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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February 1, 2024

Fed takes March rate hike off the table in hawkish press conference

Macro & Overnight

The Fed’s FOMC left rates unchanged after yesterday’s meeting. While he formally took the prospect of further hikes off the table, Jay Powell also took the prospect of a March cut off the table in a relatively hawkish press conference.

In the press conference afterwards, Chair Powell said that rates are “well into restrictive territory” and that supply and demand conditions in the labour market are balancing better with inflation expectations well anchored. He said the Fed would be attentive to inflation risks and extend the period of higher rates if required; the FOMC needs greater confidence in the journey to 2%; almost every member of the FOMC wants rates to come down and thinks they should; understood that real rates are going up as inflation comes down but said they were in a risk management mode to avoid moving too soon or too late; confirmed that any unexpected weakening in the labour market would result in quicker action to reduce rates; there was “a ways to go” to get to a soft landing, and it was too soon to declare victory.

In reaction, US equities, notably Mag 7, reversed while bonds remained steady.

UK Company News

FDM, the IT professional services provider, ended the year with 3,892 consultants placed with clients (2022: 4,905), a decrease of 21%. It delivered 1,338 training completions during the year (2022: 3,179 training completions), reflecting the Group’s response to reduced levels of client demand. Its balance sheet remains robust, with closing cash of £47m (2022: £46 million) and cash conversion strong at 112% (2022: 108%). It has taken action to align business activity and resources and considers itself to be well-placed to meet clients’ needs as and when market conditions improve. 

In the six years since JTC‘s IPO, it has quadrupled the size of the Group. The fund administrator’s achievements in 2023 included completing the acquisition of South Dakota Trust Company. The momentum in revenue growth reported in September continued to the year-end, remaining significantly above the medium-term guidance range of 8%-10% and 2022 performance of 12%. EBITDA margin will be at the lower end of the guidance range of 33% – 38%, reflecting continued investment in growth. Cash conversion will be more than 90% for the FY.

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