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Oil inventories fall as FTSE 100 weakens
The FTSE 100 index has weakened 19.83 points to 7530.54, with Shell and BP among the stocks under pressure after Brent crude fell to $95 a barrel.
Hargreaves Lansdown analyst Sophie Lund-Yates said: “Traders are chewing on the prospect of more Iranian supplies following US President Joe Biden’s talks with European allies to revive the 2015 nuclear deal.
“The additional supply comes alongside a broader sell-off that has been underway since June.”
B&Q owner Kingfisher, one of the most shorted stocks in the London market, fell 3.6p to 236.3p and Howden Joinery fell 8p to 626.6p on worries over the strength of consumer spending.
The FTSE 250 Index continued its recent weak performance, falling 73.42 points to 19,814, led by falls of 5% for Aston Martin Lagonda and 4% for the Hammerson shopping center owner.
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Cineworld is considering a Chapter 11 filing
Today’s Cineworld update comes after the Wall Street Journal reported on Friday that the company and its advisers are considering bankruptcy protection in the US and bankruptcy proceedings in the UK.
The company has nearly $5 billion (£4.2 billion) in debt, with its fortunes hurt by a slower-than-expected return of cinema audiences to pre-pandemic levels and a recent limited run of blockbuster films .
The world’s second-largest cinema chain said today, “Some strategic options to help Cineworld achieve its restructuring goals include a possible voluntary Chapter 11 filing in the United States and related ancillary litigation in other jurisdictions as part of an orderly implementation process.”
Cineworld said each filing is expected to provide the group with access to near-term liquidity and “support the orderly execution of a fully funded deleveraging transaction.”
It added: “Cineworld would expect to continue its operations as normal up to and following a filing and ultimately continue its business longer term without a material impact on its employees.”
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Cineworld considers insolvency option
CINEWORLD admitted today that it is considering filing for bankruptcy – at least in the US – while struggling to survive.
The world’s second-largest cinema chain is saddled with $5 billion in debt and is struggling to recover from Covid lockdowns.
Shares fell 60% on Friday as speculation mounted that bankruptcy was imminent.
Today the company said that “strategic options that will allow Cineworld to achieve its restructuring goals include a potential voluntary Chapter 11 filing in the United States.”
Chapter 11 is a less severe form of bankruptcy than in the UK as it seeks to protect the company and its assets from creditors while it regroups.
Cineworld has seen customers return since lockdown ended, but at lower rates than hoped. While the latest releases from Top Gun, Thor and James Bond have done well, there haven’t been enough blockbusters to draw people back to theaters, analysts say.
Cineworld, which owns the UK Picturehouse chain, has 750 locations across the UK and employs more than 28,000 people in 10 countries.
Shares opened at 4pm today, valuing equity at just £60m. The stock was around 320p pre-Covid.
Cineworld warned of what its latest plans could mean for investors.
Today’s statement reads: “Cineworld would expect to continue its operations as normal up to and following a filing and ultimately to continue its business longer term without a material impact on its employees. However, as previously announced, any deleveraging transaction would result in a very significant dilution of existing interests in Cineworld.”
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FTSE $100 weak trading elsewhere
The recent stock market rally faltered last week as the tech-heavy Nasdaq fell on fears of more aggressive rate hikes on Wall Street.
The Nasdaq slipped 2.6% and the S&P 500 fell 1.2% as Federal Reserve policymakers reiterated their focus on bringing inflation back to 2%.
Recession fears in the UK also weighed on the FTSE 250 index, which fell 1.2% on Friday and 2.2% for the week.
In contrast, the FTSE 100 index found positive territory on Friday, up 0.7% for the week as a whole, thanks to its defensive bias and the impact of a weaker pound on the large number of dollar-denominated stocks in the top bracket.
Markets will now be on the lookout for clues on interest rate policy at the economic symposium in Jackson Hole, Wyoming, with Federal Reserve Chair Jerome Powell set to comment on Friday.
In today’s trading, futures markets are pointing to a weak start later for Wall Street and CMC Markets expects the FTSE 100 index to open 15 points lower at 7535.
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