LONDON MARKETS: U.K. Stocks At 4-month High As Government Opens Up For Customs Union After Brexit
May 17 2018 - 4:45AM
Dow Jones News
By Sara Sjolin, MarketWatch
Betting companies take a beating, Ocado leaps on U.S.-market
deal
U.K. stocks edged up Thursday, as traders largely ignored a
rally in the pound and instead welcomed reports that Britain plans
to stay in the customs union after Brexit.
Betting companies took a beating after a government move to
drastically limit bets on certain machines.
What are markets doing?
The FTSE 100 index was up 0.1% to 7,741.74, which would be
enough to mark its highest close since Jan. 16, according to
FactSet data. A win Thursday would be the index's third in a
row.
The pound rose to $1.3510 from $1.3490 late Wednesday in New
York. A stronger sterling usually pull down the FTSE 100 as it eas
into revenue made overseas by the benchmark's many multinational
companies.
On Wednesday, sterling traded around its lowest dollar level
since late December, as the greenback rallied on speculation the
Federal Reserve could start to hike interest rates more
aggressively.
What is driving the market?
The pound advance followed a report that the U.K. government
plans to tell Brussels it wants to stay in the European Union's
customs union beyond 2021 in an effort to avoid a hard border with
Ireland. The report, in the Daily Telegraph
(https://www.telegraph.co.uk/politics/2018/05/16/britain-will-tell-eu-prepared-stay-tied-customs-union-beyond/),
said Prime Minister Theresa May's Brexit subcommittee has agreed on
Britain staying in the union on a temporary basis, if the
technology needed to keep the borders working after Brexit aren't
up and running.
Gambling companies were in the spotlight again after the U.K.
government's decision to cut the maximum bets
(http://www.marketwatch.com/story/uk-betting-companies-warn-of-financial-hits-2018-05-17)
that can be placed on fixed-odds betting terminals to 2 pounds
($2.70). People can currently bet up to GBP100 every 20 seconds on
such machines.
William Hill PLC (WMH.LN) , down 3.7%, said the changes could
cause a 35% to 45% fall in its total net gaming revenue.
Paddy Power Betfair PLC , down 0.5%, said the new stake limit
could cause a 33% to 43% fall in its total machine gaming
revenue.
William Hill and Paddy Power are still up 8% and 16%,
respectively, on the week after a favorable U.S. Supreme Court
ruling on Monday that could open sports betting around the
nation.
What are strategists saying?
Marshall Gittler, chief strategist at ACLS Global, noted that
while the Brexit developments may solve the problem of the Irish
border it may not be acceptable to the hard-care Brexiteers in
May's cabinet.
"It seems to me to be 'Brexit-lite,' leaving the EU in name but
not in reality, as remaining in the customs union also means
adhering to various EU rules and regulations without having any say
in their making. I'm not sure this is going to fly politically in
Britain. It may settle one problem, but set up another one -- a
cabinet revolt," Gittler said in a note.
Stock movers
On the FTSE 250 Index , shares of Ocado Group PLC (OCDO.LN)
soared 44%. The company, which runs online delivery services and
makes related software, said it has signed a partnership agreement
with U.S. supermarket chain Kroger Co
(http://www.marketwatch.com/story/ocado-entering-us-market-through-technology-deal-with-kroger-2018-05-17).(KR)
under which Kroger will use Ocado's technology in the U.S. for
grocery and other food-distribution activities.
Shares of Experian PLC (EXPN.LN) rose 2.3% after the
consumer-credit reporting agency said it expects to launch a new
share-buyback program of up to $400 million
(http://www.marketwatch.com/story/experian-profit-falls-plans-new-400-mln-buyback-2018-05-17).
British Land Co. PLC (BLND.LN) added 1.7% after the commercial
property company said pretax profit more than doubled in fiscal
2018
(http://www.marketwatch.com/story/british-land-pretax-profit-more-than-doubles-2018-05-17).
National Grid PLC (NG.LN) picked up 1% after the utility company
said its fiscal 2018 pretax profit rose 24%
(http://www.marketwatch.com/story/national-grid-yearly-profit-rises-24-2018-05-17).
It also said it expects its U.S. business to continue performing
well and that the U.K. business remains on track to outperform.
On a downbeat note, shares of Royal Mail PLC (RMG.LN) slumped 5%
after the company said fiscal 2018 pretax profit declined 37% due
to a pension charge
(http://www.marketwatch.com/story/royal-mail-yearly-pretax-profit-declines-2018-05-17).
(END) Dow Jones Newswires
May 17, 2018 04:30 ET (08:30 GMT)
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