Hopes for progress on Brexit helped lift the pound on Thursday (7 December), hitting the relative value of the overseas earnings which dominate the FTSE 100. At close the index of leading shares was down 0.25% at 7,329.91.
Next Tuesday (12 December) UK inflation figures are out, followed on Wednesday (13 December) by similar data for the US as well ask figures showing Britons’ average earnings. This will offer an insight into how hard-pressed consumers on both sides of the Atlantic are heading into the festive period which is critical for the retail sector. The US Federal Reserve is widely expected to increase interest rates later on Wednesday. Neither the Bank of England or European Central Bank are likely to take the cue from their US counterparts when they meet next Thursday (14 December) to determine their own respective monetary policies.
The spotlight was on the bookmakers this week as on Thursday (7 December) Foxy Bingo owner GVC (GVC) confirmed speculation it wants to buy rival Ladbrokes Coral (LCL). In one of the worst kept secrets in the gambling industry, GVC outlined a proposal which values Ladbrokes at a maximum of 203.7p per share, or £3.9bn. The deal would be structured in favour of GVC shareholders where they would own 53.5% of the enlarged business and Ladbrokes’ shareholders would own 46.5%. GVC says 'the enlarged group would be an online-led globally positioned betting and gaming business that would benefit from a multi-brand, multi-channel strategy applied across some of the strongest brands in the sector.'
The proposed transaction has a payment contingent on the final form of a new regulatory framework for the UK gambling sector. Consultation on the new rules concludes in January and further consolidation may have to wait until then. William Hill (WMH) was also in focus for investors as it ended a spat with US firm Scientific Games over the latter’s acquisition of NYX. It had previously bought a stake in NYX to block the deal.
The pound surged on 4 December amid speculation a divorce settlement was about to be delivered but opposition from the Democratic Unionist Party (DUP) to a settlement of the Irish border issue put paid to any deal. Now the race is on to secure a compromise ahead of a crunch Euro Summit on 14 and 15 December. With all 27 EU countries participating this is a critical opportunity to secure the transition deal which can deliver the level of certainty and visibility craved by business.
In the last month US markets have outperformed their counterparts across the globe, partly thanks to the US Senate passing President Trump’s tax reform plan (2 December). It is possible to gain exposure to US stocks through iShares Core S&P 500 (CSP1) for an ongoing charge of 0.07%
11 December - Investors should expect leisure group Hollywood Bowl (BOWL) to declare a special dividend when it reports full year results. The company said in October that its results would be marginally ahead of the board’s previous expectations. It is expected to reveal that full year revenue grew by nearly 9% for the 12 months to 30 September.
13 December - In the wake of a profit warning in August, expectations are subdued ahead of half year results from Dixons Carphone (DC.). In its first quarter update, the retail behemoth bemoaned a tough UK mobile market. Investors are also concerned over the impact of weakening UK big-ticket demand on the Carphone Warehouse-to-Currys PC World brand owner, which may well report on a muted performance during the Black Friday discounting period.
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