The pleasant surprise on inflation figures across the pond gave US stocks a welcome lift and this positive sentiment extended to Europe on Thursday, except the UK.
The FTSE 100 was flat at the market open, with dollar weakness weighing on the large number of UK stocks which earn revenue in that currency. A stronger pound against the dollar creates a headwind for the big dollar earners on the UK market, and there are plenty of them, including miners and oil producers.
“Also weighing on the market were several big names trading without the rights to their latest dividends, including Barclays, Shell, Rio Tinto and AstraZeneca.
“Entain continues to find new flags to plant across the world, this time making moves on the Croatian market. The London-listed gambling group has found a recipe for success which can be replicated around the world, helping it build scale and market dominance. While a lot of the excitement for Entain continues to be the rich opportunities in the US, underpinning the relentless bid rumours, it’s important to remember this company is a major player globally,” says Danni Hewson, financial analyst at AJ Bell.
“The key test for Entain will be if a recession strikes in many of its operating territories. On one hand, this could threaten earnings if people are watching the pennies more closely and scaling back on spending. On the other, history suggests a lot of people like to try their luck during hard times, in the hope of winning a big prize.
“If you thought life was going badly at Netflix, along comes another blow, with Disney overtaking the streaming rival in terms of subscriber numbers. Admittedly Disney’s 221.1 million subscribers (versus Netflix’s 220.7 million) are based on more than just its Disney+ platform, as they include Hulu and ESPN+.
“Combined with a recovery in demand for its theme parks post-pandemic, Disney is sitting pretty. However, the high-ticket price for visiting its parks makes it vulnerable to a drop in demand in an economic downturn. And we all know the world of streaming is only as good as the quality of the content, which means consistently spending big bucks to create new shows and films.
“GSK’s demerger hasn’t quite produced the success story it expected. The demerged entity, consumer goods seller Haleon, continues to slip in price, falling another 6% on Thursday.
“This might be down to GSK investors ditching the Haleon shares they were given for free as they are only interested in pharmaceuticals, rather than the latter’s toothpaste and headache pills. Or it could be investors nervous at Haleon’s growth prospects in a world where cash-strapped consumers can easily shun big name, expensive brands in favour of cheaper, supermarket own-brand products.
“But perhaps the key reason for share price weakness in Haleon and GSK itself might be market worries over lawsuits concerning Zantac, a heartburn drug made by GSK and withdrawn in 2019 over fears it was contaminated with a chemical linked to cancer.”
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