Market Prognosis

A concise summary of the major macro events of the past 24 hours, and selected UK company-specific news.

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April 22, 2024

Are we approaching the great equity market dispersal?

Macro

US GDP and PCE Core inflation data are the most consequential releases this week, with the outlier potential of a rate decision due from the Bank of Japan on Friday.

Expectations are for a decent Q1 decline in US GDP growth from 3.4% last time to 2.3% this time.

Expectations are that the MoM PCE inflation for March will be unchanged on the prior month at 0.3%.

Oil and precious metals prices have weakened along with the dollar index DXY, indicating that concerns over a Middle Eastern conflagration continue to ease.

Nvidia fell 12% last week, and semiconductor stocks were weak in Asia overnight. This week, the US Big Tech earnings season will focus on the AI Magnificent Seven goliaths amid signs of splintering. Investors will watch Tesla’s results particularly keenly amid signs of global excess supply of EVs.

Are we approaching the great equity market dispersal?

UK Companies

An agreed offer from US Quanex for building products supplier Tyman valuing it at £788m, a c.35% premium. 

There is talk of a Blackstone offer for Hipgnosis following Apollo’s agreed bid last week.  

Cerillion, the telecom software supplierupdated that it is well-placed to meet market expectations for the current financial year and beyond. H1 results will show new highs for revenue and adjusted EBITDA. Telco’s digital transformation, the transition to Software-as-a-Service solutions, and investment in enterprise software remain its key growth drivers. 

Frenkel Topping said that trading is in line with expectations and that it has a strong pipeline of new FUM opportunities. However, it is mindful of the market backdrop, consumer duty, and the ongoing integration of acquisitions and prudently maintains guidance.

Hornby warned that sales are only marginally ahead of the prior year, with debt at £14.3 million vs. £5.5 million, mainly due to losses and capital expenditure. It remains cautious in outlook due to the natural challenges facing a business in turnaround and the uncertainty of the broader economic and socio-political factors.

Mind Gym revenues for H2 increased 15%, and the significant cost reduction plan resulted in an H2 FY24 expected underlying EBITDA of £3.8m (vs the £4.1m loss reported in H1 FY24). It has identified a further £3.0m of reductions, bringing the total to £11.0m. It has cash of £1.4m and access to a £2m undrawn loan facility but continues to see delays in customer decision-making and project scalebacks. 

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Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Any prices quoted in our research are as at the previous day’s close.