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“The FTSE 100 started its penultimate trading day before Christmas with a modest slump after selling in Asia and the US overnight,” says AJ Bell Investment Director Russ Mould.
“Disappointing earnings from delivery and logistics outfit FedEx – often seen as an economic bellwether – and a general shift in market focus from when rates will be cut to the underlying health of the economy helped to temper investor optimism.
“A downturn would be unwelcome news for corporate earnings even if central banks move on rates as the market hopes. For now, stocks are walking a tightrope to a hoped-for soft landing for the economy.
“However, a higher-than-expected core US inflation reading tomorrow could tip us back into fretting about rates being higher for longer, while any downgrade to America’s final GDP estimate for the third quarter might elevate concerns about the health of the economy.
“There was bad news on the UK’s public finances as borrowing came in ahead of the anticipated level, though the pressure this put on the pound probably spared the FTSE 100 from greater losses at the open – given the implied boost to the relative value of the index’s dominant overseas earnings.”
Warner Bros Discovery / Paramount
“Reported talks over a combination of two of Hollywood’s ‘Big Five’ studios has logic. Consolidation in this sector feels inevitable – streaming is an extremely competitive market and the respective platforms owned by Warner Bros Discovery and Paramount have struggled to gain traction in a market dominated by Netflix and Disney and at a time when hard-pressed households are looking to scale back their subscriptions.
“A combined entity would have a greater arsenal of content with which to compete with their rivals. However, there may be some nervousness around any deal. While Warner Bros Discovery has been cutting costs and reducing leverage, Paramount’s balance sheet is under real strain.
“Bigger isn’t always better and given both are burdened with linear cable TV networks which appear to be in structural decline there is a danger combining will just double the problems. No surprise then to see share prices in both companies trading lower in reaction to the speculation.”
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