FTSE on track for blockbuster week, ITV drops plan to buy Gogglebox maker, and Burberry sees China sales rebound

“The FTSE 100 squeezed out another drop of happiness at the end of what’s been a positive trading week for equities. The UK blue chip index rose six points to 7,446, putting it on track to end the week 2.6% higher as US inflation pressures ease, raising the hope that the Federal Reserve is near to the end of its interest rate hike cycle,” says Danni Hewson, Head of Financial Analysis at AJ Bell.

“A month after saying it was looking at buying Gogglebox maker All3Media, ITV has done a U-turn and said the deal is not happening. This comes a day after reports that All3Media customer Channel 4 was unhappy about the potential acquisition by ITV, saying it would harm competition in the market.

“While there was clear strategic logic in owning the business, as it would help to beef up ITV’s production and content capabilities, perhaps the broadcaster thought it would be too complicated a deal to get past the competition authorities.

“With the prospect of a downturn in advertising on the horizon, ITV’s management already has enough on its plate without the distractions of trying to push through a big acquisition.

“The list of winners from the cost-of-living crisis keeps getting bigger, with McBride the latest to say business is booming thanks to what’s going on in the world. It supplies supermarkets with own-label products including dishwasher tables and surface cleaners.

“Consumers have been actively looking for ways to cut their shopping bill and more have opted for cheaper alternatives to big brand products as an easy way to save a few quid. McBride as a business has been through many wars over the years but it has come out on top this year. The shares jumped 22% on its latest trading update, meaning they are now up more than 50% year-to-date.

“The big wheel has been grinding to a halt in Hollywood as workers go on strike and streaming platforms sharpen their axe as more shows are cancelled in the name of cost-cutting. That’s disastrous for companies serving the film and TV industry as subtitling and dubbing specialist ZooDigital has just found out.

“Its share price sank 33% on a nasty profit warning linked to disturbance in its end-markets. Investors might be watching Facilities by ADF a lot closer as a result, being another TV/film service provider on the UK stock market, providing catering, dressing room and production vehicles.”

Burberry

“A strong footprint in China means the country’s faltering post-Covid recovery was always likely to have a negative impact on sentiment towards luxury goods firm Burberry.

“Expectations for a big bounce coming out of lockdown for the Chinese economy had clearly run ahead of themselves. In the West a wave of so-called ‘revenge spending’ followed the easing of restrictions but China’s population had been less protected from the economic impact of Covid by their government and, as a result, any recovery was likely to be more steady than spectacular.

“This could be a good thing for Burberry if it also means a pick-up in economic activity is more sustainable.

“Certainly, sales have surged from a low base and this should remain a helpful tailwind for much of the rest of the year as Burberry outstrips easy comparatives from when China’s zero-Covid policy was still in place.

“Less impressive is the performance in the Americas. Burberry is likely to face a big test of its luxury credentials in the coming months. When economic times are tough, sales of true luxury goods are often relatively unaffected as the wealthy clientele who buy them are insulated from the worst of the impact. Does Burberry have the necessary cachet?

“The reception given to the work of Burberry’s new design chief Daniel Lee – whose product is set to hit the shelves in September – will be important for the business.”

These articles are for information purposes only and are not a personal recommendation or advice.