What to Watch: European stocks jump, British American Tobacco, Man City stake

Edmund Heaphy
Finance and news reporter
Boards show indexes at the Euronext headquarters in Paris, where stocks gained on Wednesday. Photo: AP Photo/Kamil Zihnioglu

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

European stocks climb on US–China trade deal hopes

European stocks hit a four-year high in early trading on Wednesday, largely on the pack of comments from US president Donald Trump that suggested the US–China trade war could soon come to an end.

The pan-European STOXX 600 index (^STOXX) was up by more than 0.4% to its highest level since 2015 after Trump said on Tuesday that his administration was in the “final throes” of work on a trade deal with China.

The FTSE 100 (^FTSE) up more than 3%. Germany’s DAX (^GDAXI) was up nearly 0.5%, while France’s CAC 40 (^FCHI) was up by 0.2%.

After a poor showing on Tuesday, the pound was up 0.1% against the dollar (GBPUSD=X) and up 0.2% against the euro (GBPEUR=X), at around $1.288 and €1.17, respectively.

Sale of Man City stake values club group at record-breaking $4.8bn

City Football Group, the owner of Manchester City, has agreed to sell a more than 10% stake to US private equity giant Silver Lake, in a deal that values the group at a record-breaking $4.8bn (£3.7bn).

Silver Lake, which is known for technology-related investments in giants like Dell, Broadcom, and Skype, said it would invest $500m (£388m) in the company, becoming the second major outside investor in the group.

The $4.8bn valuation is a record for a sports group globally. In addition to Manchester City, City Football Group owns football clubs in the US, Australia, Japan, Spain, Uruguay, and China.

Manchester City is thought to be the only profitable club within the group, however.

City Football Group said on Wednesday that the proceeds will be used to fund the group’s international expansion and allow it to further develop its technology and infrastructure assets.

British American Tobacco says US vaping slowdown to affect growth

British American Tobacco (BATS.L) on Wednesday said that revenue growth in its current financial year would be dented by a recent slowdown in the US vaping market.

In recent months, US health authorities have said that more than 2,000 people have been affected by lung illnesses related to vaping, while there have been 47 deaths linked to the use of vaping products.

The spate of issues have led to bans in some states and a strengthening of regulations.

The company said on Wednesday that revenue growth in its new category segment would come in at the lower end of its forecasts, which it said was reflective of the slowdown.

It had previously forecasted that revenue growth would come in at the middle of this range.

Recently appointed CEO Jack Bowles said that the company believed “the issues around vaping in the US should lead to a better and stronger regulatory environment in which we are well-placed to succeed.”

Industry warns no-deal Brexit will cost UK car sector £40bn by 2024

The Society of Motor Manufacturers and Traders warned on Tuesday that leaving the European Union without a Brexit deal would cost the British car industry £40bn in the next five years.

Independent research commissioned by the SMMT calculates that World Trade Organisation tariffs on both imported car components and exported cars would add over £3bn a year to manufacturing costs—an amount equal to the sector’s current annual research-and-development spending.

These huge costs would effectively devastate British manufacturing, the SMMT said, forcing it to raise its prices, which in turn would kill demand.

The research estimates that WTO tariffs would drive down UK production volumes by 1.5 million units by 2024, which would amount to a value of over £42bn.

What to expect in the US

Futures are pointing to a higher open for US stocks.

S&P 500 futures (ES=F) are up 0.14%. Dow Jones Industrial Average futures (YM=F) are up marginally and Nasdaq futures (NQ=F) are up 0.25%.