Market Prognosis

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

January 23, 2024

China prepares a bazooka, UK government borrowing less than expected & H&T warns

Macro & Overnight

Oil prices have firmed, but European wholesale natural gas prices have weakened further. Both seem somewhat oblivious to increased military exchanges and rising Middle East tensions.

Bond yields remain elevated, some 25-30 bps above last month’s lows, but they are stable.

Bitcoin continues its post-ETF pullback and trades below $40000 c. 15% below its recent high.

Chinese shares and the yuan advanced overnight, anticipating a Chinese bazooka of measures to revive its stock market. Bloomberg reports a $278bn package of measures directing state-owned entities to buy domestic and internationally traded Chinese equities.

In Japan, the BoJ meeting proved uneventful, with no change in interest rates.

The UK borrowing requirement substantially undershot the OBR forecast for December at just under £7bn compared to expectations of £14.7bn, increasing optimism for a tax-cutting budget in March.

UK Company News

Boohoo confirms that trading remains in line with market expectations. The CFO is being replaced.  

Eleco, the software provider for the built environment, updated that its recurring revenue increased to £20.7m (2022: £16.9m), up 22%, representing 74% of total revenue in 2023. 

The cinema operator Everyman Media updated that its H2 was affected by the well-documented Hollywood strikes. However, it re-confirms market expectations for 2024.  

H&T, the UK’s largest pawnbroker, expects to report record profits for 2023, up c.40%. However, this is 10% below current market forecasts due to trading challenges over the peak Christmas period. Issues cited include watch valuation volatility and retail jewellery customers displaying caution in spending, with a significant shift towards lower-priced items. 

H&T’s warning is further evidence of the trading down among UK consumers. Watches of Switzerland highlighted similar issues in the luxury watch and high-end jewellery market last week.  

Marstons’ like-for-like sales for the 16 weeks to 20 January 2024 were +8.1%, reflecting strong trading over the festive period.

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