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Entain shares plummet as MGM walks away, while London markets absorb earnings reports

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Shares in sports betting and gambling company Entain nosedived in London trading on Tuesday, as MGM Resorts International said it didn’t plan to submit a revised proposal to buy the company.

Formerly known as GVC Holdings, Entain
ENT,
-15.39%
stock fell 16% following the announcement from MGM
MGM,
-1.59%,
which previously made a £8.09 billion ($11 billion) offer for the owner of Ladbrokes on Jan. 4. The deal would have created a new online gambling powerhouse.

MGM said in a statement that “after careful consideration and having reflected on the limited recent engagement between the respective companies regarding MGM’s rejected all stock proposal at an exchange ratio of 0.6x, it doesn’t intend to submit a revised proposal and it will not make a firm offer for Entain.”

Read more: Entain shares nosedive as MGM says it won’t go forward with offer

Entain’s plunge comes as London markets inch higher, in line with peers on the continent in Paris
PX1,
+0.06%
and Frankfurt
DAX,
+0.23%,
ahead of the Congressional testimony of U.S. Treasury Secretary nominee Janet Yellen.

The FTSE 100
UKX,
+0.11%,
the index of London’s top stocks by market capitalization, was trading just above flat.

“After seemingly succumbing to the January blues, the FTSE 100 is feeling a lot brighter on Tuesday, chalking up solid gains as investors look ahead to comments from Treasury Secretary nominee Janet Yellen on the U.S. stimulus plan,” said Russ Mould, an analyst at AJ Bell.

Yellen, the former chair of the Federal Reserve, is expected to advocate for fiscal policy to “act big.” Her confirmation hearing before the Senate Finance Committee presents an opportunity to sell President-elect Joe Biden’s $1.9 trillion stimulus plan and advocate for a strong economic response to the COVID-19 pandemic.

Essential reading: Yellen says smartest thing to do now is ‘act big’ to help struggling Americans

A wave of corporate results is also hitting the FTSE 100 as earnings season gets under way, closely watched by analysts, with a number of positive reports adding buoyancy to the index.

“These earnings reports will help provide a bit of clarity on how the corporate world is coping with the latest wave of coronavirus as the markets continue to weigh the rising infection rates globally with the pace of vaccine rollouts,” Mould said.

Shares in London-listed Irish credit reporting agency Experian
EXPN,
+0.63%
surged 4% at the open, settling 0.5% higher. The group said its performance in the last quarter was better than expected, with revenue growth of 7% at constant currencies in the three months to the end of December 2020.

But not all earnings reports brought good tidings. Retailer Superdry
SDRY,
-13.67%
saw its stock dive more than 14% after its results detailed the damage of COVID-19 lockdowns on sales in the half-year to Oct. 24, 2020. The group lost £18.9 million before tax in the period, compared with £4.2 million in the year prior, and said it expected “prolonged store closures and subdued footfall” over the next few months.

In moves outside of earnings, shares in HSBC
HSBA,
+2.12%
helped the FTSE 100 stay in the green, with the China-exposed bank stock lifting 2%. 

Official figures from China on Monday showed that the country’s economy grew 2.3% in 2020 — the slowest pace in more than 40 years, but still likely the only major economy to have expanded last year. The news from China helped Hong Kong stocks
HSI,
+2.70%
close at their highest levels since May 2019.

Read more: China’s economy rebounds from pandemic, grows 2.3% in 2020

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