Daily market update: European shares move higher and Games Workshop slips on licencing forward guidance

“It was a solid end to the trading week for European equities, helped by Germany’s economy growing faster than previously thought and strong investor interest in pharma and energy stocks,” says Russ Mould, investment director at AJ Bell.

“The Dax has been a bright spot in global markets this year as investors lock on to a region where the government plans to boost spending on infrastructure and defence, as well as German equities offering value relative to the US market.

“The FTSE 100 was propelled by AstraZeneca and Rolls-Royce which made the biggest contribution in terms of index points. The more domestic-focused FTSE 250 also nudged ahead, driven by a range of sectors including financials and real estate.

“A small improvement in GfK’s Consumer Confidence index was a surprise given so many uncertainties in the world. The Bank of England cutting interest rates and the UK striking a trade deal with the US might will have helped to calm people’s nerves.

“It’s interesting to see an improvement in GfK’s index score for big-ticket purchases, which bodes well for retailers who have seen lacklustre demand for items like sofas and expensive electrical goods over the past year. That explains why shares in sofa-seller DFS got a boost on the GfK figures.”

Games Workshop

“It’s been a monumental year for Games Workshop as it has delivered a string of good news around earnings and enjoyed promotion to the prestigious FTSE 100 index. It’s capped that year off with another upgrade to earnings guidance.
 
“Games Workshop has a rock-solid core business, underpinned by an army of fans emerged in its fantasy worlds who collect miniature figures and play its board games. This success has enabled the company to build a rich library of intellectual property that it is now the platform for additional revenue generation.

“Licencing the rights to certain brands and characters is easy money but Games Workshop is fiercely protective of its assets and won’t let anyone come along and milk them. It wants to be sure that any custodians of its IP are using it wisely and do not tarnish its reputation.

“Games Workshop has enjoyed terrific success with licencing assets for the Warhammer 40,000: Space Marine 2 video game. There’s a warning that licencing gains seen over the past 12 months won’t be matched in the new financial year, which explains why the shares have pulled back on the trading update. However, the pipeline looks strong enough to keep most investors on side. In addition to another Space Marine game being developed, it has all the licencing income from a deal with Amazon to look forward to.”

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