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Insights

A concise summary of the major macro events of the past 24 hours, and selected UK company-specific news. Listen to the accompanying podcast, Market Prognosticator, for more detail.

February 21, 2023

Brighter economic news and improved liquidity boost markets

Macro & Overnight

Ukraine and Russia dominate headlines as we approach the anniversary of the invasion.

Most economic analysis shows the surprising resilience of European economies amid suggestions of recession avoidance and soft landings.

European PMI business activity in January, as measured by S&P, was stronger than expected across the EZ and the UK.

The UK’s Public Sector Net Borrowing was much lower than forecast.

For now, the boost to liquidity and global GDP from China’s reopening, increased monetary stimulus, and the US Treasury running down its General Account at the Federal Reserve has created a mini QE effect. Stock markets have regained some animal spirits.

However, bond markets suggest a slightly different story as 10 yr Treasury yields approach 3.9% and the DXY $ index moves through 104. The higher-for-longer camp is fighting back against the prevailing soft landing brigade, at least in FX and fixed-income markets.

 

UK Company News

Customer billing provider Bango has announced a partnership deal with Dropbox. 

GB Group, the location, identity verification and fraud software provider, has issued another warning. It reports that challenging conditions among certain cryptocurrency customers have continued into H2 and also seen some incremental lengthening of sales cycles. The Company expects to report approximately £279 million in sales versus £273.8 million in the prior year. Operating profit will be about £60 million, about 11% shy of the current consensus. 

National Milk Records, the agri-tech information services provider in the UK dairy sector, produced solid H1 results. It said that milk prices have declined from their peak. However, they remain c.50% above the average over recent years, with many reductions already announced for deliveries in the first quarter of 2023. Inflation has led to a scenario where marginal decision-making for farmers carries more risk: higher investment and input costs are making the need for robust data insights ever more critical. Furthermore, maximising a herd’s efficiency is the single most direct route for the dairy industry supply chain to achieve its sustainability objectives. 

Restaurant Group‘s public spat with activist investor Oasis is ongoing. 

Zoo Digital, the provider of cloud-based localisation and media services, announced it is now a key vendor for a significant content producer to support its content localisation needs. This client is also using ZOOstudio to manage the localisation of content across its vendors. [Note here]. 

Scottish housebuilder, Springfield Properties, issued FY results. [Note here]. 

 

Prognosticator

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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.

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