Stoxx 600, FTSE, DAX, CAC, tariffs

U.S. pharmaceutical firm Merck will purchase U.K.-based Verona Pharma for around $10 billion, the companies said Wednesday.

The move, which will help build out the firm’s respiratory treatment portfolio, is see as a way of diversifying Merck’s revenue stream beyond its blockbuster cancer immunotherapy Keytruda, which faces patent expiries from 2028.

Merck will pay $107 per American depository share for Verona, a premium of around 23% to its last closing price on the Nasdaq.

— Karen Gilchrist

Geopolitical tensions and macroeconomic uncertainty continue to pose a risk to the U.K.’s financial stability, the Bank of England said Wednesday.

In its Financial Stability Report, the central bank’s Financial Policy Committee (FPC) outlined the U.K.’s resistance to ongoing risks. These include the conflict between Israel and Iran, Russia’s war with Ukraine, U.S.-China relations and President Donald Trump’s trade policy, outlined in April, which sent global markets reeling.

The BoE noted that a tariffs pause by Trump reassured investors and some risk sentiment recovered — but warned of the possibility of a “sharp correction.”

“Risks to the global outlook remain high … Despite this, risky asset prices have rebounded to historically stretched levels across several asset classes since early April,” the central bank wrote.

“The FPC therefore continues to judge that risky asset values are vulnerable to a sharp correction, and that this could interact with vulnerabilities in the system of market-based finance, adversely affecting the cost and availability of finance for households and businesses.”

It added, however, that U.K. households and businesses remain broadly resilient, and the country’s banking looks strong and able to support people, “even if economic, financial and business conditions became substantially worse than expected.”

— Katrina Bishop

There were nine new listings on the London Stock Exchange in the first half of the year, according to professional services firm EY.

In a new report released this morning, EY said those listings raised £182.8 million ($248.5 million), marking a 64% year-on-year decline in deal value.

The U.K. downturn was part of a wider trend seen across Europe, where IPO proceeds fell 60% year-on-year to $5.9 billion.

However, Europe was an outlier – the global IPO market raised $62 billion from an estimated 540 deals in the first half, according to EY, which reflected a 17% jump in total proceeds from the same period a year earlier.

The European Stoxx Aerospace and Defense index rose to a new record high this morning, following a gain of around 1.1%.

So far this year, the index has surged more than 53%.

Top performers in the sector on Wednesday include Germany’s Renk, which jumped 5.3% after Bloomberg reported the military vehicle parts maker was considering expanding to offer a civilian business. Poland’s Lubawa was last seen trading 3% higher, while Airbus was up by 1.2%.

— Chloe Taylor

It’s around 30 minutes since European markets opened, and regional stocks are edging higher.

The pan-European Stoxx 600 was last seen trading up by 0.1%, with all major bourses in positive territory.

The French CAC 40 and Germany’s DAX have both gained 0.4%, while London’s FTSE 100 is 0.1% higher.

— Chloe Taylor

Here’s a roundup of the trade policy updates that have come from the White House so far this week.

New duties on 14 countries: On Monday, U.S. President Donald Trump extended his “reciprocal tariffs” deadline to Aug. 1, but announced new tariff rates of 25% to 40% on 14 trading partners. The affected countries are Japan, South Korea, Malaysia, Kazakhstan, South Africa, Laos, Myanmar, Bosnia and Herzegovina, Tunisia, Indonesia, Bangladesh, Serbia, Cambodia and Thailand.

Tariffs on copper: “Today, we’re doing copper,” Trump said during a Tuesday Cabinet meeting at the White House. Without giving details on when the duties on the metal would take effect, Trump said the new tariff on copper would be 50%.

Threatened tariffs on pharmaceuticals: At the same Cabinet meeting, Trump also reiterated his previous threat to impose sector-specific tariffs on pharmaceutical goods. The sector would face “a very, very high rate, like 200%,” the president said.

No news on the EU: No new tariffs targeting the European Union have been announced, with many seeing the lack of a letter from the Trump administration to the bloc as a sign that a trade agreement will be struck before the looming deadline. An EU diplomat told CNBC on Monday that any framework deal is likely to include a 10% baseline tariff and may see certain goods — such as aircraft and spirits — given exceptions. It was also widely reported earlier this week that European Commission President Ursula von der Leyen had a “good exchange” with Trump over the weekend.

— Chloe Taylor

Good morning from a sunny and summery London, and welcome to CNBC’s live blog covering all the action and business news in European financial markets on Thursday.

Futures data from IG suggests regional markets will open higher, with London’s FTSE 100 expected to open 34 points higher at 8,902, Germany’s DAX up 60 points at 24,580 and France’s CAC 40 up 19 points at 7,897. Italy’s FTSE MIB is seen opening 60 points higher at 40,934.

Global markets have been focused on one thing this week: the increasingly unwieldy U.S. trade tariffs regime.

On Wednesday, U.S. President Donald Trump sent letters dictating new U.S. tariff rates on at least seven more countries’ imports, having already sent letters to 14 other countries earlier this week that laid out punitive duties.

He also announced late Wednesday a 50% tariff on Brazil partly in retaliation against the current trial against former Brazilian President Jair Bolsonaro for his role in an alleged attempt to overturn the country’s 2022 election results. 

Trump on Tuesday announced a 50% levy on copper imports, which will begin on Aug.1, and signaled that more sector-specific tariffs will come soon. He also threatened to impose tariffs of up to 200% on pharmaceutical exports into the U.S., but said that he will “give people about a year, year and a half” until the duties go into effect.

— Holly Ellyatt

Markets will be keeping an eye on comments from the OPEC seminar in Vienna on Wednesday, as well as all the latest tech news from the RAISE Summit in Paris, where the outlook for artificial intelligence is a key focus.

Traders are also assessing the likelihood of more trade deals between the U.S. and partners as the initial deadline for reduced tariffs, Wednesday, is reached. The U.S. has already sent 14 countries “letters” telling them what trade duties they will be hit with on a later date, Aug. 1.

Investors in Europe are awaiting a U.S.-EU trade deal, with speculation that an agreement could be imminent.

There are no major earnings or data releases Wednesday.

— Holly Ellyatt