FTSE 100 dips on ex-dividend companies, GSK’s Haleon demerger sinks

A weaker US dollar dragged on blue-chip companies reliant on the currency as the FTSE 100 dipped 0.3% to 7,479 in early afternoon trading on Thursday.

“[Dollar] weakness [weighed] on the large number of UK stocks which earn revenue in that currency,” said AJ Bell financial analyst Danni Hewson.

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“A stronger pound against the dollar creates a headwind for the big dollar earners on the UK market, and there are plenty of them, including miners and oil producers.”

Meanwhile, the FTSE 100 was pulled further down by a slate of companies trading ex-dividend, as Barclays dipped 1.1% to 167.8p, Rio Tinto dropped 4% to 4,799.2 and Astra Zeneca fell 1.5% to 11,064.6p.

Entain

Entain was the big riser on the market today, climbing 6.4% to 1,393.5p after the gambling company announced sparkling results, alongside its new Entain CEE partnership with EMMA Capital to expand across Central and Eastern Europe.

“Entain continues to find new flags to plant across the world, this time making moves on the Croatian market. The London-listed gambling group has found a recipe for success which can be replicated around the world, helping it build scale and market dominance,” said Hewson.

“The key test for Entain will be if a recession strikes in many of its operating territories. On one hand, this could threaten earnings if people are watching the pennies more closely and scaling back on spending.”

“On the other, history suggests a lot of people like to try their luck during hard times, in the hope of winning a big prize.”

The betting firm reported a 19% revenue growth to £2.1 billion as retail performance reopened to a strong rebound, offsetting a fall in online revenue.

Entain also unveiled a new dividend policy, including a FY 2022 dividend of £100 million to be split in half, per HY period, representing an 8.5p per share payout for HY1 2022.

“Positive performance and the rebound of retail has paved the way for a fresh and revitalized dividend policy. Starting at £100m over the current year, split between the first and second half, that’s expected to grow from here,” said Hargreaves Lansdown equity analyst Matt Britzman.

Haleon

On the other end of the index, GSK’s Haleon demerger continued to dent investor confidence, with the gamble failing to spark the attractive returns GSK had hoped to achieve.

GSK shares sank 8.2% to 1,428.9p and Haleon shares fell 5.5% to 263.9p.

“GSK’s demerger hasn’t quite produced the success story it expected. The demerged entity, consumer goods seller Haleon, continues to slip in price,” said Hewson.

“This might be down to GSK investors ditching the Haleon shares they were given for free as they are only interested in pharmaceuticals, rather than the latter’s toothpaste and headache pills. Or it could be investors nervous at Haleon’s growth prospects in a world where cash-strapped consumers can easily shun big name, expensive brands in favor of cheaper, supermarket own-brand products.”

“But perhaps the key reason for share price weakness in Haleon and GSK itself might be market worries over lawsuits concerning Zantac, a heartburn drug made by GSK and withdrawn in 2019 over fears it was contaminated with a chemical linked to cancer.”

US Markets

Across the Atlantic, US markets responded positively to Wednesday’s inflation figures, which came in below analyst expectations at 8.5% as a result of lower gas prices across the country.

The Dow Jones was up 0.4% to 33,424 in pre-open trading, with the NASDAQ rising 0.4% to 13,451.7 and the S&P 500 gaining 0.4% to 13,451.7.

Disney+

Disney+ also reported a banner Q3, with shares rising 8.5% in pre-open trading after it beat streaming giant Netflix for its crown by soaring to 221.1 million subscribers against Netflix’s 220.7 million.

“If you thought life was going badly at Netflix, along comes another blow, with Disney overtaking the streaming rival in terms of subscriber numbers,” said Hewson.

“Admittedly Disney’s 221.1 million subscribers (versus Netflix’s 220.7 million) are based on more than just its Disney+ platform, as they include Hulu and ESPN+.”

“Combined with a recovery in demand for its theme parks post-pandemic, Disney is sitting pretty.”

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