News & Insight • Weekly Newsletters

28 April 2023 | William Buckhurst

That Was The Week That Was

MACRO

• Ukrainian President Volodymyr Zelensky spoke with Chinese President Xi Jinping in their first phone call since the start of the Ukraine invasion
• Political in-fighting on both sides of the Commons as Labour suspend Diane Abbott – a previous ally of Jeremy Corbyn – and BBC Chairman, Richard Sharp, resigns after Boris Johnson loan-gate. As Jerry Springer used to say, "Till next time, take care of yourselves and each other”
• Is the UK closed for business? Apparently so, according to CEO of Activision Blizzard, Bobby Kotick as the CMA (Competition and Markets Authority) blocked the takeover by Microsoft on competition grounds

COMPANY NEWS

A very busy week for company results:

• Microsoft shares powered ahead as it posted better-than-expected results. In the earnings call CEO, Satya Nadella, referred to artificial intelligence (AI) no fewer than 50 times!
• Alphabet shares also rose after it reported a return to growth in its advertising revenue, but management warned that capital spending would increase as it adds to its data centre capacity to handle the demands of AI
• Amazon issued revenue guidance ahead of expectations, but the share price reaction was muted as they then warned on slower sales growth in cloud computing (AWS)
• Sony profits fell but it did ship 6.3m PS5 units during the quarter, bringing the grand total up to 38.4m units. This was the second-best quarter in terms of unit sales for the console, beaten only by the previous quarter, which included the holiday season
• Keyence, the factory consultants, had solid results but gave very little detail in their typically shy style
• Sanofi posted better-than-expected earnings for the first quarter as continued gains from anti-inflammatory drug Dupixent more than offset declining sales from its more established drugs.
• Bristol Myers Squibb reported a slight miss on the top-line as Revlimid, their big selling cancer drug, is starting to see patent erosion
• Eli Lilly reiterated guidance, but the announcement was dwarfed by the positive news around obesity drug, Tirzepatide, and a general consensus that this could be the best-selling drug of all time
• Merck posted better-than-expected results for the first quarter on the strength of its blockbuster cancer immunotherapy Keytruda and human papillomavirus (HPV) vaccine Gardasil
• Thermo Fisher saw a year-over-year decline in COVID-19 test demand and said its overall revenue for the first quarter dropped 9%
• A shopping list of consumer staples reported, namely Coca Cola, Nestle, Unilever, Colgate-Palmolive and Reckitt Benckiser, and all eyes were on “greedflation” – were they putting up prices too much in an inflationary environment – versus the balance of volume of sales. Most prints saw positive pricing offsetting flat volumes
• Following a weak few months, Persimmon and Taylor Wimpey issued much more upbeat trading updates
• Visa topped estimations due to a return to growth in international payments
• At their quarterly results there was a significant amount of discussion over Linde’s growing role in clean hydrogen and carbon capture
• Newmont Mining beat most estimates due to the high price of gold during the quarter
• Benefiting from the return of the Chinese consumer, French luxury goods giant LVMH reached a market cap of $500bn this week making it the first European stock to reach such heights

TECH WATCH

Where are the titans of tech putting their own investments? Nuclear Fusion is one of the areas… Commonwealth Fusion Systems (which came out of MIT) has received investments from Marc Benioff (Salesforce) and Bill Gates (Microsoft), while Jeff Bezos (Amazon) has provided funding to Helion Energy, which hopes to build a commercial reactor by 2030. Peter Thiel (PayPal) alongside Larry Page (Alphabet) meanwhile are backing TAE Technologies. Interest in the sector has grown as a result of recent positive breakthroughs in net energy gain

SMALL CAP NEWS

A number of rumours were circling this week with Betaville mentioning potential deals for Fevertree and Watches Of Switzerland in the offing; however, the only one to materialise was Deutsche Bank stepping up to buy UK broker, Numis for £410m. One of the busiest brokers, the business supports and advises a fifth of the UK’s largest 350 listed companies. With brokers Cenkos and FinnCap merging recently we wonder, cynically, whether they are showing some companies how corporate activity is done?!

THIS WEEK IN HISTORY

• 1989: The Argentinian government declares an emergency bank holiday and closes money exchanges because of an acute currency shortage. Banks that week were offering interest rates of 100% a month in order to obtain currency

IN OTHER NEWS

Following in the footsteps of The Big Short and Wall Street, the snappily titled: "The Antisocial Network: The GameStop Short Squeeze and the Ragtag Group of Amateur Traders that brought Wall Street to its knees" will be coming to the big screen starring Seth Rogen as the hedge fund manager Gabe Plotkin; and Paul Dano as the meme-stock influencer Keith Gill

MARKET DATA

 As at 28^th April 2023. Source: FactSet

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