Bookmakers’ shares are showing losses on reports that the UK government is planning to cut the maximum stake on fixed odds betting terminals from £100 to £2. It said in October it would reduce the stake to between £50 and £2, to tackle the “crack cocaine of high street gambling.” A consultation period ends on Tuesday.
William Hill is down 13%, Ladbrokes Coral has lost 12% and Paddy Power Betfair has fallen 2.6%. Analyst Alistair Ross at Investec said:
A DCMS official apparently indicated that while no formal decision has been made, £2 is ‘highly likely’. However Matthew Hancock, the new Secretary of State, has only just been appointed (9 January), and we think it is unlikely that a final decision on FOBT staking limits has actually been made. We also note that the FOBT consultation only closes tomorrow, and suspect speculation on the final outcome is premature.
As expected it has been an uncertain start to the week for European markets.
The FTSE 100 has fallen 0.13%, while France’s Cac is down 0.1%, Italy’s FTSE MIB has lost 0.33% but Spain’s Ibex is up 0.3%.
More on the German coalition talks. Here’s ING economist Carsten Brzeski:
Given the very detailed informative talks in January, the official coalition talks should not take too long – if all parties stick to the desired results. However, the SPD delegate pushed the party leaders to renegotiate details of the informative talks regarding the healthcare system, the labour market and immigration, increasing pressure on the SPD to bring some new political achievements from the forthcoming talks. The willingness of the CDU to really re-open some of the most controversial issues seems to be very limited.
… However, once there is an official coalition agreement, all SPD party members, more than 440,000, will get the chance to vote for or against it. Compared with today’s party congress, this party members’ vote will be a much tougher nut to crack.
And here’s our latest report on the talks:
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
It’s a fairly quiet start to the week at the moment but it is the quiet before the storm.
Later today the Davos shindig kicks off, with the great and the good putting the world to rights. One highlight, if that is the right word, is Donald Trump’s scheduled appearance on Friday, assuming it goes ahead in the midst of the US government shutdown.
Also this week come the latest policy meetings from the Bank of Japan – which surprised the market by announcing an unexpected slowdown in its bond buying programme – and the European Central Bank. UK unemployment figures and UK and US GDP numbers will also be closely watched.
But back to today, and ahead of the official start of the Davos meeting (the World Economic Forum to give it the proper name) comes the latest assessment of the global outlook from the IMF.
Not everyone is taken with Davos though. UBS’s Paul Donovan says:
The data calendar is pretty empty today. This leaves markets at the mercy of media coverage of events at the World Economic Forum in Davos. Significant policy announcements are unlikely, but Davos does give journalists an opportunity to pontificate while wearing silly hats.
It also gives locals in Davos the opportunity to rent out their premises to attendees and move out for the duration, as Rupert Neate reports:
Markets are likely to open in a mixed fashion, as investors take on board not only the US government shutdown, but the news from Germany that it came a step closer over the weekend to ending its political stalement and forming a coalition goverment. Michael Hewson, chief market analyst at CMC Markets UK, said:
Having seen the US government shutdown confirmed after last week’s US close there might be a case for suggesting that stocks may well be adversely affected. This seems unlikely in the long run given that the shutdown, at least in the short term, is likely to be fairly limited in nature, given that by and large economic data from across the globe continues to show a fairly robust level of economic activity.
Furthermore, dysfunctional US politics isn’t really anything new, in fact dysfunctional politics appears to be becoming the norm, not only in the US, but the world over, even if in Germany we do appear to be starting to make progress on the formation of a new government after the German SPD party membership granted permission for the party leaders to begin new coalition talks with Angela Merkel.
Despite this progress, and before we hang out the bunting, there still remains some way to go before any form of agreement starts to evolve into a workable arrangement between the various parties.
Here is IG’s forecasts for the market open:
Also on the agenda today, eurozone finance ministers will discuss the improvement in the Greek economy in the first eurogroup meeting hosted by new president Mario Centeno.
Here’s the day’s agenda:
2pm GMT Eurogroup meeting set to start
2pm GMT Release of the World Economic Outlook
5pm GMT : Davos opening ceremony with Cate Blanchett/Elton John/Shah Rukr Kahn
6.30pm GMT: PwC report on CEO outlook