FTSE 100 up despite Chinese deflation, Flutter hails exceptional US contribution ahead of New York move and TUI reports first third quarter profit since pandemic

“The market has spent so long fretting about inflation it feels discombobulating to suddenly switch attention to deflation,” says AJ Bell Investment Director Russ Mould.

“However, that’s what the latest data has revealed in China, raising further questions about the recovery of the world’s second largest economy from its zero-Covid stasis. Premature comparisons are being made with Japan, which faced lost decades after an economic boom in the 1990s.

“Given the broader disinflationary impact on the global economy though, these latest figures may give central bankers in the US, UK and Europe pause for thought when they weigh up their next steps. They cannot afford to repeat their earlier complacency over surging prices but they will want to avoid overdoing it, inflicting too much economic damage and perhaps being forced to undo their hard work by cutting rates before they’re ready to.

“Interestingly the FTSE 100 was higher this morning with firms whose fortunes are traditionally tied to China enjoying gains, perhaps amid hopes of further Chinese stimulus to get the economy moving.”

Flutter Entertainment

“Gambling stock Flutter continues to lay the groundwork for a move to the US, pointedly highlighting an ‘exceptional’ performance across the pond. This may be overegging things a touch given its American FanDuel business has only just nudged into profit. However, given the speed of the growth it can be forgiven for getting slightly carried away.

“The move of its primary listing to New York remains on track for the turn of the year and will further diminish the ranks of an increasingly depleted FTSE 100.

“Elsewhere the company’s debt is starting to look a touch burdensome in a rising interest rate environment and now the US business is starting to make a positive contribution to the bottom line, paying down these borrowings may become more of a priority for the company.”

TUI

“Holidays firm TUI has reported its first profitable third quarter period since the pandemic amid continuing signs of consumers prioritising a week on the beach with their dwindling disposable income.

“How long this can be sustained, as household budgets face continuing strain, is tricky to predict. TUI really needs to ensure it fixes the roof while the sun shines.

“The company has taken steps to repair a balance sheet which took severe damage during the pandemic but it is still sitting on lots of debt. It doesn’t want to be left exposed if the post-Covid boom in travel demand starts to ebb away.

“This means dividends remain a distant prospect. The Greek wildfires are a reminder of the risks posed by climate change and, amid increasing awareness of this issue, TUI needs to demonstrate how it can reduce its own emissions.”

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