InterContinental Hotels gobbles up Six Senses, Smurfit Kappa growth slows
London open
The FTSE 100 is expected to open 30 points higher on Wednesday, having closed up 0.06% at 7,133.14 on Tuesday.
Stocks to watch
InterContinental Hotels Group has announced the acquisition of Six Senses Hotels Resorts and Spas from Pegasus Capital Advisors for $300m in cash. The acquisition includes all of Six Senses' brands and operating companies but does not include any real estate assets. The business manages 16 hotels and resorts and there are a further 18 management contracts signed into its development pipeline.
Smurfit Kappa saw growth slow in the final few months of last year but the Irish packaging group still delivered strong growth in profits and cash flow. The FTSE 100 group's calendar year revenue of €8.95bn was up 4% on the previous year, with profit before tax and exceptional items up 56% to €938m. With free cash flow swelling 61% to €494m, the dividend was lifted 12% to 72.2 cents a share.
Dunelm reported “strong” like-for-like revenue growth in its interim results on Wednesday, with underlying revenue growing 6.9% to £473.9m, and increases seen both in store of 3.8%, and online of 35.8%. The FTSE 250 home furnishings retailer said its gross margin improved by 170 basis points year-on-year, as a result of improved sourcing, foreign exchange benefits and the removal of its less profitable Worldstores lines. Profit before tax was £70.0m for the 26-week period to 29 December - up 16.7% year-on-year.
BHP on Wednesday approved $696m in funding to develop its share of the Atlantis Phase 3 project in the US Gulf of Mexico. This follows sanction by BP, as the operator, of the project last month.
Newspaper round-up
Business leaders have demanded the prime minister answer 20 crucial questions before the 29 March deadline to prevent a chaotic no-deal Brexit. The British Chamber of Commerce (BCC), the UK business trade body, said that without greater clarity over import and export duties, border controls and customs procedures, Theresa May risked thousands of companies suffering a potentially catastrophic shock when the UK quits the European Union. - Guardian
Theresa May’s chief Brexit negotiator has contradicted the prime minister’s position on Brexit. Olly Robbins was overheard by an ITV News journalist in a Brussels hotel bar suggesting that MPs would be confronted next month with a “significant” delay to Brexit if they did not vote for the prime minister’s deal. This suggests that Mr Robbins believes that backbench moves led by Yvette Cooper and Nick Boles to stop a no-deal will succeed. - The Times
The Government has called on competition watchdogs to examine the stranglehold of Google and Facebook over the £14bn digital advertising market amid concern that “opaque” practices deny publishers a fair share. Jeremy Wright, the Culture Secretary, has written to the Competition and Markets Authority (CMA), urging it to study the sector for evidence of abuse of dominance by the Silicon Valley giants. - Telegraph
US close
US stocks closed sharply higher on Tuesday as investors welcomed news of a tentative deal to avert another government shutdown.
At the close, the Dow Jones Industrial Average was 1.49% higher at 25,425.76, while the S&P 500 closed 1.29% firmer at 2,744.73 and the Nasdaq Composite moved ahead 1.46% firmer at 7,414.62.
The Dow closed more than 370 points higher on Tuesday as sentiment was boosted by news that Democrats and Republicans had reached an agreement in principle over border security that involves 55 miles of new border fencing and could avert another partial government shutdown.
While the deal still requires Trump's signature, the White House would receive $1.4bn in funding - versus the President’s request for $5.7bn - to erect 55 miles of new fencing built through existing designs, such as metal slats, instead of a concrete wall.
If Trump does not sign the bill for the deal, the US government will once again close down, potentially impacting thousands of civil servants.