What’s moving markets and bitcoin madness

Europe is the only show in town right now, and ongoing speculation around a solution to the Irish border issue has further dampened enthusiasm for sterling.

A deal must be done by close of play Friday if Brexit talks are to move onto trade after next week’s summit. Reality is, deadlines will likely get extended, whisper from Brussels will raise and dash expectations, and we may or may not get anything at the end of it. Prepare for a volatile couple of days on the currency markets.

The inverse relationship between sterling and the FTSE 100 (UKX) remains very much intact, so the pound’s pain will remain the stock market’s gain.

Traders have more than one eye on tomorrow’s US jobs data. A quarter-point increase in US interest rates is very much baked in for next week’s meeting of the Federal Reserve, and it will take a lot to dissuade policymakers at this late stage.

With inflation already low, a surprise number way off the 198,000 expected could tip the balance. That’s unlikely, however, and both investors and consumers need to prepare for further monetary tightening in the US in 2018.

Trump’s tax cuts will make higher US rates easier for corporate America to absorb. That makes talk of recession less relevant and will continue to create demand for equities. This bull run is not over.

Ladbrokes Coral (LCL) has stuck out like a sore thumb as the next obvious target in an ongoing round of gambling sector consolidation.

That GVC (GVC) has made a move is not the surprise, only the timing is unexpected. Industry players were thought to be waiting for the outcome of a review into fixed-odds betting terminals (FOBT) imminent.

GVC was itching to make a move and got impatient and, with its share price up 44% in a year at a record high, found the chance to make a cash and shares offer now too tempting.

GVC has been smart here, holding back a chunk of the final payout until the results of the FOBT review are known.

Slashing the maximum stake from £100 to as low as £2 would hammer industry profits, so factoring in a ‘contingent value right’ worth as much as 42.8p is a sensible option.

If FOTB stakes are cut to £2, the deal will be worth nearer £3.1 billion than £3.9 billion.

Investors in traditional asset classes reluctant to take part in the bitcoin boom continue to have their noses rubbed in it, as the cryptocurrency passed another milestone.

Now above $15,000, the controversial virtual coin has risen more than 60% in less than a week. This is where it gets dangerous, as even diehard sceptics risk getting sucked in by ‘fear of missing out’.

It’s a big day for income seekers. A number of the big yielders start trading without the right to the latest payout today, among them Royal Mail (RMG), Greene King (GNK), and Debenhams (DEB).

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.