News & Insight Weekly Newsletters

12 May 2023 | William Buckhurst

That Was The Week That Was

MACRO

  • US CPI came in at 4.9% year-on-year, slightly lower than last month. Last year it was “transitory”, this year the key term is “super-core”, the Federal Reserve’s favourite inflation gauge. This figure subsided pointing to a pause in rate hikes
  • The Bank of England raised interest rates for the 12th consecutive time to 4.5%
  • Interesting to note that half the positive S&P 500 returns this year have come from Apple and Microsoft

COMPANY NEWS

  • Compass Group announced very good interim results with profits ahead of expectations as it combats food inflation through its ability to purchase at scale
  • Melrose released an upbeat statement with profits now expected to be ahead of previous guidance. Simon Peckham, CEO, also suggested the dealmaking may be coming to an end
  • GSK started to sell down their stake in Haleon
  • Tyson Foods reported a warning on profits primarily due to cost related issues and some supply chain challenges
  • Paypal released quarterly profits ahead of expectations, but the shares fell as management cut their operating margin outlook. Analysts suggested that the company's branded checkout button, a high margin business, isn't doing as well as people thought it was and the fear is that it is losing market share to Apple
  • Further positive news from the travel sector as Ryanair announced an order for 150 new Boeing aircraft, with an option to buy a further 150. The aircraft are expected to be delivered between 2027 and 2033
  • Disney missed on the mainline streaming subs number and content spend is going to fall. Theme parks, however, continue to operate very well
  • Toyota issued guidance in line with consensus and the new management team announced a move to a progressive dividend policy

SMALL CAP NEWS

Following last week’s excellent results where profits are now expected to be materially ahead of expectations, the AIM subsea equipment company, Ashtead Technology, announced a share placing with BP Inv2B Bidco selling 9.0% of the share capital, retaining just 0.5%.

Sadly, one deal looks to have fallen through with THG, previously known as The Hut Group, walking away from talks with their potential offeror, Apollo

TECH WATCH

We have mentioned the AI theme being the trade of 2023 and this week was no different. Shares in Palantir Technologies Inc rose by 23% as the CEO, Alex Karp, outlined the company’s strategy in this increasingly competitive market. “Just take the whole market”, he said. The company plans to begin rolling out the first version of its Artificial Intelligence Platform to “select customers” in the coming few weeks.

One company that has maybe been unfairly treated as ChatGPT usurped them is Google owner, Alphabet. Yet this week we saw the beginning of the fight-back at their annual developer’s conference, I/O, as the company announced it would bring AI features to its signature search product to turn complex queries into simple answers by combining results from multiple sources. Game on!

Mike Lynch, the previous CEO of Autonomy, has been extradited to the US to face criminal charges over the $11bn sale to Hewlett-Packard in 2011. He is a founding investor in the UK cyber-security firm, Darktrace.

THIS WEEK IN HISTORY

1866: London banking house Overand, Gurney & Co fails. The bank owed £11m to its clients at the time. Its failure would lead to a severe but brief financial panic, hitting the shipbuilding industry the hardest

1927: The German central bank, concerned about the rapid rise in share prices fuelled by Germans borrowing money to buy stocks, announced that margin loans would be restricted. The day after the announcement, the German stock market crashed 13% on what is now known as Germany’s “ Black Friday"

IN OTHER NEWS

God Speed! Probably distracted by the upcoming role he was going to play in the Coronation it was revealed the Archbishop of Canterbury was recorded driving 25mph in a 20mph zone on 2nd October and had tried to pay the fine three times only for a clerical error to get in the way.

MARKET DATA

% returns

1 Week

1 Month

1 Year

5 Years

UK Equities (% return)

-0.43

-0.84

3.05

-0.42

World Equities (% return)

-0.15

-0.26

3.65

36.04

10 Year US Treasury Yield (%)

3.47

3.41

2.84

2.97

GBP / USD (fx rate)

1.25

1.24

1.22

1.35

 As at 12th May 2023. Source: FactSet

 

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