Wall Street has dipped at the open on Monday, as investors eye the Federal Reserve’s latest interest rates decision later in the week.

The S&P 500 gained 0.29% after the market opened to reach 2,890.62 points, while the Nasdaq rose by 0.29% to 7,819.29 points. The Dow Jones industrial average gained 0.07% to 26,106.9 points.

Boeing has agreed a first-of-its-kind deal which will supply parts to British Airways for its fleet of A320 planes, manufactured by its fierce rival Airbus.

The deal with British Airways owner International Airlines Group (IAG), one of the world’s largest airline groups, will mean that Boeing and its partners will own and manage a global exchange inventory of parts for the airline’s A320 and A320neo aircraft.

The unusual deal, signed at the Paris air show, comes with Boeing trying to bounce back from the crisis which resulted in the grounding of its 737 Max fleet. The crisis has dominated the buildup to the show – with Boeing chief executive Dennis Muilenberg apologising for the company’s handling of the crisis yesterday.

However, analysts remain relatively sanguine for the prospects for the major aerospace companies – even as geopolitical and trade tensions loom over the growth outlook – mainly because of the sheer size of the multi-year order backlogs for new jets from Airbus and Boeing.

US pharma giant Pfizer has agreed to pay $10.6bn in cash for cancer drugs specialist Array BioPharma.

Array specialises in “targeted small molecule medicines” to treat cancer and other diseases. The boards both companies have approved the merger.

Reuters reported that the US Food and Drug Administration last year approved Array’s oral combination treatment for use in patients with melanoma – the deadliest form of skin cancer.

The company is also testing its triple combo therapy in colorectal cancer patients.

An interesting graph on the past year for airlines, or travel firms with significant airline arms, from the Share Centre here.

Add to the below list Germany’s Lufthansa – down by about 30% in the past 12 months, in no small part thanks to a 11% drop so far today on the back of a surprise Sunday night profit warning.

Graham Spooner, investment research analyst at the Share Centre, said:

Airline companies remain at the mercy of a number of external factors which they have little control over: terrorism, air traffic control strikes, volcanic eruptions, currency movements, oil prices, along with new events such as Brexit and people flying drones over airports. Many of these can lead to a squeezing of margins or wipe out profits in what is a cut-throat business.

This makes life difficult for management in their quest to grow the business especially with regards to upgrading their fleet. But demand for travel is not going to go away, so long-term investors in the sector should hopefully be aware that it will be a bumpy ride and is likely to remain so in the foreseeable future.

N.B.: There is one possible fly in that ointment: new regulations aimed at tackling the climate crisis (although that is still in all likelihood years away).

The early mood of cautious optimism on European indices appears to have turned slightly sour as traders in London approach their lunchtime.

The FTSE 100 is now in the red, down by 0.1% at 7,337 points. Bourses in France and Italy are still holding on to gains for the day, but the broader Stoxx 600 index is down by 0.1%.

Defence ministers from France, Germany and Spain today signed an agreement at the Paris air show to develop a European fighter jet and air combat system, as they bolster efforts to reduce their dependency on the United States.

French President Emmanuel Macron presided over the signing. Here’s more from the Associated Press:

The project fits in with Macron’s ambition to increase European cooperation at a time when the United States under President Donald Trump is showing an increasing reluctance to support the continent militarily.

The Future Combat Air System (FCAS) is not expected to be operational until 2040.

The chief executive of investment funds platform Hargreaves Lansdown has delayed taking his bonus for the year until investors are able to access money held in a fund run by Neil Woodford which has suspended redemptions.

Woodford, previously feted by Hargreaves Lansdown and many others as a star fund manager, made the shock decision to suspend his flagship Equity Income Fund on 3 June, following a surge in redemptions sparked by poor performance of investments.

Hill has previously apologised to customers for the suspensions.

In a brief statement, Chris Hill, chief executive of Hargreaves Lansdown, said:

Until investors are able to access their money held with Woodford Equity Income, I will not be taking a bonus.

Boeing with an order at Paris: aircraft lessor GE Capital Aviation Services has ordered 10 freighters, with the option of 15 more.

The 737-800 Boeing Converted Freighter (BCF), which is making its air show debut at Paris this week, is Boeing’s newest freighter product.

The US company converts 737 passenger airplanes into cargo jets that are capable of carrying up to 23.9 tonnes than its previous standard-body freighters.

Sterling is flat against the euro and the US dollar today; indeed, there has been little major movement in the pound since the start of June.

That could change as the Conservative party leadership contest continues, and the various views on how to leave the EU are sifted. The candidates – again minus the frontrunner – are currently at a press gallery hustings.

Jeremy Hunt, Sajid Javid and Rory Stewart have all answered questions, with Dominic Raab and Michael Gove still to come.

The justice secretary, David Gauke, has mocked Boris Johnson, the absent contender, for making profligate spending promises during the ongoing Conservative leadership campaign, saying “good luck” to whoever became his chancellor.

You can follow all the details from the event with Andrew Sparrow on the Guardian’s politics live blog.

Investors are currently pricing in a one-in-five chance of a cut on Wednesday, according to CME Group’s very useful FedWatch tool.

The tool, which is based on investors’ hedging activities, shows an 83% chance of a rate cut at the next meeting on 31 July.

Investors are weighing up whether the US Federal Reserve is going to signal a likely cut interest rates on Wednesday, in what would be the first downwards move since the US economy emerged from the financial crisis.

The US dollar has today remained near levels reached on Friday, after stronger-than-expected industrial output data and consumer confidence.

The dollar index, measured against a trade-weighted basket of currencies, remains about 0.5% higher than its opening level on Friday. Investors generally buy the dollar if they believe US interest rates will remain higher for longer.

Analysts at Creditsights, a bond ratings agency, said they expect a “more dovish outlook” from the infamous dotplot, which shows the various Fed voters’ interest rate expectations.

Ricardo Evangelista, senior analyst at ActivTrades, said:

Despite expecting a more dovish tone from the Fed at this meeting, investors are also focusing on how other central banks will react to the escalation in trade tensions, knowing that many will be very likely to start easing soon, too.

A Paris deal: Virgin Atlantic has ordered 14 of Airbus’s A330neo aircraft in a deal valued at $4.1bn (£3.3bn).

The airline, which was founded by Sir Richard Branson, has the option of ordering another six of the wide-body aircraft, it announced.

Euro zone wages rose “almost uniformly” across sectors, according to Claus Vistesen, chief euro zone economist at Pantheon Macroeconomics, offering a “decent headline” for European Central Bank (ECB) watchers.

Overall, these are encouraging headlines, though Eurostat’s labour cost data are horribly lagging.

Looking ahead, wage growth in the [euro zone] should now be picking up, in response to a tighter labour market, but the pace remains uneven across countries.

[L]abour costs in the [euro zone] appear to be accelerating, consistent with a tightening labour market. We think this trend will continue this year, and unlike in previous cycles, the ECB is unlikely to be “worried” about it.

Euro zone inflationary pressure has been hard to come by in the last decade – just ask the European Central Bank, which spent the last four years expanding its balance sheet with quantitative easing to try to pump up the economy.

Perhaps this is it? Euro zone wages rose in the first quarter of the year at the highest pace recorded since 2010, when the European commission first started collecting the data.

Wages and salaries rose by 2.5% in the first three months of the year compared to the previous year, said the commission’s statistics office, Eurostat.

At mid-morning there is little movement on major stock market indices, with banks helping to counterbalance the under-pressure airline sector.

The FTSE 100 has risen by 0.2%, while the broader Stoxx 600 index – which tracks large companies across Europe – is up by 0.1%.

An interesting session coming up tomorrow for the Business, Energy and Industrial Strategy committee of MPs: a meeting with one of the leaders of the Extinction Rebellion climate protest movement.

The government has committed to cut UK carbon emissions to net zero by 2050, but some environmental groups have argued for a more ambitious target, given the scale of the climate emergency.

The committee will “examine the rationale for going faster to hit the net zero target”, hearing from witnesses including Gail Bradbrook of Extinction Rebellion, Isabella O’Dowd, climate and energy specialist at WWF, and Baroness Bryony Worthington of the Environmental Defense Fund.

Deutsche Bank appears to be on track to throw in the towel on keeping an investment bank with global scale, according to reports this morning.

Germany’s biggest lender has drawn up plans for a radical restructuring which will involve the creation of a “bad bank” to hold tens of billions of euros of toxic assets and a round of severe cuts to its investment banking operations, writes Martin Farrer.

The bad bank would house or sell assets valued at up to €50bn (£45bn) comprising mainly of long-term trades that have been a major drag on the struggling bank’s balance sheet, the Financial Times reported, citing four people briefed on the plan.

Pressure on chief executive Christian Sewing (who is still relatively new in the job) has increased since he abandoned merger talks with Commerzbank in April.

You can read more here:

Russ Mould, investment director at AJ Bell, said the turnaround at Kier will not be an easy task, even as it stops its dividend payouts.

New CEO Andrew Davies is not stopping at just the dividend. He is taking drastic action in an attempt to avoid Kier suffering a similar fate to its doomed peer Carillion. Jobs are being slashed, the housebuilding unit is being sold and the company is prioritising cash flow.

These all seem like sensible steps but delivering on this plan will not be easy.

Analysts at Liberum believe Kier could get as much as £315m from a sale of its housebuilding operation, excluding £60m of old land.

The separate property development arm could be worth £254m, wrote analysts led by Joe Brent.

Despite that potential to tackle the £920m debt pile, Liberum is cautious.

There is much to be concerned about. While expected net debt of £200m seems manageable the total creditor stack is too large. Disposals can reduce debt and probably more importantly reduce leverage ratios. However, events are moving fast and disposals are likely to be complicated.

(Kier is a client of both Liberum and previously quoted Peel Hunt.)

The investment community is trying to work out whether Kier is doing enough to turn around – even with the painful loss of 1,200 jobs.

Andrew Nussey, an analyst at Peel Hunt, the stockbroker, said Kier’s plans to sell or close some parts of the business were “welcome”. Kier has already received interest for its housebuilding arm, meaning it will likely go some way to reducing its debt levels.

In a note to clients, he wrote:

We are mindful that there are numerous potential scenarios and possibilities ahead.

Despite the asset value, reassurance over trading and evidently supportive customers, the uncertainties around the period-end debt position results in us placing our estimates under review ahead of the July debt update.

There has also been movement in the outsourcing sector aside from Kier: Babcock, which carries out maintenance on much of the UK’s submarine and naval fleet, today confirmed that it had rejected an approach for a merger by Serco, another outsourcer.

Babcock “received an unsolicited and highly preliminary proposal” from Serco for an all-share combination. “No further proposal has been received”, it added.

In a statement Babcock said:

The board of Babcock, together with its advisers, carefully considered the proposal and unanimously rejected it, having concluded that a combination of the two companies had no strategic merit and was not in the best interests of Babcock’s shareholders, customers or wider stakeholders.

Babcock shares had risen by 4.2% in morning trading.

Jarrod Castle, an analyst at UBS, the investment bank, said the steep share fall for Lufthansa and the broader sector weakness were to be expected, given the airline’s warnings.

Competition in the short-haul sector is brutal. Castle said:

While long haul remains strong especially on transatlantic and Asian routes, the European short haul network (especially Germany and Austria) is under increased pressure due to over-capacity and need to defend home markets.

The long haul yield strength is not sufficient to offset short haul weakness and the company has revised guidance for group margin to 5.5%-6.5% from 6.5%-8% which results in a material downgrade to guidance.

A few more additions to the airlines who are under pressure this morning, as the Lufthansa struggles point to broader problems in the sector.

Ryanair shares are down by 4.7%. Dart Group, the owner of Jet2, lost 1.5%.

Air France KLM and Norwegian Air Shuttle fell by 4.3% and 4% respectively.

Neil Wilson, chief market analyst for Markets.com, said:

Over-capacity in the European short haul market, intense competition and the resulting pressure on fares can be blamed for the decline in profitability, whilst rising fuel costs are an added headache.

The sector always does a good job at competing away margins in the good times. No signs that anyone is prepared to reduce capacity therefore we would anticipate the wave of consolidation in European short haul is not over.

Some interesting details on debt levels from the Kier statement, admitting that their business model was too reliant on taking on large debts to expand.

In its statement to the stock market, Kier said:

The strategic review concluded that, during this period, there was insufficient focus on cash generation and that the group today has debt levels that are too high. It also concluded that the group’s portfolio is too diverse and contains a number of businesses that are incompatible with the group’s new strategy and working capital objectives.

Net debt at 30 June 2019 will be “higher than current market expectations”, Kier said, while its average month-end net debt will rise to £420m-£450m.

And, meanwhile, the brief bump in the share price has reversed, with a fall of 8% at the time of writing – although as noted we should expect volatility given how far the company’s value has fallen.

Kier brought in Andrew Davies as chief executive only two months ago, and he has taken little time before wielding the axe.

Speaking to analysts and investors this morning, Davies said that Kier is a great company at its core, but that it needs self-help.

I’ll put up any more comments that come through from the call, but meanwhile, here is Davies’s pre-prepared statement:

Since becoming chief executive on 15 April, I have visited many of our key locations and spent time with all of our businesses, meeting the leadership teams and many of our dedicated people in the process. I have also met with many of our clients. Kier has a number of high-quality, market-leading businesses, in particular Regional Building, Infrastructure, Utilities and Highways. I believe that these businesses will deliver long-term, sustainable revenues and margins and are inherently cash generative.

As previously announced, I have been leading a strategic review which has resulted in the actions being announced today. These actions are focused on resetting the operational structure of Kier, simplifying the portfolio, and emphasising cash generation in order to structurally reduce debt. By making these changes, we will reinforce the foundations from which our core activities can flourish in the future, to the benefit of all of our stakeholders.”

Investors appear to have cautiously welcomed Kier Group’s actions, with shares rising by about 2% in early trading.

Bear in mind, however, that any moves on stock markets are less meaningful given Kier’s decline even in the last year. Here’s a chart showing the collapse in the value of a share in Kier over the past five years.

Stock markets in Europe have started the week slowly – with all of the action likely as investors build up to the Fed.

The FTSE 100 in London rose by 0.1% at the open to about 7,355 points.

France’s Cac 40 also rose by 0.1%, while Germany’s Dax gained 0.2%.