Unlike other European markets, UK shares slipped back last week but have at least started the new trading session on a positive note.
Michael Hewson, chief market analyst at CMC Markets UK, said:
While European and US markets managed to book their fourth successive week of gains they still remain in negative territory for the year, though the FTSE 100 did slip back slightly last week, largely as a result of weak performances from the mining, oil and gas and banking sectors which all posed negative weeks, and weighed overall.
This week looks set to get off to a positive start due to Asia markets following on from the positive end to last week, as we look ahead to another week of headline risk from data and central banks.
The Bank of Japan meets over the next two days, while the US Federal Reserve will unveil its latest interest rate decision on Wednesday, the same day as the UK budget. The day after comes the Bank of England announcement.
China’s central bank could also be in the spotlight. Weak retail sales and industrial production figures from the world’s second largest economy over the weekend prompted speculation the bank might be prepared to provide more stimulus to boost the flagging economy.
This thought has helped mining shares, with Glencore up 6.3p to 148p, Anglo American adding 19.6p to 535.2p and BHP Billiton 19.8p better at 835.6p.
So overall the FTSE 100 is currently 32.91 points higher at 6172.70.
ITV has climbed 3.5p to 237.9p following a report in the Sunday Times that Channel 4 could be privatised. That could help ITV if it leads to the introduction of retransmission charges, said Liberum. In a buy note analyst Ian Whittaker said:
The Culture Secretary yesterday indicated he was in favour of privatising Channel 4. We see this as increasing the chances of the introduction of retransmission fees for the main public service broadcasting channels, which would be a boost to both ITV’s earnings and rating.
If ITV could charge £1 per month per pay-tv subscriber for ITV1, we estimate this would boost full year revenues (and adjusted pretax profit, as it would be 100% margin enhancing) by £145m, or a 12% boost to our current 2017 estimated ITV forecasts (we currently do not assume any retransmission revenues for ITV1 in forecasts). It should also – as it did for the US broadcasters – lead to a re-rating of the shares.
Morgan Stanley was also positive on the broadcaster:
ITV looks cheap against peers and the advertising outlook may be better than the April number suggests.
But Liberum’s Whittaker repeated his sell rating on Pearson, up 0.5p to 872.5p, after comments from a US book business. He said:
Barnes and Noble Education, a major US college bookstore business reported third quarter numbers last week and indicated it was seeing a number of structural headwinds in the sales of textbooks and materials in the US higher education market: “As we look at sales for the quarter by merchandise category, our textbook sales declined 5.4% on a comparable basis, primarily due to the later Rush period and decreased enrollments in community colleges. Aggressive online marketplace pricing, digital direct courseware sales, OER (Open Education Resources) content, along with students’ reluctance to purchase textbooks, is providing some headwinds for course material sales. In order to combat these headwinds, we have successfully piloted our textbook price-matching program on multiple campuses this fall, and again during the Spring Rush.” This seems at odds with Pearson’s comments about “cyclical/policy” factors being the main reason for the problems it faces in its US higher education side, which we estimate is at least one-third of group profits.
Insurer Admiral has fallen 41p to £18.74 after a good recent run as HSBC moved from buy to hold, while the same bank reduced its rating on transport group Stagecoach, down 13.6p to 259.8p, from hold to reduce.
Aviva is down 6.4p at 489p as RBC issued an underperform rating, although it raised its target price from 460p to 480p.
The Guardian
