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- FTSE 100 above session low of 7,579.27
- Dow Jones stays lower as Fed rate decision awaited
- Vodafone (LON:VOD) confirms Three merger
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Cineworld shares dropped 17% in value to just 0.77p on Wednesday afternoon following reports the company is preparing to file for administration as part of a comprehensive financial restructuring that will wipe out its shareholders.
Sky News said on Tuesday that the multinational cinema operator is lining up AlixPartners to act as administrator to help effect a transfer of ownership to its lenders.
An announcement is expected to be made by the end of next week, Sky News added, according to one source.
Cineworld trades from 128 sites in the UK and cinema operations will not be impacted by the insolvency process for the holding company, insiders said, according to Sky News.
Cineworld has been in US Chapter 11 bankruptcy protection for months, a process it plans to exit shortly.
The financial restructuring will reduce Cineworld's indebtedness by $4.5bn and be accompanied by an $800m rights issue to place the company on a sustainable financial footing, the firm said in April.
Fed watch
The FTSE 100 index held its gains mid-afternoon as US stocks started mixed on Wednesday as investors focused on the Federal Reserve’s latest policy decision, with further data showing signs of easing US inflation adding to expectations that a recent series of US interest rates hikes are likely to be paused.
Around 20 minutes after the start of trading in New York, the Dow Jones Industrial Average was down 110 points, or 0.3% at 34,101, while both the S&P 500 index and the Nasdaq Composite gained 0.2%.
TickMill Group analyst James Harte said the inflation data has seen the market move to fully price in a rate pause at the FOMC later today.
“The USD has softened accordingly while risk assets have moved firmly higher. Equities and commodities have seen fresh demand as have risk currencies,” he pointed out.
“Looking ahead to today’s meeting, the focus will be on the guidance the Fed issues and its new rate projections. While the Fed is likely to still signal further tightening, the outlook might be less hawkish than many were anticipating prior to yesterday’s data which, if seen, should drive USD lower near-term, allowing risk assets room to move higher.”
Strikes continue
The Unite union has said that offshore oil workers employed by Petrofac (LON:PFC) on the FPF1 platform, and by Wood Group UK Limited on the TAQA platforms will resume strike action next week, Reuters has reported.
The news comes hot on the heels of news that rail strikes will continue across the country for the next six months after members of ASLEF voted overwhelmingly in favour to continue industrial action.
Members of the union rejected a 4% pay offer from the 16 train companies they are in dispute with, which includes Gatwick Express and East Midlands Railway.
The strike resumption news bucked the trade seen so far this week of employers bending to the power of the unions, implementing pay rises that have brought an end to industrial action.
Staff at the largest soft drinks factory in Europe, located in Wakefield, agreed to an average 18% pay rise, stopping strikes that were due to start today. Arriva bus drivers in London also agreed to a pay rise yesterday.
And strikes due to take place later this month have also been suspended at Heathrow as airport security staff mull an improved offer, although a further 29 days of planned action for the summer will take place if the offer is not satisfactory.