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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January 26, 2024

Hot US economy not inflationary says Yellen

Macro & Overnight

US GDP data were below last quarter but still a robust 3.3% annualised growth above expectations and any other major economy.

Treasury Secretary Yellen pointedly said that these levels of US growth are not inherently inflationary, thus fuelling the “soft landing” narrative.

We get US PCE inflation data, the Fed’s favourite inflation yardstick, later today.

The dollar and oil prices firmed yesterday, and US oil majors advanced on tighter-than-expected inventory data.

Meanwhile, European wholesale natural gas prices, the Continent’s most significant forward inflation measure, remained weak, albeit abnormally high European wind speeds are impacting short-term demand.

Intel results disappointed, and the shares fell c.10%.

UK Company News

Avon Protection said that its order intake for the first quarter was 36% higher, its order book was 21% higher and cash conversion was strong. Its transformation programme is progressing.

CT Automotive, the designer, developer and supplier of interior components to the automotive industry, said that FY23 revenue should be at least $140m. Its gross margins have continued to improve, and it expects to report FY23 underlying profit before tax of c.$8 million. Strong cash conversion and successful $9.6 million fundraising in H1 left FY’s net debt at $6m. It entered FY24 with good visibility of booked production and tooling revenue. It monitors the Red Sea impact on supply chains and maintains buffer stocks to mitigate any short-term disruption to shipping times but hasn’t experienced any difficulties. 

Car retailer Motorpoint Retail issued a Q3 update with volume performance improved through the period and has continued. Used car values have stabilised in January, and its expectations for FY25 profitability remain unchanged. It has announced a share buyback programme. 

WH Smith said its revenue for the last 20 weeks was up 8%, with Travel UK up 15%, Travel USA up 14%, R0W up 24%, and UK High Street -3%.  

Wickes updated that its LFL sales align with the prior year, and its PBT is expected at the upper end of the consensus range.

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