Market buzz: Bookies' Supreme Court gamble pays-off, IWG flies on takeover talks
1630:Close Shares of bookmakers fared best after the US Supreme Court handed down a ruling allowing New Jersey and other states to legalise sports bets.
The news helped the second-tier index keep its head above water, while the top-flight index was dented by a slight bounce in the value of the pound ahead of Tuesday's employment report.
Pacing losses on the Footsie were shares of Royal Mail, which traders linked to profit-taking, and BT Group, weighed down by a target price cit out of Numis.
A downgrade from Morgan Stanley accounted for losses in Direct Line Group.
FTSE 100 down 13.57 points at 7,710.98.
1550: William Hill, 888 Holdings, GVC Holdings and Paddy Power Betfair all higher after US Supreme Court hands down a ruling that sports gambling itself is not a federal crime, in effect allowing the state of New Jersey and others to legalise sports betting.
"Taking into account the fact that all forms of sports gambling were illegal in the great majority of States at the time of PASPA's enactment, the repeal of a state law banning sports gambling not only 'permits' sports gambling but also gives those now free to conduct a sports betting operation the 'right or authority to act'," the ruling reads.
1544: Despite Silver Lake's bid for ZPG, Barclays stays at 'underweight' on Rightmove, saying they do not see it as a bid target and therefore would not ascribe it an M&A premium.
Barclays also stays underweight on Morrisons, although Sainsbury /ASDA merger "has the potential to be good news in a number of respects".
"Nevertheless, we think the 23% share price rise since its low of 26 March seems excessive - this exceeds the 21% increase for Tesco over the same period (which has in the meantime reported a strong set of FY results) and is not far behind Sainsbury at 35% (which has in the meantime proposed a historic - and potentially very accretive - merger with ASDA)," Bacrlays says.
JP Morgan says Cyclicals remain in the driver's seat and remains 'underweight' most defensives, such as on Staples, Pharma, Real Estate and US&UK utilities.
Citi sounds 'bullish' note on global integrated oils, with oil at $72 a barrel (their 'bull case') implying a sector RoE at 14% and 25% equity upside to the sector's value.
Deutsche Bank pointing out 6 percentage point increase in BT Group's share of fibre retail over the first quarter.
1519: Commenting on the drop in Greggs's share price over the previous week, analysts at Canaccord Genuity say it was "probably overdone", whereas Greene King's recovery "was overdue".
1456: It looks increasingly likely that Italy's Five Star Movements and the Lega will form a government, though the talks can still collapse, says Oxford Economics, particularly as the pair have not chosen a PM and that figurehead may not get the green light from the President.
"We’re watching developments and will update our forecast accordingly, we currently see GDP growth of 1.4% this year and 1% in 2019/20," noted the forecasting group.
Two parties are close to agreeing a populist power-sharing deal. The agreement is founded on three main economic policies: a change in the social security system, a radical income tax cut and rolling back some of the 2011 pension reform.
Oxford Economics reckons these measures will cost around €100bn per year, around 5.5% of GDP, and if enacted "would lead to a dramatic deterioration in the fiscal deficit. However, markets and the European Commission are unlikely to be impressed with the proposals, so we expect them to be watered down to meet the 3% limit."
1356: In remarks to Bloomberg TV, BofA-ML's Francisco Blanch reiterates 9 May forecast that Brent might to $90 a barrel and perhaps reach $100 this year. And that's without factoring-in fewer barrels from Iran.
1208: Earlier, analysts at Bernstein updated its Sainsbury's standalone model, integrating the merger model within the SBRY model, and updating its valuation.
As the company indicated their comfort with consensus EPS and guided towards the tax rate, "we think we will see (small) EPS upgrades," analysts said. The merger with Asda is seen as providing EPS synergies at 40% in 2021/22 and the merger deleverages the company from 2.6x lease-adjusted net debt/EBITDAR to 2.4x. "The combination of the two, assuming the merger goes through, should warrant a 50% re-rating over time, not the 10% we have seen so far."
Bernstein has increase its target price to £3.30. This maintains the current 13.4X NTM EPS multiple but applies it to a one-year-forward EPS. "Given the potential of the merger, we don’t see derating of the multiple as likely in the coming months."
Catering company Compass got a boost from Bernstein, as it upped the stock to 'outperform' from 'market perform'' and lifted the price target to 1,750p from 1,650p.
1041: Speaking in Paris, Fed's Loretta Mester says it is too soon to declare that inflation in the States has reached its goal on a "sustainable basis".
0951: Mothercare has confirmed that is it putting the final touches to a "comprehensive restructuring and refinancing package to put the business on a stable and sustainable financial footing", for which it will reveal full details with Thursday's results.
0946: HSBC has downgraded its rating for Marks & Spencer to 'hold' from 'buy', and cut its price target to 300p, from 400p. Shares in the retailer are down 1.2% at 288p.
Meanwhile, Compass is up 1.7% after it was upgraded to ‘outperform’ at Bernstein.
0943: Monday's London open market report finds the FTSE 100 down 0.1% to 7,717.06, with the pound flat against the euro at 1.1340 and 0.2% firmer against the dollar at 1.3575.
Mike Van Dulken at Accendo Markets said the muted open came despite a broadly positive start to the week in Asia, helped by US President Trump signalling compromise in Sino-American trade disputes, pushing for a rescue of telecom giant ZTE on President Xi’s request, which "boosted prospects of a trade deal" and potentially supporting global equities, such asd miners and energy companies.
0857: UK consumer price inflation will fall below 2.5% when April data is released, according to the World Price Index, which is based on local prices for a basket of commonly bought goods & services and shows a continued easing in the rate of UK price inflation in April.
April's WPI data suggests that UK price inflation is set to slow further, potentially below 2.5%.
0821: IWG is leading the risers this morning, up 23% on news that it's in talks with three private equity groups.
The serviced office group, formerly known as Regus, said late on Friday that it had received a takeover approach from one private equity company and proposals from two others.
The news from ABC, which has contracted for 22 episodes of the second series of show that stars and is produced by Kiefer Sutherland, comes less than four months after eOne snapped up the series' producer Mark Gordon Company, for which Designated Survivor had been the recent main revenue driver.
0817: Visa's consumer spending index shows a fall of 2.0% year-on-year in April, matching the decline seen in March.
"With inflation beginning to fall and wages growing faster than expected in recent months, it would have been easy to assume we might be over the worst of the consumer squeeze. Yet there has been no corresponding improvement in spending, with April’s 2% decline a simple repeat of what we witnessed in March."
The index has a good record of indicating how UK GDP will move, having already pointed to a slowdown in growth in the opening quarter of 2018.
Visa and IHS Markit, which carries out the survey, said the latest dip in seems to indicate 2018 is on track for its worst spend performance for six years.
0805: Centrica shares are up modestly, as although the British Gas owner said it lost 110,000 customers in the UK in the first four months of the year, it said the “Beast from the East” snowstorm in February helped increase customer demand in a tough competitive environment.
0742: In the Monday pre-open report there's some words from London Capital Group analyst Jasper Lawler said: "The currency correlation between the FTSE and the pound has been notably strong over the last week. Given the pound is already up 0.2% in early trade, the FTSE is expected to struggle on the open, lagging behind its European peers."
Investors will be digesting events in Italy, where over the weekend the two anti-establishment parties, Five Star Movement and League, were locked in talks to form a government.
Lawler said: "The leader of the Eurosceptic party Five Star Movement, Luigi Di Maio and far right leader of the League, Matteo Salvini, are attempting to create a functioning coalition government to fill the political vacuum which Italy has experienced since the Italian election in March. The popularist parties are expected to announce their decision on Monday. Should their negotiations, be going well, as reports suggest, and they agree upon a Prime Minister who is accepted by the Italian President, they will be the first anti-establishment government in Italy and in Western Europe."