The prospect of a global trade war is back on the agenda after Donald Trump approved tariffs on $50bn worth of Chinese imports. Click here for The Trader Nicole Elliott's latest take on the markets.
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Telecoms regulator Ofcom has suggested BT (BT.A) has retained too much control in the running of Openreach, sparking fresh concerns that the broadband provider may be split from the wider group. Without the substantial cash flows from Openreach, beleaguered BT would struggle to match the capital intensive demands of its pension scheme dividend and mobile spectrum. We think it is only a matter of time before the worryingly high yielding dividend is cut. Sell
Ascential (ASCL) will deploy £19m of the cash made on the sale of some of its events into WARC - a digital subscription service which improves the outcome of marketing. The acquisition comes as part of the group’s strategy to diversify away from events and into online. Buy
One week on from our sell tip, Glencore (GLEN) appears to have settled two of its four headaches in the Democratic Republic of Congo. Following a debt-for-equity swap with state-owned Gécamines, the company has today decided to resume royalty payments to Dan Gertler, in exchange for the US sanctions-hit billionaire dropping “all pending and threatened litigation”. The move, which Glencore has concluded is “the only viable option to avoid the material risk of seizure”, will be made possible by paying royalties owed to Mr Gertler’s associated companies in euros, rather than dollars. Between a potential SFO probe and a punitive set of new mining laws in the DRC, we remain sellers.
Stobart Group (STOB) has fired its executive director and former chief executive Andrew Tinkler and will be pursuing legal action for breach of contract and fiduciary duty. In May Mr Tinkler wrote a letter to shareholders urging them to vote against the re-election of chairman Iain Ferguson and replace him with Philip Day. The board also accused him of destabilising the company by writing to all employees. Shares fell more than 3 per cent in early trading. This infighting is unfortunate, but the underlying business remains solid. The announcement earlier this week that Ryanair (RYA) would base planes at Stobart’s London Southend Airport from next year is also encouraging. Buy.
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Shares in Rolls Royce (RR.) climbed 12 per cent in early trading after the engineering giant confirmed that its free cashflow guidance for 2018 was unchanged at £450m, plus or minus £100m, despite the further issues encountered with its Trent 1000 engines. Management also said it was well-placed to exceed its free cashflow of £1bn by 2020. The update comes a day after management revealed plans to cut around 4,600 jobs as part of a restructure aimed at saving £400m a year by 2020.
US regulatory approval to two competitive opioid addiction treatments has sent Indivior’s (INDV) share price down nearly a fifth in early trading. One of the two drugs - owned by Indian generics pharma company, Dr Reddy’s - is set to be launched imminently, meaning analysts expect a 52 per cent hit to Indivior’s earnings in 2018.
First quarter figures from Tesco (TSCO) suggest that wholesaler Booker is already proving a nice addition to Britain’s largest supermarket chain. Group like-for-like sales improved by 1.8 per cent, while underlying sales at Booker shot up by more than 14 per cent. That 1.8 per cent growth rate exceeded last year’s 1 per cent improvement, despite disruptive snowfall in March this year. It also marks a tenth consecutive quarter of improved sales for the group as it continues to make it’s way back from a high-profile accounting scandal in 2014.
