Although European markets started the day with healthy gains, that rally stumbled by the end.

Markets have just closed for the night, with the Europe-wide Stoxx 600 index up just 0.18%. The UK’s FTSE 100 and the German DAX were basically flat, while France’s CAC gained 0.4%.

Shares were pulled down because both the euro and pound have rallied against the US dollar today. With investors in a more confident mood, there was less appetite for the safe-haven dollar.

Hopes for an early Covid-19 pushed some stocks higher. Airline group IAG ended the day as the top riser in London, up 4.4%, followed by online grocery group Ocado (+3.9%), food service Compass (+3%) and property firm Land Securities (+2.6%).

Back in London, G4S has hit back at Garda World’s takeover bid, saying it “significantly undervalues” it.

In a statement to the City, G4S says it unanimously rejected the three approaches from GardaWorld, and adds that “the timing of the proposal is highly opportunistic, coming as it does at a time of severe turbulence in global financial markets.

Shares in Nvidia have jumped sharply in early trading, up over 6% at $517.

They’re now up over 120% since the start of the year, lifted by the wider rally into tech stocks.

Investors are excited by the prospect of Nvidia adding Arm’s formidable intellectual property business to its existing, highly successful, gaming chip business, despite the possibility that UK regulators look at the deal.

Ding ding! Shares are rallying at the start of trading in New York, lifted by takeover fever.

The Dow Jones industrial average has gained 185 points, or 0.6%, at the open, lifting it to 27,851.

The S&P 500 has gained 1%, up 32 points to 3,373 -- back towards its recent record highs.

The Nasdaq has also made solid start, up 1.3% at 10,995.

AJ Bell investment director Russ Mould says today’s three big deals are boosting sentiment in the markets:

“Along with US pharma giant Gilead buying a cancer specialist for north of $20 billion, Japanese investor Softbank announced it would sell UK microchip designer ARM to US-based Nvidia for $40 billion – just four years after snapping up the business in the wake of the Brexit vote for around $10 billion less. That’s a very tidy profit, although it is likely to have invested a lot in the business during its ownership.

“The biggest deal in terms of market sentiment was Oracle’s reported partnership with Chinese social media platform TikTok which helped ease concerns over the on-off trade war between the US and China

Back in Westminster, Boris Johnson’s spokesman has said that the UK government will scrutinise Nvidia’s purchase of Arm closely.

Speaking to reporters, he explained that the enterprise act allows ministers to probe such mergers (as flagged earlier):

The deal was announced earlier this morning and we will scrutinising it in close detail including exactly what it means for the Cambridge HQ.”

“The enterprise act provides the government with powers to intervene in mergers where they raise concerns about national security, financial stability, media plurality and maintaining in the UK the capability to combat and to mitigate the effects of public health emergencies.”

(thank to Reuters for the quotes)

Over in the eurozone, the surge in factory output as lockdown measures were eased has faded.

New figures show that industrial production rose by 4.1% during July in both the euro area and EU, compared with June 2020. That’s a notable slowdown on June, when industrial production surged by 9.5% in the euro area and by 9.6% in the EU.

It means that, on an annual basis, eurozone industrial production was 7.7% lower than in July 2019.

It doesn’t look terribly like a V-shaped recovery:

Eurostat adds:

In the euro area in July 2020, compared with June 2020, production of capital goods rose by 5.3%, durable consumer goods by 4.7%, intermediate goods by 4.2%, non-durable consumer goods by 3.9% and energy by 1.1%.

In the EU, production of capital goods rose by 5.6%, durable consumer goods by 4.8%, intermediate goods by 3.9%, non-durable consumer goods by 2.8% and energy by 1.3%.

The highest increases were registered in Portugal (+11.9%), Spain (+9.4%) and Ireland (+8.3%). Decreases were observed in Denmark (-4.9%), Latvia (-0.8%) and Belgium (-0.5%)

G4S has experienced a swathe of problems over the years.... and GardaWorld claims it would do a better job of running the firm.

Notoriously, G4S did such a bad job of running HMP Birmingham that the prison was eventually taken back into public ownership. It also lost its contract to run Medway Secure Training Centre, amid allegations of mistreatment of children, and the contract to run Rainsbrook STC after a very critical inspection.

It also quit the immigration and asylum sector, after undercover footage from BBC’s Panorama showed G4S officials mocking, abusing and assaulting detainees at the Brook House facility.

GardaWorld’s CEO, Stephan Crétier, is urging G4S’s shareholders to push the company to discuss its takeover offer:

“G4S needs an owner, not a manager. GardaWorld has 25 years of experience in the sector and we know how to improve and repurpose this business. As owner-operators, we believe that the combined business’s operations will offer a better future for all those who depend on G4S. We will turn G4S around, ensuring it delivers for its customers, its people and the public.

“The combination of GardaWorld and G4S is an important part of our strategy to create the world’s leading security services business. If successful, our commitment to the UK will be for the long-term.

Crétier also pledges to tackle G4S’s pensions pot:

“We understand G4S’s importance as a UK employer and as a significant provider to public and private sector institutions. In addition, significant steps would be taken to address the company’s persistent underfunding of UK pension obligations.

Newsflash: We have another potential deal.

Canadian private security group GardaWorld has just announced that it wants to take over UK rival G4S.

The deal would create “the world’s leading security service provider,” Garda tells the City.

It is prepared to pay 190p per share, compared to Friday night’s closing price of 145p, which I think values G4S at nearly £3bn.

Garda says it has made three attempts to engage with the board of G4S over the last three months, but has been “summarily dismissed or ignored” each time, so it’s now taking its interest public.

Garda attempted to merge with G4S last year, but was rebuffed - and walked away in May 2019.

Shares in G4S have just surged by over 20% to 178p.

The firm runs cash handling services, security operations, and is currently managing UK Covid-19 test centres.

ARM has tried to calm fears (including from its founder!) that the Nvidia deal will crush its business model.

ARM CEO Simon Segars has told analysts that its independence wouldn’t be threatened by America’s CFIUS security rules if it was sold by Softbank, insisting:

“We will maintain our neutral business model, and will keep a level of independence.”

[reminder, the Committee on Foreign Investment in the United States can block the use of technology owned by US companies by overseas firms. Currently, ARM’s whole business model is based on licencing its chip architecture to firms across the industry].

Nvidia echoed this line, telling analysts that ‘nothing changes’ regarding the jurisdiction of technology under the deal.

CEO Jensen Huang also told analysts that his firm has “just started talking” to the UK government about the deal, and its plans for a significant investment in ARM’s British operations.

Germany’s government has warned that its economy probably won’t recover all its Covid-19 losses until 2022.

In its latest healthcheck, the economy ministry predicted strong growth in the current quarter (following a record-breaking plunge in Q2). But looking further ahead, the picture is less rosy.

Reuters has the details:

The trough of the recession was reached in the second quarter and the easing of lockdown measures since May led to a rapid recovery in industry and in some service sectors, the ministry said in its monthly report on Monday, adding that the revival has lost some steam lately though.

“The German economy is continuing to pick up, albeit at a more moderate pace,” the ministry said

Elsewhere in the markets, sterling is strengthening as opposition to the UK’s efforts to undermine the Brexit withdrawal agreement mounts.

MPs are due to start debating the Internal Markets bill today. There are signs of a backbench rebellion building, against the provisions which breach the Northern Ireland protocol (over state aid rules and checks on goods moving between NI and GB).

Former attorney general Geoffrey Cox made a significant intervention over the weekend, pledging to oppose the “unconscionable” breach of international law.

David Cameron has weighed in, becoming the fifth former PM to criticise the plan, saying:

“Passing an act of parliament and then going on to break an international treaty obligation is the very, very last thing you should contemplate.”

Sterling, which took a battering last week, has jumped by 0.5% against the US dollar this morning to $1.286 (up from a seven-week low).

Against the euro, it’s up 0.3% at €1.0838, rebounding from a six-month low.

Here’s my colleague Martin Farrer on the ARM/Nvidia deal:

One of Britain’s most successful tech companies, Arm Holdings, is being sold by its Japanese owners for $40bn (£31m) in a deal that could reshape the semiconductor landscape.

Nvidia, a US company, will pay SoftBank $21.5bn in shares and $12bn in cash for the chip designer although the deal is still subject to regulatory approval in the UK and could face opposition from its new owners’ rivals.

It is expected that Nvidia will face tough conditions on protecting jobs and the status of Arm’s headquarters in Cambridge as part of the deal.

European stock markets have also begun the week brightly, with gains across the board.

In London, the FTSE 100 index has jumped by 42 points or 0.7% to 6037 points, its highest level in nearly three weeks.

Germany’s DAX has gained nearly 1%, with France’s CAC up 0.8% and Spain’s IBEX 0.5% higher.

Deal-making often gets City traders’ blood pumping a little faster. If CEOs are signing multibillion dollar deals, they must be optimistic, goes the theory.

Michael Hewson of CMC Markets explains:

M&A appears to be the main focus as we start a new week with US pharma company Gilead Sciences buying cancer drug maker Immunomedics for $21bn, while Softbank appears to have finally agreed a price with US graphics chip maker NVidia, for UK chip company ARM Holdings of $40bn, as it seeks to bolster its balance sheet after a rather troubled 2019, as well as the recent scrutiny of its big derivative bets on some big US tech shares.

Softbank shares have moved sharply higher in Asia trading this morning on news of the sale, however this optimism needs to be tempered.

Not least because the proposed sale has already attracted the attention of the UK government with respect to the thousands of UK jobs based in and around Cambridge, with the CMA likely to take an interest in the sale.

Hermann Hauser, ARM’s co-founder, says the sale of ARM to a US firm was an “absolute disaster for Cambridge, the UK and Europe”.

He warned that it would lead to job losses in the UK, destroy the UK firm’s business model and impinge on UK economic sovereignty. Any promises made on jobs are “meaningless unless they are legally enforceable,” pointing to the takeover of Cadbury by US company Kraft in 2010.

Hauser told BBC Radio 4 this morning:

“The headquarters [will] move to the United States as they inevitably will when ARM becomes a division of Nvidia. This will lead to job losses in Cambridge, Manchester, Belfast, Warwick where ARM employs thousands of people.

Secondly, Nvidia will destroy ARM’s business model… which is being the Switzerland of the semiconductor industry of dealing with over 500 licensees, most of which are competitors of Nvidia.

The reason why ARM has 95% market share of mobile phones in the world is because there’s a lot of competition between the 500. If this will now be done by a single company there is a monopolies problem.”

The third reason, he said, was “by far the most concerning,” the impact on economic sovereignty for the UK. If ARM becomes a US company, it will come under US regulations, he warned.

“Which means that if hundreds of UK companies that incorporate ARM in their products want to export it to anywhere in the world including to China which is a major market, this decision on whether they are allowed to export it will be made in the White House, and not in Downing Street.”

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

The City has woken up to an dealmaking frenzy this morning, with three tie-ups with serious ramifications well beyond the markets being announced.

Firstly, video platform TikTok has plumped for a ‘technology partnership’ with enterprise software giant Oracle, rather than selling its US operations as president Donald Trump had demanded.

At first glance that looks like a win for Oracle’s Larry Ellison over Microsoft -- but it’s not yet certain that the tie-in will be approved.

My colleague Alison Rourke explains:

The Washington Post reported that Oracle had been chosen by ByteDance as a ‘“technology partner” to allay US concerns, and Reuters quoted a source as saying it would be a restructuring rather than a sale, with Oracle handling TikTok’s US user data. The source did not disclose how much of TikTok’s US operations ByteDance and its investors would continue to own.

ByteDance will need approval for the deal from both Washington and Beijing. It is not clear whether Trump, who wants a US technology company to own most of TikTok in the United States, will approve the proposal.

One of Britain’s most important technology companies is also changing hands, in a controversial deal.

US tech giant Nvidia has just finalised the $40bn acquisition of ARM, the UK-based semiconductor designer, from Japan’s Softbank.

ARM is a real UK success story, with a heritage dating back to Acorn Computers, whose BBC Micro helped teach a generation of children how to get to grips with computers and coding (some, ahem, better than others).

Its chip architecture is used in virtually all mobile phones today, and will power the next-generation of Apple Macs too.

Nvidia insists it will expand Arm’s R&D presence in Cambridge, UK, by “establishing a world-class AI research and education centre”. But a backlash is underway, with the firm’s founder worried that jobs will be lost, and that Nvidia will destroy the firm’s business model of licensing its intellectual property to chipmakers.

Thirdly, American biopharmaceutical company Gilead is acquiring cancer drugmaker Immunomedics in a $21bn merger. Gilead is most famous for its Remdesivir treatment for Covid-19, but this deal will expand its cancer treatments.

In particular, Immunomedics’ drug Trodelvy, a treatment for metastatic triple-negative breast cancer.

Gilead Chief Executive Daniel O’Day explains that the deal could see Trodelvy used to treat more types of cancer:

“Trodelvy is an approved, transformational medicine for a form of cancer that is particularly challenging to treat.

We will now continue to explore its potential to treat many other types of cancer, both as a monotherapy and in combination with other treatments.

European stock markets are expected to open higher as investors digest this flurry of news. There’s also relief that AstraZeneca has resumed trials of its Covid-19 vaccine, after a brief pause last week after a triallist fell ill.

We’ll be tracking all the action through the day.

The agenda

• 10am BST: Eurozone industrial production for July