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London pre-open: Stocks to track Wall Street lower; Shire 'willing to recommend' Takeda offer
(WebFG News) - London stocks were set for a downbeat open on Wednesday following a tech-led selloff on Wall Street.
The FTSE 100 was called to open 51 points lower at 7,374.
CMC Markets analyst Michael Hewson said the declines on Wall Street appeared to have been prompted by some concern about the growth in capital spending at Google parent Alphabet, with $7.3bn in the first quarter alone, which is well in excess of the same period a year ago.
"However it is an age old adage that if you don't invest in your infrastructure in the short term you pay the penalty eventually in the long term," said Hewson. "Sensible investors will generally tolerate higher capex if it helps keep the business sustainable in the face of higher traffic while increasing resilience. The problem comes with a valuation that could be conceivably fully valued already, which seems to be the case here."
Hewson added: "We have seen some decent gains in European markets over the last four weeks, however with bond yields in the US suddenly spiking higher in the last few days investors appear to be taking the opportunity to take some profits on some of these gains."
There are no major UK data releases due.
In corporate news, Shire directors said they would be willing to recommend the latest takeover proposal from Takeda Pharmaceutical that was pitched at roughly £49 per share, subject to further conditions. The UK Takeover Panel has given the two companies a new deadline of 1700 BST on 8 May to conclude talks.
Persimmon said it was trading well this year after customer enquiries and sales of its houses increased.
The housebuilder said enquiries were up 13% from a year earlier and that forward sales revenue had risen 8% to £2.76bn.
Whitbread announced plans to spin off its Costa coffee chain into a separate listed business following activist pressure.
The company, which also released its preliminary results on Wednesday, said the demerger would be pursued "as fast as practical and appropriate to optimise value for shareholders".
Vodafone announced that it, Bharti Airtel and Idea Cellular have agreed to merge their respective shareholdings in Indus Towers into Bharti Infratel, creating a combined company that will own 100% of Indus Towers.
The company currently owns 42% of Indus Towers. It would be issued with 783.1 million new shares in the combined company, in exchange for its shareholding.