World stock markets appear to be stabilising after the extreme volatility seen last week. By the close the FTSE 100 was up 0.3% to 7,234.81, taking its cue from a solid open to trading across the Atlantic.
Next Tuesday (20 February) Bank of England Governor Mark Carney and some of his colleagues are due to appear before MPs in Westminster to testify on inflation and UK economic conditions. The market will be looking for cues on the future trajectory of interest rates amid recent hints rates could be hiked as early as the Bank’s meeting on 10 May. This appearance is followed on Wednesday (21 February) by average earnings data for the UK from the Office for National Statistics and later on by the minutes from the latest meeting of the US Federal Reserve (see Economic update). Next Thursday (22 February) sees the release of the second estimate of UK GDP for the final three months of 2017.
The broadcasting sector was in view this week as the results of the first round of the latest auction of Premier League TV rights was announced. The analyst community, as represented by consensus estimates, was factoring in a 20% to 30% increase in the cost of the football rights for Sky (SKY). The broadcaster has now struck a deal to pay £1.193 billion per year for the rights, which works out as 16% cheaper per game versus the current agreement.
The reduction in costs effectively means analysts will have to upgrade their earnings forecasts from when the new deal kicks in 2019. Stronger earnings forecasts could lead to shareholders seeking a higher offer price if 21st Century Fox gets regulatory approval for its £10.75 per share purchase of the 61% of Sky it does not already own. Sky’s takeover deal is quite complicated thanks to Disney having struck a deal to buy assets from Fox including its current 39% stake in Sky. Sky has secured the rights to show 128 Premier League games a season, up from 126, and Saturday evening matches for the first time. Rival BT (BT.A) secures Saturday lunchtime Premier League games and is paying £295 million per season for 32 games, 10 less than the current contract.
The publication of the minutes of the latest meeting of the US Federal Reserve next Wednesday (21 February) could have a material market impact, with the recent correction linked to expectations for faster than previously anticipated increases in interest rates. The next decision on rates, which will be the first delivered under new Fed chair Jerome Powell.
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19 February - Neighbourhood retailer McColl’s (MCLS) full year results statement will be keenly watched for an update on its wholesale tie-up with grocer Morrisons (MRW), which has seen it launch Safeway branded products exclusively in McColl’s stores. The convenience stores-to-newsagents operator’s pre-close trading statement flagged 19.1% total revenue growth for the year ended 26 November.
22 February - Having lost 823,000 UK consumer energy customers in the third quarter, all eyes are on Centrica (CNA) ahead of full year figures. The owner of the UK’s biggest household energy supplier British Gas has had a difficult year, prompting a profit warning in November. That puts its dividend under serious threat.
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