News & Insight Weekly Newsletters

10 March 2023 | William Buckhurst

That Was The Week That Was

MACRO

  • Jay Powell warned that there are further higher and faster rate hikes to come, admitting that the Federal Reserve was wrong with their “transitory” thinking
  • US employment data for February beat expectations with non-farm payrolls rising by 311,000 (exp 205,000)
  • Haruhiko Kuroda defended the Bank of Japan’s dovish stance (known as “bazooka” policies) in his final meeting leaving any possible change of direction to Kazuo Ueda
  • With the Budget due on the 15th March there was some optimism in the UK GDP numbers as the economy grew by 0.3% in January apparently due to higher school attendance and the return of Premier League football after the World Cup    

COMPANY NEWS

  • Concerns around ASML as the Dutch government (following the US lead) imposed export restrictions on its semiconductor sector, particularly in regard to China. ASML quickly released a statement saying, “we do not expect these measures to have a material impact on our financial outlook.
  • DS Smith said that it continues to trade in-line with expectations despite seeing lower corrugated box volumes due to businesses de-stocking over Christmas
  • Uber closed down on the week after it was reported that it was considering spinning off its freight division to streamline its focus on ride hailing and food delivery
  • Ashtead closed up on the week after reporting third quarter results above consensus estimates and increased its full year guidance, now seeing rental revenue growth of 21-23%, up from the prior guide of 18-21%
  • Strong results from Greggs with most metrics ahead of expectations. They also mentioned trialling 24hr drive-thru’s and opening 130 more stores
  • On the back of Legal & General’s impressive figures, the CEO, Sir Nigel Wilson lamented the state of the UK market and the “perpetual drift” of companies away from London. Sounds like they are staying put!

FUND WATCH

AssetCo have continued to buy and build with a purchase of Ocean Dial for £4.125m, split 2.9m shares (likely to be treasury) and £2.125m cash. Ocean Dial is the manager of the India Capital Growth Investment Trust (IGC)

SMALL CAP

Having exposure to infrastructure certainly helped offset housebuilding at Breedon as solid numbers from the aggregates business coincided with news to move onto the main market from AIM. Abicad (the Chairman’s investment vehicle) then bought another 5% of the company (up from 10%) via a reverse accelerated bookbuild – or a “dawn raid” in old parlance

Break dancing at Wandisco as the company announced the growing trend of moving to the US to lift the valuation. Not long afterwards the shares were suspended as the management discovered significant, sophisticated and potentially fraudulent irregularities with regard to received purchase orders and related revenues and bookings

TECH WEEK

The tech-focused lender, Silicon Valley Bank, was shut down by US banking regulators after customers attempted to withdraw $42bn (of $209bn) of assets leading to the second largest bank failure in US history. This bank had struggled as it took large deposits from tech companies in 2021 and 2022 and couldn’t lend it out as quickly. They bought a lot of long-term US bonds which in this rising rate environment have been unable to provide deposit returns. The Federal Deposit Insurance Corporation protects deposits up to $250,000 – last year they announced 96% would not be protected

THIS WEEK IN HISTORY

1933: At the worst of the Great Depression, US unemployment peaks at 25.2% this week in 1933

2011: Global stock markets plunge following the Fukushima nuclear disaster in Japan triggered by a 15-metre tsunami

IN OTHER NEWS

International Women’s Day 2023: According to Moody's recently published gender pay survey, closing the pay gap would boost the global economy by 7% or US$7trn - by raising productivity and economic output across the globe.  Interestingly the firm’s own corporate pay gap report showed their female staff are paid 23% less and earn 47% less in bonuses than their male staff…  At the current rate of change it will take 132 years to achieve parity

MARKET DATA

% returns

1 Week

1 Month

1 Year

5 Years

UK Equities (% return)

-2.58

-2.00

6.88

5.83

World Equities (% return)

-3.85

-4.23

-4.56

29.55

10 Year US Treasury Yield (%)

3.70

3.67

1.94

2.90

GBP / USD (fx rate)

1.20

1.21

1.32

1.39

As at 10th March 2023. Source: FactSet

 

 

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