London stocks were set to rise at the open on Monday as investors mull the results of the German election over the weekend.
The FTSE 100 was called to open 42 points higher at 7,093.
CMC Markets analyst Michael Hewson said: “In an outcome that will surprise no-one the German elections at the weekend provided the deadlocked outcome that was predicted. The SPD is still going to be the largest party, however they don’t appear to have done as well as expected, while the CDU/CSU appear to have performed much better, although it’s still their worst post war result ever.
“This means that the likely outcome will be a three-way party coalition, with the SPD set to lead the way, alongside the Green’s and one other party, and the FDP, though Linke might also scrape into the equation, though at this stage this looks unlikely.
“Of course, there could be another Grand Coalition but that doesn’t seem likely given how much damage the last one did to the SPD brand, sending its polling numbers down to as low as 15% as recently as the end of last year. The Greens will be the most disappointed given they were polling at 25% as recently as May, a remarkable fall from grace.
“Using the 2017 election as a benchmark it would be unexpected if we did get a new government before Christmas, given the last one took until February 2018 to come into any kind of focus, which means that Angela Merkel may have to stay in place for a while longer yet until her successor is appointed.
“What this means for German politics is that nothing much is likely to change in the short term, with investor attention likely to remain on events in China, and Asia more broadly, as well as the various supply crunches taking place across the world.
“We also need to be cognisant of the fact that we are coming up to the end of the month, as well as the end of the quarter, which could temper, or exacerbate market volatility. Asia markets have had a somewhat mixed session, with the Nikkei giving up some decent early gains, with markets here in Europe looking set to open higher.”
In corporate news, Hikma Pharmaceuticals said it was buying US firm Custopharm from Water Street Healthcare Partners for $375m on a debt and cash-free basis, with a further $50m payable on meeting certain commercial milestones.
Workspace has exchanged contracts to acquire Stapleton House, also known as ‘The Old Dairy’, in Shoreditch, for a total of £43.38m.
The FTSE 250 company said the property provides 57,000 square feet of net lettable space, and is currently 80% let, being acquired at a net initial yield of 4.9% and a capital value of £761 per square foot.