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Markets Today: Positive vaccine news as Brits head to the beach

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May 18, 2021
  • More positive trial news from GSK
  • UK unemployment figures hint at recovery, but hospitality is not out of the woods yet 
  • Amazon remains on the acquisition hunt

Brits heading to the beach in their first week away for five months might be disappointed when they seek out their first post-lockdown ice cream. The UK is facing a shortage of Cadbury 99 Flakes: “we’re seeing a surge in demand that we had not expected,” said a spokesperson from Cadbury’s US-owner Mondelez. 

The anecdote feeds into the story being told by the likes of Trainline and National Rail last week that Brits are seeking out staycation, rather than travel abroad. Although reports from the airports yesterday suggest that many of us are desperately seeking respite from the UK’s miserable May. Green-listed Portugal and amber-listed Greece are high on the agenda for international travel in the coming weeks and months. 

There are signs of recovery elsewhere. The UK’s unemployment rate fell to 4.8 per cent in April, from 4.9 per cent in March - an unspectacular decline, but a trend in the right direction. 

But job vacancies are at their highest level in 12 months, as the hospitality sector in particular struggles to fill roles. The combined impact of Brexit and Covid-19 has sent many foreign workers back to Europe, leaving vital jobs in restaurants and bars empty. Add to the fact that fewer students are seeking jobs in university towns and many hospitality staff who had been furloughed during the pandemic have found work elsewhere, and the outlook is tough for the industry which has surely faced its fair share of challenges. Filling vacancies may require more generous remuneration - an unwelcome challenge to margins.

Hospitality might not be the only sector facing wage growth as inflation fears continue to spiral. The IC’s resident economist Chris Dillow doesn’t think that wage increases, or monetary growth, or commodity prices are the main thing to fear about inflation, “but rather from policy or from structural failings in the economy.” Read his full outlook here.

Where should media assets live?

Just three years after the $85bn acquisition of Time Warner made AT&T (US:T) one of the most indebted businesses in the world, the telco giant has said that it will spin off and combine Warner Media with its rival Discovery (US:DISCA).  Under the terms of the all-stock merger,  AT&T should receive $43bn (£30bn) in a combination of cash, debt securities and Warner Media’s retention of some debt. Lauren Almedia has dug into the details of the deal here. 

Meanwhile, Amazon (US: AMZN) is rumoured to be in acquisition talks with content giant MGM. According to an FT report, Netflix (US:NFLX) was in discussions with MGM about acquiring the title for a streaming release, but was put off by its $9bn asking price. The shifting landscape of the media industry is something we explored in last week’s cover feature, in the context of the challenges facing the BBC.

Is Alphawave the new ARM?

When ARM was bought by Japanese company Softbank, British investors bemoaned the lack of technological innovation available on the London stock market. As ARM continues its international corporate actions tussle, British investors might have a new destination for their money. Newly listed Alphawave explicitly compares itself with the business model that ARM perfected: namely, licensing its technology to chip manufacturers on which it then intends to earn royalties. Julian Hoffman explains why the company could fill the gap in the market left by ARM despite its lacklustre IPO performance.

We’ve updated all of this morning’s top stories in the blog below. Join the conversation on Twitter or by having your say in our polling.