Market Prognosis

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

August 15, 2023

Is China having a balance sheet recession?

Macro & Overnight

China’s residential property sector revealed more cracks yesterday, sending Asian markets lower and increasing the shift to US$ safety.

There is increasing evidence that China risks suffering from a balance sheet recession along the lines of Japan from the early 1990s.

The DXY went up through the 103 level and is now +4% in the last four weeks.

US 10 yr Treasuries were volatile in thin trading, but yields are increasing.

In the UK, average earnings were higher than expected in Q2, although there are some signs of weaker employment trends in some of the jobs data.

All eyes are on tomorrow’s UK inflation data.

The Russian Rouble is returning to the lows last seen post the Ukraine invasion as the Russian central bank raised rates to 12.5% yesterday to stem the damage.

UK Company News

Instem updated that H1 revenue should be in the region of £29.7m vs £27.0m last year and that its recurring software revenue is growing by 27%. It said revenue growth will be H2 weighted, but overall its FY performance will be broadly in line with expectations. Note here

Just Group, the annuity provider, revealed strong growth in defined benefit and retail retirement income sales. It is confident it will comfortably exceed its 15% profit growth pledge this year.   

Marks & Spencer continued market share growth in its Clothing & Home and Food divisions with 6% and 11% l4l sales growth. Interim results will show a significant improvement against previous expectations. 

The M&S renaissance continues. 

MTI, the provider of communication and radio frequency solutions across multiple sectors, said its revenues were broadly level, and its gross margin improved by 1% to 32%. Earnings rose 9%, but cash from operating activities improved with a net cash increase of 20%. It remains confident in the business’s growth prospects and the year’s outcome. 

Prognosticator 

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