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London midday: Stocks maintain gains ahead of Powell speech; Entertainment One rockets

By Michele Maatouk

Date: Friday 23 Aug 2019

London midday: Stocks maintain gains ahead of Powell speech; Entertainment One rockets

(Sharecast News) - London stocks were still firmly in the green by midday on Friday, with deal news injecting a little life into otherwise dull proceedings, as investors eyed a speech by Federal Reserve chairman Jerome Powell at the Jackson Hole symposium.
The FTSE 100 was up 0.8% at 7,182.03, underpinned by weakness in the pound, which fell 0.3% against the dollar to 1.2216 and 0.1% versus the euro to 1.1047.

Spreadex analyst Connor Campbell pointed out that all French President Emmanuel Macron and German Chancellor Angela Merkel did this week was make positive noise about a Brexit deal.

"Nothing more substantial than that was announced", he said. "And while, yes, it still means the currency has had a decent couple of weeks, in the wider context of the last few months it remains deeply troubled."

More broadly, all eyes will be on Powell's speech at Jackson Hole at 1500 BST.

David Cheetham, chief market analyst at XTB, said it is "not only the most anticipated event of the week for markets but arguably the whole month".

"Ever since then fed chair Bernanke announced another round of quantitative easing at Jackson Hole in 2011 this event has attracted intense scrutiny and while Powell is unlikely to declare any change to monetary policy this afternoon the tone of his address could well shape risk sentiment for global equities going forward," he said.

"Expectations are high with the markets currently fully discounting a 25 bps (basis points) cut next month, and around a 1 in 5 chance of a 50 bps reduction. This is a high bar to clear and should Powell rein in the current expectations then we could well get another swoon lower in stocks."

In equity news, Peppa Pig owner Entertainment One surged as it agreed to be bought by Hasbro in an all-cash deal valuing the UK company at £3.3bn. The US toymaker will pay £5.60 for each eOne share - 31% more than eOne's average share price over the past 30 days.

Russ Mould, investment director at AJ Bell, said the big question now is whether someone else will make a bid for ETO now it's in play.

"The shares were trading at 571p at the market open versus Hasbro's 560p bid, which implies the market is confident about a counterbid.

"It wouldn't be surprising to see Amazon or Netflix want to throw their hat in the ring given how Entertainment One has such a big library of content which they need in order to keep customers loyal to their streaming platforms. While both these companies already licence content from Entertainment One they only get the films and TV shows for a specific period of time.

"Perhaps more logical would be a counterbid from Disney given it is part owner of the PJ Masks brand alongside Entertainment One. The imminent launch of Disney's new streaming service would be an ideal time to lock in a host of new characters like Peppa Pig."

Shares of broadcaster ITV, which made a failed £1bn attempt at buying ETO back in 2016, were also on the rise, sitting pretty at top of the FTSE 100 index.

GlaxoSmithKline was trading up after the pharmaceuticals giant said a clinical trial of its blood cancer treatment met its primary goal.

Elsewhere, Computacenter rallied after saying it expects full-year profit growth to be "the best in the company's history" as it reported a 2.7% rise in adjusted interim pre-tax profits to £53.5m.

On the downside, shares of Woodford Patient Capital Trust slumped after it said the revision of the value of its holding in IH Holdings International will cut its overall net asset value by 3.4p.

Marks & Spencer was under pressure as the retailer faced demotion from the FTSE 100 index for the first time since it was formed 35 years ago, as it suffers the effects of high street decline and its own problems.

Market Movers

FTSE 100 (UKX) 7,182.03 0.76%
FTSE 250 (MCX) 19,387.12 0.95%
techMARK (TASX) 3,859.59 0.79%

FTSE 100 - Risers

ITV (ITV) 119.93p 4.60%
Burberry Group (BRBY) 2,189.00p 3.16%
Persimmon (PSN) 1,953.50p 2.82%
Berkeley Group Holdings (The) (BKG) 3,978.00p 2.79%
CRH (CRH) 2,675.00p 2.77%
TUI AG Reg Shs (DI) (TUI) 825.40p 2.74%
Barratt Developments (BDEV) 645.00p 2.71%
Rightmove (RMV) 541.40p 2.54%
Land Securities Group (LAND) 773.20p 2.19%
International Consolidated Airlines Group SA (CDI) (IAG) 429.10p 2.09%

FTSE 100 - Fallers

Marks & Spencer Group (MKS) 190.05p -0.89%
Evraz (EVR) 485.60p -0.88%
BAE Systems (BA.) 546.29p -0.64%
Sainsbury (J) (SBRY) 199.05p -0.33%
BP (BP.) 493.09p -0.28%
Rentokil Initial (RTO) 446.60p -0.18%
Royal Dutch Shell 'B' (RDSB) 2,275.57p -0.13%
NMC Health (NMC) 2,295.00p -0.04%
Royal Dutch Shell 'A' (RDSA) 2,287.00p -0.02%
Prudential (PRU) 1,385.00p 0.04%

FTSE 250 - Risers

Entertainment One Limited (ETO) 584.37p 31.79%
Sirius Minerals (SXX) 10.22p 5.04%
Bakkavor Group (BAKK) 109.40p 4.99%
Funding Circle Holdings (FCH) 119.40p 4.92%
Intu Properties (INTU) 33.64p 4.41%
Computacenter (CCC) 1,459.62p 4.33%
Hammerson (HMSO) 228.40p 4.29%
Euromoney Institutional Investor (ERM) 1,370.00p 3.47%
SIG (SHI) 123.90p 3.42%
Polypipe Group (PLP) 391.41p 3.38%

FTSE 250 - Fallers

Premier Oil (PMO) 75.92p -3.88%
Amigo Holdings (AMGO) 163.20p -3.66%
Woodford Patient Capital Trust (WPCT) 42.40p -3.42%
Metro Bank (MTRO) 277.00p -2.53%
Rank Group (RNK) 165.60p -2.47%
IP Group (IPO) 57.80p -2.20%
Tullow Oil (TLW) 209.20p -2.06%
Clarkson (CKN) 2,495.00p -1.96%
Syncona Limited NPV (SYNC) 227.50p -1.73%
John Laing Group (JLG) 353.01p -1.72%

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