Vodafone agrees deal to increase Vodacom stake, TUI confident in earnings growth potential

London open

The FTSE 100 is expected to open 23 points higher on Monday, after closing up 0.66% at 7,435.39 on Friday.

Stocks to watch

Vodafone said it has agreed to transfer 35% of its indirect shareholding in Safaricom to Vodacom Group, its sub-Saharan African subsidiary, for 226.8 million new Vodacom shares. The transaction, which has a value of €2.4bn based on Vodacom's closing share price on May 12, will increase Vodafone's ownership in Vodacom to 70% from 65%.

Thomson travel owner TUI said it remains confident it can grow underlying earnings 10% this year even though losses grew in the first half. Revenue for the six months until the end of March grew 8.2% to €6.69bn and underlying losses before interest, tax, depreciation and amortisation declined 3.8% to a €214.4m loss, although if the later Easter and currency effects are removed the loss improved by 6.3%.

Electra Private Equity and its investment manager Epiris announced on Monday that its portfolio company AXIO Group has agreed the sale of intellectual property and technology services provider TechInsights to Oakley Capital. The FTSE 250 firm said the sale was expected to complete within a fortnight, and was the seventh and final major realisation from the AXIO portfolio. Based on exchange rates on Monday morning, Electra Private Equity would receive proceeds from the transaction of £26m, taking total cash proceeds received by Electra from its AXIO investment to £455m, or five times the investment’s original cost, with an internal rate of return of 76%.

Newspaper round-up

British workers should brace themselves for rising unemployment and falling real pay in the year ahead as the impact of a Brexit slowdown is increasingly felt in the jobs market, reports have warned. The era of rapidly increasing employment is over, according to the forecasting group EY Item Club, which on Monday predicted the unemployment rate will rise from 4.7% now to 5.4% in 2018 and 5.8% in 2019. - Guardian

Britain could see its fourth deficit rule in as many years, economists believe, as the Government has to keep adapting its borrowing targets. The rules are intended to show voters and financial markets that the national debt is under control, though economists fear that “moving the goalposts” undermines the purpose of the rules altogether. - Telegraph

One of the energy companies’ main arguments against a price cap has collapsed after the competition watchdog’s alternative plan to help consumers was shelved indefinitely. The industry has argued that reforms proposed by the Competition and Markets Authority last year should be allowed to work before the government intervenes further in the market. - The Times

Emmanuel Macron will on Monday use his first international trip to try and persuade Germany to build a common eurozone budget, a day after being sworn in as France's youngest ever president. He also hopes to discuss plans for a Buy European Act, ramping up European defence, and German investment to boost EU growth. - Telegraph

The massive ransomware attack that caused damage across the globe over the weekend should be a “wake-up call” for governments, the president of Microsoft has said. Security officials around the world are scrambling to find who was behind the attack which affected 200,000 computer users and closed factories, hospitals and schools by using malicious software that believed to have been stolen from the US National Security Agency. - Guardian

US close

Weak readings on inflation and retail sales sent the S&P 500 to its first weekly loss in three with retailers again bearing the brunt of selling.

The Dow Jones Industrial Average fell by 0.11% to 20,896.61, alongside a dip of 0.15% for the S&P 500 while the Nasdaq Composite managed to eke out a higher close, rising 0.09% to finish at 6,121.23.

For the week, the S&P 500 lost 8.39 points after hitting a fresh record high on Wednesday, with the CBoE's VIX volatility gauge ending 1.89% lower on Friday at 10.40.

"We're ending another week with stocks at record highs and volatility at rock bottom. This week was notably good for the tech-heavy Nasdaq as Apple topped a market cap of $800bn for the first time. Things are very calm right now – and that’s typically what happens before the next panic," LCG's Jasper Lawler told clients in a note.

The worst performing industrial groups were: Heavy construction (-2.79%), Apparel retailers (-2.75%), Tires (-2.60%), Furnishing (-2.03%) and Retail REITs (-2.02%).