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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October 26, 2022

Two FANGS loose their bite

Macro & Overnight

US equities closed up after better than expected numbers from Coca-Cola and General Motors. Alphabet and Microsoft fell after the close following lower than expected numbers and citing currency headwinds, among other issues. Alphabet is suffering from lower ad spend and Microsoft signalled slower cloud compute growth.

In positive tech news, Intel’s self-driving Mobile Eye spin-off priced its IPO above the guided range, which had previously been significantly lowered. But IPO is a rare enough beast these days, let alone the term guiding higher in the same context.

House price data showing much slower rates growth were absorbed and bond yields eased helping overall equity market sentiment. Fed pivoters continue to expect news of peak rates soon.

The US dollar has weakened 3% since the end of last week.

UK yields are back below the levels last seen before the appointment of our previous Prime Minister, not yet two months ago.

In energy markets there is commentary around lower (some negative) near term and spot natural gas prices both in Europe and North America. Longer term prices, while easier remain at historically high levels.

 

UK Company News

Book publisher Bloomsbury reported its highest ever H1 sales and profit numbers and said it was confident of achieving market expectations for the year ending 28 February 2023.

Speciality chemical supplier Elementis announced strong performances in the Americas, with lower demand in Europe and continuing market weakness in China. Its full year outlook remains unchanged

Language technology and services provider RWS saw FY 22 revenue growth as expected, but significantly assisted by $ strength in H2. In a mixed outlook statement the company believes it can deliver on previous guidance for revenue growth, margin, capital expenditure, cash conversion and ROCE for FY23.

Enterprise IT supplier Bytes Technology reported a decent H1 with outlook into H2 encouraging.

Consumer staples vendor Reckitts narrowed its revenue guidance range to +6-8% and continues to see growth in operating margins. As with Coke overnight, branded consumer staples suppliers can seemingly pass on the impact of inflationary cost increases.

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