Pound and stocks await the next move

Summary:

  • UK100.cash back around the 7200 level
  • Legal & General the UK's first £1tn investment manager
  • Profits fall for Paddy Power Betfair 

After a strong run higher of late the Pound has taken a pause as traders focus on the latest Brexit developments and the many permutations that could ensue. It’s a similar story for stocks with the FTSE little changed and back around the 7200 handle with the benchmark edging back near its year-to-date high and working on a 4th consecutive day of gains.      

 

Legal & General falls after trading update

The worst performing stock on the UK blue-chip index is Legal & General, with the financial services company off by 4% after releasing its latest earnings figures. The announcement that the firm has become the UK’s first £1tn investment manager despite negative market movements at the back end of last year has made the headlines, as net inflows have more than offset the drop in equity valuations caused by the stock market rout. Furthermore, another 10% increase in underlying profit - which makes it an 8th year of double-digit compound annual growth - is also pleasing, but investors have looked through this in the initial reaction to focus on the negatives. A worse than expected solvency ratio and a below forecast level of cash generation are not to be taken lightly, but the long term prospects seem to remain favourable for the firm going forward, with the selling seen likely just a case of investors taking some profits off the table after an impressive run higher of late.       

Legal & General shares have fallen after the latest earnings update with the stock pulling back from highs around the 2.90 mark once more. Source: xStation

 

Paddy Power Betfair to take a Flutter on new name

Tighter regulations on betting shops in the UK have weighed on the bottom line for Paddy Power Betfair, with the bookmaker posting an 11% fall in pretax profit, even though revenues rose by 7%. The company attributed some of the decline in profitability, which saw year-end figures dip to £219M, to investments in the US sports betting market which no doubt has potential and has opened up significantly in the past 12 months due to the relaxing of hitherto stringent regulations. At the AGM in May, shareholders will vote on whether they approve a proposed renaming of the group to Flutter Entertainment, in a bid to reflect the increasing diversity of the company, although the consumer-facing brands including Paddy Power and Betfair will remain unchanged.The proposed synergies of the merger between Paddy Power and Betfair have not quite lived up to their billing as of yet, but this latest update is fairly solid on the whole and shareholders will be hoping that the stock can arrest the slide seen in recent years.      

 

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