FTSE 100 rises as investors exude confidence in US containment measuresOn June 29, 2020 by Thomas Belayneh
The FTSE 100 rose 1.08% as Florida and Texas rowed back reopening measures following surges in coronavirus cases. This follows recent announcements from Florida, Texas and Arizona that they would pause their reopening plans.
Investors welcomed further steps taken by the US states of Florida and Texas to stem record surges in covid-19 cases, as concerns over the US’ lax approach to virus containment measures began to seep into investor sentiment leading to significant falls in global equity indices.
Authorities in Florida have ordered bars to stop serving alcohol, whilst Texas has instructed its bars to close completely and restaurants to operate at 50% capacity.
Leading the index higher was International Consolidated Airlines Group, the Anglo-Spanish airlines group, (Ticker: IAG) following comments from Iberia chairman and CEO, Luis Gallego, that the group would review its €1bn acquisition of Spain’s third largest airline, Air Europe.
Mr Gallego believes that whilst the deal makes strategic sense, the current climate in the airlines industry puts the financial viability of the deal in doubt. IATA (the international air transport association) forecasts that passenger numbers may not recover to 2019 levels until at least 2022, so, with liquidity already battered from the bruising air travel restrictions, IAG may walk away from the deal or even negotiate a lower price for the Spanish airline than was negotiated in November.
Betting groups GVC holdings (Ticker: GVC) and Flutter Entertainment (Ticker: FLTR) were the two biggest fallers at -2.72% and -2.04% respectively, as the Committee of Public Accounts published a damning report on problem gambling and protecting vulnerable people on Sunday.
The committee estimates that there are 395,000 problem gamblers in the UK, ‘with a further 1.8 million people at risk’. In the report, the committee argues the department for Digital, Culture, Media & Sport, as well as the Gambling Commission, have failed to adequately protect vulnerable consumers.
As gambling has moved increasingly online and new games hot off the press attract a growing crowd, the committee calls for more efficient and effective regulation in a fast-moving industry.
They also call for the regulator to be proactive in influencing firms to treat consumers better, particularly in light of the the surge in online gaming as countries around the world were plunged into lockdown.
All this is clearly not good news for gambling firms, whose shares have rerated sharply higher in light of accelerating revenue growth during the pandemic.
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