News & Insight • Weekly Newsletters

25 August 2023 | William Buckhurst | Charlie Todd

That Was The Week That Was

MACRO

•  At Jackson Hole, Federal Reserve chairman, Jerome Powell, struck a hawkish tone as he warned that inflation “remains too high” and said that they are prepared to raise rates further if needed
• European business activity contracted once again during August, to its lowest level since November 2020. The Eurozone’s flash composite purchasing managers’ index fell to 47.0 for August from 48.6 in July
• Business activity in the US private sector expanded at a softening pace in early August, with S&P Global Composite PMI falling to 50.4 from 52 in July. This reading came in worse than the market expectation of 52
• Chinese policymakers disappointed market expectations as the 15bp reduction in the medium-term lending facility (MLF) rate last week had stoked expectations that, as is typically the case, this would be a precursor to a same-sized cut in the Loan Prime Rate (LPR). In the event, however, the one-year LPR was cut by just 10bps, to 3.45%, and the five-year LPR – most relevant to the pricing of mortgages in China – was kept unchanged at 4.20%

COMPANY NEWS

• Nvidia once again far surpassed quarterly expectations, raking in $13.5bn in revenue – over $2bn more than the $11.2bn Wall Street analysts had predicted – amid skyrocketing demand for its computer chips that power artificial intelligence (AI) systems
• Hunting reported a surge in orders and sales for the first half, driven by heavier spending in Asia, the Middle East and South America. But its North American shale business, Hunting Titan, was flat as lower gas prices and mergers in the space caused a development slowdown
• After more than half a decade leading Zimmer Biomet it was announced that CEO Bryan Hanson is leaving to join 3M’s healthcare group

SMALL CAP NEWS

Shares of Watches of Switzerland fell by around a quarter this week as news emerged that Rolex is going to buy Bucherer in a deal that gives Rolex a major presence in consumer sales for the first time. Watches of Switzerland is the biggest Rolex dealer in the UK and, despite assurances that the system Rolex uses for allocations of product wouldn’t be altered, investors worried that Rolex is planning a long-term shift away from using authorised partners to sell their watches directly to wealthy consumers

THIS WEEK IN HISTORY

2000: Swedish company OM Group makes an £884m hostile takeover bid for the London Stock Exchange. But despite increasing its bid for Europe's largest stock market to £1.06bn, OM's offer was ultimately to fail

2004: Google, now known as Alphabet, finally held its highly anticipated IPO in 2004, six years after it was founded. The company had already become a search juggernaut by that time, and IPO shares were priced at $85 per share for a valuation of $23bn

MARKET DATA

 As at 25^th August 2023. Source: FactSet

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