The FTSE 100 started the week on the wrong foot, weighed down by the falls of Unilever, owner of Marmite, while in the US the battle for control of Warner Bros Discovery took another turn.
The FTSE 100 index closed down 21.92 points, or 0.2%, to 9,645.09. The FTSE 250 finished 142.67 points lower, or 0.7%, at 21,921.28, and the AIM All-Share ended down 2.78 points, or 0.4%, at 748.52.
In London, trading was quiet ahead of Wednesday's U.S. interest rate decision.
The US central bank is widely expected to make a third straight 25 basis point interest rate cut, bringing the Federal Reserve's target range for the federal funds rate to 3.5%-3.75% in what could be a contentious meeting.
Goldman Sachs says the case for a cut is “strong.”
“Job growth remains too low to keep pace with labor supply growth, the unemployment rate has risen for three consecutive months to 4.4%, other measures of labor market tightness have weakened further on average, and some alternative data on layoff measures have recently begun to rise, presenting a new and potentially more severe downside risk,” the investment bank said.
Barclays expects a “hard” cut.
“At the press conference, we expect (Fed) Chairman Powell to reinforce the message that a pause in the January meeting is likely, provided the labor market does not suddenly deteriorate, and to mention that the (Federal Open Market Committee) remains very divided over the future course of policy,” the bank said.
The pound was trading lower at $1.3319 at the close of the London Stock Exchange on Monday, down from $1.3326 on Friday.
The euro stood at $1.1624, down from $1.1635. Against the yen, the dollar was trading higher at 155.88 yen against 155.42 yen.
In European equities on Monday, the CAC 40 in Paris closed down 0.2%, while the DAX 40 in Frankfurt rose 0.1%.
New York stocks were down at the time of the London stock close.
The Dow Jones Industrial Average and S&P 500 index were down 0.3%, while the Nasdaq Composite was down 0.2%.
In New York, Paramount Skydance launched a cash offer to acquire Warner Bros. Discovery for $30 per share, beating an earlier offer from streamer Netflix.
The hostile bid sparks a battle between Paramount – whose owner, Larry Ellison, is an ally of US President Donald Trump – and streaming giant Netflix to buy one of Hollywood's most historic studios.
Netflix shocked the industry last week by announcing that it had sealed a deal to buy the Warner Bros. studio, sparking bitter reactions from voices in Hollywood concerned about the future of their industry.
Trump weighed in on Sunday, saying Netflix's effort to acquire Warner Bros. “could be a problem” as it would be left with huge market share in the film and television industry.
“We're really here to finish what we started,” David Ellison, Paramount's chairman and chief executive, told CNBC as his company made a sixth offer for Warner Bros since the bidding war began.
Netflix fell 4.5%, Warner Bros. rose 5%, and Paramount Skydance rose 7.3%.
The 10-year US Treasury yield was quoted at 4.19%, widening from 4.14%. The 30-year US Treasury yield was at 4.83%, down from 4.80%.
On the FTSE 100, Unilever fell 6.6% as Magnum Ice Cream began trading in Amsterdam, London and New York.
Shares of the owner of Ben & Jerry's and Magnum, spun off from Unilever, rose 1.3% in Amsterdam against the reference price of 12.80 euros, implying a market value of around 7.94 billion euros, below some market forecasts.
Morningstar equity analyst Diana Radu said initial valuations are “lower than previous estimates,” though she noted that technical factors could also weigh on Magnum shares in the near term.
She said: “Magnum is based in the Netherlands and is primarily listed on Euronext Amsterdam, so unlike Unilever, it does not qualify for inclusion in the FTSE UK index series.
“As a result, UK index tracking funds that receive Magnum shares in the spin-off but benchmark against the UK FTSE indices must sell, creating some short-term downward pressure on the share price following the listing.
“Still, we remain optimistic about the long-term prospects. As an independent company, the ice cream business has a renewed management team and a more focused and category-specific strategy.”
Housebuilders were also another weak feature as UK bond yields rose with Barratt Redrow down 4% and Persimmon down 3.5%.
However, Citi equity analyst Ami Galla believes a spring rebound is likely to drive a rerating of the sector, saying: “We remain positive on the sector through 2026 for volume homebuilders, who should benefit from a favorable rate outlook as well as a gradually improving planning environment.”
Heading higher, defense stocks rallied due to continued geopolitical uncertainty.
Defense contractor Babcock International led the top-line rises, up 2.6%, with BAE Systems, up 1.1%.
Aerospace manufacturer Rolls-Royce saw strong demand, up 2.1%, after receiving an order from defense company KNDS for more than 300 engines for Leopard 2 battle tanks.
On the FTSE 250, Kainos rose 6.6% as Bank of America twice upgraded its rating from “underperform” to “buy”, while Baltic Classifieds, up 5.9%, recovered some of last week's sharp declines, which followed a bearish trading update.
Brent oil was trading at $62.79 a barrel at the close of the London Stock Exchange on Monday, up from $63.60 on Friday.
Gold was trading at $4,192.10 an ounce on Monday, down from $4,208.77.
The biggest risers on the FTSE 100 were Babcock International, up 30p to 1,176p; Scottish Mortgage Investment Trust, up 25p to 1,094.5p; Polar Capital Technology Trust, up 10.5p to 475p; Rolls-Royce, up 22.5p to 1,107p; and Prudential, up 19.5p to 1,097.5p.
The biggest fallers on the FTSE 100 were Unilever, down 296p to 4,160p; Barratt Redrow, down 15p at 363.2p; JD Sports Fashion, down 3.1p to 79.6p; Khaki, down 46.5p to 1,298.5p; and Entain, fell 24p to 735.2p.
Tuesday's economic calendar includes an interest rate decision in Australia overnight and BRC retail sales data in the United Kingdom. The two-day FOMC meeting begins in the United States.
Tuesday's UK corporate calendar includes half-year results from equipment rental company Ashtead Group and greeting card and gift retailer Moonpig.
Contributed by Alliance News.
