BT Group

It looks like being a fairly lacklustre end to the week with European markets slipping back slightly against a backdrop of a little uncertainty about the time line of a US tax reform package while over in Brussels UK Prime Minister Theresa May appears to have won the backing of EU leaders in transitioning into the next phase of Brexit talks.

In company news this morning’s announcement by BT Group and Sky is an interesting development in light of Disney’s intended acquisition of the brand. This morning’s deal certainly seems a better one for BT than it is for Sky given that Sky will take BT’s sport content while BT gets Sky’s sports, cinema and Sky Atlantic channel, and could even gain more access to content further down the road, depending on how the Disney takeover plays out.

The timing is certainly an interesting one given that the talks between BT and Sky have been ongoing for a few years now and maybe both parties have an eye on the next round of bidding rights on Premier League and Champions League, which starts next February.

The costs of these are not insubstantial amounts of money, and getting a return on this sort of investment is becoming much more challenging. At a time when content is all important and brands like Amazon and Netflix are proving such disruptors this tie-up could suggest a more collaborative approach when it comings to bidding next year.

When these rights were last up for negotiation Sky and BT went head to head, but with this agreement to cross sell across each other’s platforms could help keep a lid on prices if they refuse to go head to head with respect to the bidding rights.

Persimmon is amongst the underperformers after its chairman resigned in a row over executive pay.

Retail stocks have also slipped back after Swedish retailer H&M reported a big drop in Q4 sales of 4%. In response the company is expected to announce the closure of more stores while at the same time enhancing its digital operations. Other UK retail brands have slipped back with Next leading the decliners. 

The US dollar has come under pressure on the back of these tax reform jitters sliding back across the board with commodity currencies making the most headway, on the back of firmer commodity prices.

Despite closing down on the day US markets are expected to rebound modestly ahead of the latest US industrial production and empire manufacturing data. These are both expected to slow modestly with industrial production for November expected to rise 0.3% and Empire manufacturing slow to 18.7 in December from 19.4.

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