London pre-open: FTSE set for positive return from Christmas break

(Sharecast News) - London stocks were set to return from the Christmas break in the green on Wednesday, following a late Santa rally for Wall Street overnight. The FTSE 100 was expected to open 41 points higher at 7,746.90, having closed ahead 0.04% at the end of its truncated session on 22 December.

"Yesterday was a slow day where the dovish Fed expectations continued to remain in the driver seat and drive the US stock and bond markets higher, while many other markets were peacefully sleeping," said Swissquote Bank senior analyst Ipek Ozkardeskaya.

"Buyers rushed into the US Treasury's bond auctions yesterday to close in some good deals before the year ends on expectations that the Federal Reserve (Fed) will start chopping the rates by spring."

Ozkardeskaya said that according to Bloomberg, the US Treasury's 52-week bill auction saw record demand from indirect bidders - a group including foreign central banks - while the six-month bill saw 71.6% demand, the third biggest in history.

"This means that investors expect the yields to come significantly lower in the next six to 12 months.

"Consequently, the US two-year yield slipped below the 4.3% mark, [and] the US 10-year yield steadied below the 3.90% level."

The Dow Jones Industrial Average closed 159.36 points higher overnight, extending the gains it recorded on Friday as market participants cheered a recent surprise reading of the Federal Reserve's favourite inflation gauge.

In economic news, the slide in industrial profits in China slowed significantly overnight, with November seeing a 4.4% fall compared to the prior month's 7.8% plunge.

On the equities front in London, AstraZeneca announced that it was buying Gracell Biotechnologies, a global clinical-stage biopharmaceutical company developing cell therapies for the treatment of cancer and autoimmune diseases, for $1.2bn.

Under the terms of the deal, AstraZeneca would acquire all of Gracell's shares at $2 per share in cash, plus a non-tradable contingent value right of $0.30 per ordinary share payable upon achievement of a specified regulatory milestone.

The upfront cash portion represented a 62% premium to Gracell's closing market price on 22 December.

Elsewhere, HgCapital Trust said its manager Hg had agreed to a partial sale of its investment in IRIS Software Group to LGP, a Los Angeles-based private equity firm.

The transaction's financial terms were not disclosed, but valued HgCapital Trust's investment in IRIS at around £99.8m, with a net distribution of approximately £42.1m to the trust.

Following the sale, its exposure to IRIS would be £57.7m, representing 2.5% of its net asset value as of 30 September, with HgCapital Trusts's available liquid resources estimated at £705m.

Reporting by Josh White for Sharecast.com.