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FTSE gains ground as Glencore leads mining shares higher

Discussion in 'Market News' started by Lily, Mar 14, 2016.

  1. Lily

    Lily Forum Member

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    Hopes of further Chinese stimulus measures lift commodity companies

    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 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.

    ITV looks cheap against peers and the advertising outlook may be better than the April number suggests.

    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.

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