Must read: pound vs dollar, UK car sales, UBS, Entain

Our head of investment rounds up the morning's big news.

GLOBAL MARKETS 

European markets have opened flat to slightly higher, with the FTSE 100 outperforming. Banks are leading the gains in the UK with Barclays (LSE:BARC) at the top of the large-cap index. Shares in Direct Line Insurance Group (LSE:DLG) have jumped 5% after Citigroup raised the stock from a 'sell' to a 'buy' and increased its price target from 136p to 188p. 

New car registrations in the UK rose for the eighth month in a row, up 17% year-on-year. According to the Society of Motor Manufacturers and Traders (SMMT) it was the strongest month ever for battery electric car registrations. 

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Sterling rallied to a 10-month high against the US dollar, partly on the back of weak US manufacturing and job openings data which punished the US dollar. Cable (GBPUSD) has risen by over 3% so far in 2023. 

Gold also caught a bid on the back of the greenback’s weakness, hitting the highest level since March 2022 as growing fears of a US recession sparked demand for the safe-haven precious metal. 

Thin trading overnight in Asia, with holidays in Hong Kong and China, saw the Nikkei fall sharply amid concerns over a slowing US economy. 

The kiwi dollar staged gains after the Reserve Bank of New Zealand unexpectedly raised interest rates by a more aggressive 50 basis points to 5.25%. This is the highest rate since December 2008 and marks the eleventh consecutive increase as the central bank tries to keep a lid on inflation.

UBS AGM 

UBS Group AG (SIX:UBSG)’ management is set to face shareholders today in its first AGM since the Credit Suisse Group AG (SIX:CSGN) takeover. Meanwhile, Sergio Ermotti officially becomes CEO again of the Swiss lender, although he will not be attending today’s meeting. Instead, outgoing chief executive Ralph Hamers and chairman Colm Kelleher will take to the stage, a day after Credit Suisse’s final AGM as a standalone company. 

In stark contrast to Credit Suisse, UBS enjoyed a solid financial performance in 2022, with impressive earnings and particular strength in wealth management. At the AGM, UBS’s CEO and chairman will be tasked with trying to convince shareholders that the merger will be a success through synergies, job cuts and a major strategic plan of action. 

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There has been much opposition to the deal from angered Credit Suisse stakeholders, employees and Swiss citizens more broadly because of the rushed, forced nature of the deal that punished many Credit Suisse shareholders and bondholders. CS’s chairman Axel Lehmann told angry shareholders on Tuesday he was ‘truly sorry’ for the sequence of events. 

Since the deal was announced, shares in UBS have been regaining ground but are still below the recent peak in early March, suggesting the stock is still pricing in some risk of wider banking sector contagion as well as uncertainty around the takeover of its cross-town rival.

ENTAIN 

Entain (LSE:ENT) has acquired sports media business, 365scores’ entire issued share capital for a consideration of $150 million, with contingent payments of up to $10 million. The owner of Ladbrokes and Coral bookmakers said the deal with help provide customers with a ‘broader offering of interactive content and experiences.’ 365scores provides scores and sports content, speaking to an audience of over 15 million active users. 

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The sports betting and gaming industry is no stranger to inorganic growth. But this bolt-on is slightly different, pushing Entain into sports media content, underscoring the importance of data when it comes to targeting new audiences. Shares in Entain have struggled over the last year, down by 25%, in stark contrast to its rival Flutter which is one of the top performers on the FTSE 100, up around 60%. 

Entain has struggled with declining online net gaming revenue post Covid as well as the tightening regulatory landscape. Its shares also slumped in February after MGM Resorts disappointed investors by ruling out another takeover bid for Entain. The stock has been deflated as the speculative M&A premium fades.