Market Prognosis

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

October 21, 2022

Some folk like higher rates

Macro & Overnight

Equity markets overnight were relatively quiet, albeit the US sold off at the close on rising fears on inflation and rates.

 

The Yen blew out toa new record of  150 against the $. Japan must now be on every traveller’s vacation list.  

 

In the UK, not much happened, other than the resignation of our Prime Minister, very much as expected. We kept calm and carried on. The drama was largely contained in the increasingly detached Westminster bubble.   

 

The UK is not alone in suffering from global macro trends. As we focus on domestic drama and maybe even worry about our place in the world, gilt yields have slipped below those for US Treasuries. The bond vigilantes remain on the prowl. Investors are left trying to work out who is next.

UK Companies

The highlight today is positive news on interest rates from two FX companies. Alpha FX and Record deal in FX for clients with different models, but both report benefits from the new interest rate environment. Record benefits from increased rate differentials between currencies which helps them sell their hedging tools; Alpha FX materially raised guidance on profits based on the interest it earns on large customer balances alternative banking. Good to know that some people like higher interest rates.

 

Elsewhere, Wickes added to the gloom around DIY and DIFM (Do It For Me) sectors and delivered an in-line update with guidance highlighting increased costs. Rightmove announced a new CEO; hotelier IHG reported solid performance and recent market arrival ProCook guided in line with previously lowered forecasts, which is about as good as it gets for direct-to-consumer businesses currently.

PROGnosticator

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