FTSE downbeat as Jackson Hole looms into view and Cineworld confirms possible bankruptcy filing

“The FTSE 100 began Monday in downbeat mood ahead of what could prove to be a critical moment for markets at the end of this week,” says AJ Bell Investment Director Russ Mould.

“The Jackson Hole summit of central bankers and finance ministers is widely expected to see US Federal Reserve chair Jerome Powell take to the floor and puncture optimism which has built up over hopes the Fed may be nearing the point at which it pivots away from rate hikes.

“The event coincides with the PCE (personal consumption expenditure) measure of inflation, which the Fed often uses as a guide for its actions. If this confirms the trend seen in the July CPI reading of a reduction in inflationary pressures then it might give investors some reason for renewed optimism.

Cineworld

“Cineworld may still be open for business but it has confirmed Friday’s speculation that it could file for Chapter 11 bankruptcy in the US.

“While it might provoke a few dozen think pieces on the demise of the cinema, in reality Cineworld’s problems stem from an overly aggressive growth strategy which relied on using huge amounts of debt to buy US chain Regal.

“This may have made Cineworld one of the largest cinema operators in the world, but bigger isn’t necessarily better and the pandemic swiftly exposed the company’s strained balance sheet.

“Filing for bankruptcy in the US to allow a restructuring of its finances probably gives Cineworld more flexibility than if the business went into administration under UK rules. However, shareholders don’t need a movie trailer to tell them more pain could be coming their way.”

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