Markets pause for thought, oil prices go into reverse and Entain rises on renewed bid speculation

“Markets have taken a moment to reflect on last week’s barrage of data points which caught people by surprise,” says Russ Mould, Investment Director at AJ Bell.

“With little on the corporate reporting agenda and many people enjoying annual leave during the Easter school holiday, the pause has come just at the right time. It provides an opportunity to weigh up what’s really going on and what could happen next.

“In a nutshell, we’ve had hotter than expected jobs data and an oil price that has been sneaking higher, implying that the economy is resilient despite higher interest rates while at the same time sounding an alarm that the pace of inflation could speed up, due to the respective forces. That certainly gives the Federal Reserve a lot to think about – indeed, it strengthens the argument for rates to remain at their current level for a lot longer.

“On paper, markets should have tanked at the jobs news. Yet Wall Street ended the day more than 1% higher in the case of the S&P 500 and the Nasdaq. Markets aren’t behaving as one might expect.

“Investors have been desperate for rate cuts, so the idea that they’ve been kicked down the road should in theory have been negative for equities. Yet investors might have shown some relief that the US economy is not keeling over. One thing for sure is that markets can turn on their head at the slightest comment from someone in the Fed or economic data point, so investors will need to stay alert.

“Fast forward to the start of the new trading week and Brent Crude oil has fallen 1.7% to $89.60 per barrel as tensions ease in the Middle East. European equities looked as if they wanted a lie-in, with minimal movement across the board. The FTSE 100 only managed to nudge up 0.1% to 7,921 in early trading while pre-market indicative prices suggest a lacklustre on session in the US when its markets open for trading on Monday.”

Entain

“Gambling group Entain took the top spot on the FTSE 100 risers list after speculation over the weekend that private equity group Apollo might be interested in making a takeover offer for some or all of the business.

“The Ladbrokes owner has previously been subject to interest from MGM and DraftKings, but neither suitor managed to place a winning bid. Since then, Entain’s share price has lagged many of its peers and left it a sitting duck for a third party to swoop on the business. Entain is particularly vulnerable at the moment as the business is being run by a caretaker manager while the board searches for a permanent CEO.

“Expect a few twists and turns if the starting gun is fired again on any bid action as there will no doubt be multiple parties interested in picking apart Entain. It already has multiple activist investors on the shareholder register and they won’t let someone casually waltz along and snap it up on the cheap.

“Scale matters in the gambling sector and Entain has its fingers in many pies around the world, including the US which offers some of the best growth opportunities geographically for the industry.”

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