The Market Close – May finally forms government after agreeing £1bn deal with DUP

Today’s Closing Update

U.S. shares reversed early gains and were bouncing around in early trade as oil prices continued their bearish slump and as the technology sector pitched into the red.

European and U.K. shares logged broad gains, lifted by Italian banks after Rome stepped in to shut down two failed lenders, and as Nestlé SA rallied after a hedge fund snapped up a major stake in the consumer-products giant.

An agreement has been reached which will see the Democratic Unionist Party back Theresa May’s minority government. The deal, which comes two weeks after the election resulted in a hung Parliament, will see the 10 DUP MPs back the Tories in key Commons votes. There will be £1bn extra for Northern Ireland over the next two years. DUP leader Arlene Foster said the “wide-ranging” pact was “good for Northern Ireland and the UK” but one critic said it was a “straight bung”.

Theresa May has said she wants EU citizens living in the UK to stay after Brexit as she announced plans designed to put their “anxiety to rest”. All EU nationals living in the UK lawfully for at least five years will be granted “settled status” and be able to bring over spouses and children. Those who come after an as-yet-agreed cut-off point will be given two years to “regularise their status”. Jeremy Corbyn said the offer was “not generous” and “too little, too late”. Labour said the UK should have made a unilateral guarantee of security to EU citizens in the aftermath of last year’s Brexit vote.

Rio Tinto has confirmed its recommendation that shareholders vote in favour of the sale of its subsidiary Coal & Allied Industries to Yancoal Australia. The statement came as Yancoal upped its offer on Sunday following a sweetened bid from Glencore earlier in the week. Glencore increased its bid to $2.68bn in cash plus a coal price-linked royalty from a previous offer of $2.55bn. Meanwhile, Yancoal’s latest offer over the weekend includes a total consideration of $2.69bn, comprising $2.45bn in cash payable in full on completion, as well as $240m via unconditional guaranteed royalty payments, $200m of which will be received before the end of 2018.

WS Atkins said that the majority of its shareholders have voted in favour for the engineering firm to be bought by rival SNC-Lavalin Group Inc. In April, WS Atkins agreed to a £2.10bn takeover by Montreal-based SNC-Lavalin at 2,080 pence per WS Atkins share. At the annual general meeting on Monday, 97.39% of shareholder votes were in favour of the takeover and 2.61% were against, while at the court meeting 83.5% of shareholders were for and 16.5% were against. The SNC-Lavalin takeover is anticipated to become effective on July 3, subject to regulatory approval.

Oil prices steadied above last week’s seven-month lows, hemmed in by a relentless rise in U.S. supply, bloated global inventories and a surge in demand for short sale contracts that signal investors see potential for a price fall.

Gold tumbled to its lowest price in nearly six weeks as a large sell order and a stronger dollar hit sentiment, though losses were limited by political uncertainty around the world.