News & Insight • Weekly Newsletters

28 June 2024 | William Buckhurst | Charlie Todd

That Was The Week That Was

MACRO

• A rather odd debate between Trump and Biden resulted in the Californian democrat, Gavin Newsom, shortening in odds to be in the next leader of the USA
• French markets rallied and the Euro climbed against the US Dollar as investors bet that the far right could fall short of an outright majority despite its first-round victory in parliamentary election on Sunday
• The Japanese Yen fell to its lowest level against other major currencies since 1986
• Mixed news on the continent as Mark Rutte is appointed NATO secretary-general and Denmark presses ahead with its eco agriculture tax - €100 per cow!

COMPANY NEWS

• On the eve of The Championships at the All England Lawn Tennis and Croquet Club (to give it its proper name) an opportune deal by Carlsberg to buy Robinsons owner Britvic. Although they don’t sponsor Wimbledon anymore, they became synonymous with the tournament during the 1990s and 2000s
• Staying with the sporting theme, Nike had very poor results, sending their shares 20% lower, as revenues are expected to fall by 10% in the first quarter. They have failed to reply to popular new entrants such as Hoka. This fall also dragged down UK listed JD Sports
• Prudential have been highlighting the positive level of cash they are generating for some time but the market only woke up to this after the company announced a large share buyback (£2bn)
• Novo Nordisk’s share price rose higher after announcing their weight loss drug had gained approval in China – where more than 50% of the population are officially deemed “overweight”
• A profit warning from Airbus – aircraft deliveries will be 5% lower due to supply chain issues – sent fellow aerospace and defence companies lower such as Rolls Royce and Melrose
• It would seem that the US consumer is spending on activities such as cruises (good results from Carnival) while pulling back on in-store healthcare, Levi jeans and home improvements (as Walgreen Boots and swimming pool companies such as Pool Corporation took a splash)
• Shares of SUV maker Rivian soared 40% after Volkswagen invested US$1bn in the electric vehicle maker, with potentially up to US$5bn more as part of a software development agreement
• H&M’s share price fell after the retailer reported second quarter results. 2Q operating profit was SEK 7.10bn vs. SEK 7.4bn expected and gross margins in the quarter of 56.3% were higher than expected with operating margins of 11.9% below the 12.2% estimate. Management commented that conditions for achieving its margin targets had become more challenging blaming both the consumer rowing back on spending and the inclement weather at the start of June
• Spice company, McCormick & Co reported good second quarter results with earnings per share coming in at US$0.69 vs US$0.59 expected. Management commented that the investments made in the consumer segment drove substantial volume improvement while flavour solutions was impacted by lower demand from QSRs (quick service restaurant) and packaged food providers

TRUST MARRIAGE

Two historic UK investment trusts Alliance Trust and Witan have agreed to merge to create a company managing £5bn, in the latest example of consolidation in the fund management sector

Elsewhere in the trust world we had the announcement from Regional REIT regarding the shoring up of its balance sheet due to the redemption of a retail bond due in August. The company announced a conditional capital raising of £110.5m by way of a fully-underwritten placing backed by Steve Morgan, ex-Redrow founder and CEO, and an open offer of 1,105,149,821 new ordinary shares, subject to shareholder approval at an EGM on 18 July

THIS WEEK IN HISTORY

2007: the first Apple i-Phone goes on sale for US$600 with 16GB of storage. At the time, it was only available to AT&T customers

2009: Bernie Madoff is sentenced to 150 years in prison for running his massive Ponzi scheme

MARKET DATA

As at 28^th June 2024. Source: InFront

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