who account for around half of the firm’s global headcount. Over the last three years, VW’s stock price has fallen dramatically as the group seeks to navigate the transition to electric vehicles and lower cost production outside of Europe.
In early European trade this morning crude oil is flat, as is gold, and CFDs on US indices are called slightly lower. However, European equity indices are opening higher, with the CAC 40 adding 0.34%, the DAX 40 up 0.27% and the FTSE 100 up by 0.24%. On the foreign exchanges, majors are weaker against the dollar for choice, though the dollar index is largely unmoved, and US 10-year bond yields are unchanged at 3.914%.
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