FTSE takes a step back after strong run, GVC scraps first half dividend

“A combination of some big stocks trading without the rights to their dividend and a bit of profit taking after a strong run for equities so far in August saw the FTSE 100 on the back foot on Thursday morning,” says AJ Bell Investment Director Russ Mould.

“The index was still north of the 6,200 mark as investors awaited the latest unemployment figures from the US later.

“Gold prices steadied after a rapid retreat from their $2,000 per ounce plus highs, while oil continued to make gains as US crude inventories fell and OPEC looked set to continue with production cuts."

GVC

“The mixed response to GVC’s first half results reflects some encouraging signs on trading but also disappointment at the decision not to pay a dividend.

“While the continuing uncertainty over the coronavirus pandemic is a valid reason for holding fire on dividends, management may also have been weighing political considerations given it was a heavy user of the furlough scheme and it faces an ongoing tax investigation into its former operations in Turkey.

“Otherwise there were some bright spots in the first set of numbers announced under new chief executive Shay Segev who stepped in somewhat unfavourable circumstances when his long-standing predecessor Kenny Alexander stepped down unexpectedly.

“Driven by acquisitions Alexander had led GVC all the way from AIM up to the FTSE 100. The next growth opportunity for the group is the US.

“Followers of the UK gambling industry will have seen companies take big bets in America before and come up short.

“GVC certainly seems committed to throwing everything at the venture, pledging to invest whatever it takes to secure a market leading position.

“On both sides of the Atlantic the threat of increased regulation remains a live issue, as the economic fall-out from Covid-19 continues the bookies may be an obvious target if they thrive while individuals are facing financial difficulty.”

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