FTSE Extends Gains Boosted By Mergers and Acquisitions Activity

The FTSE was looking tired in early trade on Friday; pausing for breath after hitting its highest level in 3 months in the previous session. The index traded around the flat line most of the morning, finally lifting int the afternoon supported by M&A activity and a stronger start on Wall Street.

ZPG jumps 30% on takeover deal

US private equity group Silver Lake has agreed to buy London listed ZPG, owner of property website Zoopla and Prime location in a deal worth £2.2 billion as Silver Lakes offers 490p per share a 30% premium to its closing price on Thursday. 

Given Silver Lakes expertise in technology investing the tie up makes perfect sense to drive the business forward, something that was recognised by investors sending shares in ZPG higher. 

The deal, which is expected to complete later in the year is just the latest in a flurry of M&A activity which has been exciting investors over the past few weeks, boosting sentiment and helping the FTSE reach levels not seen since February.

Pound traders look to earnings data next week

The pullback in the pound has also been offering support to the FTSE over the past month. This was amplified on Thursday following the BoE rate decision and quarterly inflation report, which saw the pound dip below $1.35 on a weaker outlook for inflation. 

Today GBP/USD was in recovery mode, although this is more to do with dollar weakness rather than any particular pound strength. Pound traders will now need to wait until Tuesday for high impacting data, with the release of average earnings.

Dollar rally runs out of steam

The dollar was showing signs of fatigue, as the tremendous rally which started in the middle of last month appears to be running out of steam. 

After slightly drab inflation figures in the previous session, which have dampened optimism of a more aggressive Fed, the dollar is now trading at 92.46 versus a basket of currencies.

Whilst this is by no means the dollar falling off a cliff, it is still a sizeable pull back from Wednesday’s peak of 93.41. With no more data due now until next week, and even next week’s US calendar doesn’t look too challenging for dollar bears.

Dow on track for 7th straight win

US stocks have gapped higher on the open, putting the Dow on track for its 7th straight gain, the longest winning run since late last year. 

Tech stocks, which outperformed in the previous session were trading marginally weaker on the open, weighing on the Nasdaq.