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“The FTSE 100 is weighed down by strength in sterling as optimism builds that Boris Johnson may, after all, secure a Brexit deal,” says AJ Bell Investment Director Russ Mould.
“This outweighed encouraging signs in the other big drama over trade, as Donald Trump hailed a ‘very, very good’ first day of negotiations with China in Washington. Overall this left the index of leading UK shares flat on Friday morning."
Dart Group
“The impact on the industry of Thomas Cook’s collapse is reflected in today’s trading update from the owner of airline Jet2, Dart Group.
“Dart was always a likely beneficiary because it offers both flight-only and package holidays and is a natural home for customers looking for something similar to Thomas Cook’s proposition.
“In particular, Jet2 was well placed to strengthen its market leading positions on the Iberian Peninsula given that the region represented a third of Thomas Cook’s capacity.
“Today’s news is also likely to raise expectations for a similar boost for other Thomas Cook rivals including TUI.
“With Dart’s profit guidance for the current year to March upgraded, the question for investors is whether the business will just enjoy a short-term lift or enjoy something more lasting.
“Perhaps unsurprisingly management are cautious on the outlook, it is notable they even go so far as being ‘very cautious’.
“There are several reasons for this, including the weak pound – which as well as increasing costs undermines the purchasing power of UK holidaymakers – plus the wider uncertainty associated with Brexit.
“The performance of Jet2 in the coming months and the fate of Hays Travel, which agreed to buy 555 Thomas Cook stores this week, could help reveal if reports of the death of package holidays were greatly exaggerated or not.”
Entertainment One
“Investors in Peppa Pig owner Entertainment One may be breathing a sigh of relief this morning over its decision to accept a takeover approach from toymaker Hasbro in August.
“Its first quarter trading doesn’t make for great viewing. Just days before the £3.3bn deal is put to a vote the company has posted a more than £40m loss for the first quarter as revenue falls 7%, debt increases and it counts the cost of its own acquisitions.
“While the takeover was always likely to be approved, today’s update will sharpen shareholders minds with many likely feeling a bid came just in time.
“And the hope now must be that there are no issues over the regulatory approval of the transaction.”
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