January 9, 2023

UK labour disputes reach critical stage

Macro & Overnight

The US jobs data last week were taken positively by markets, prompting a sharp decline in the 10 yr US Treasury yield. The US $ has weakened, indicating a lowering of rate hike expectations.

Political dysfunction is continuing around the world. Following the turmoil in the US Congress electing its new Speaker, Brasilia was overrun yesterday by Bolsanaro supporters in what appears to be a largely symbolic protest. UK investors will be relieved that Westminster is keeping a comparatively professional demeanour.

The US Q4 results season starts this week with some bigger banks reporting. Expectations are for further job losses.

Oil prices have lifted from recent lows as China’s opening up gathers momentum.

The main UK news is the heightened expectations for government intervention in labour disputes on the railways and in the NHS.

The £ has moved higher.

UK Company News

A quiet day in UK company news saw negative updates from two computer game companies confirming that this industry has round-tripped from its lockdown boost of 2020/2021.  

Frontier Developments grew revenue for H1 FY23 16% above the comparative period. However, due to the underperformance of F1 Manager, the Board has reduced revenue projections for this year and next. The company is reviewing the future of its Foundry division, given the mixed performance of titles released to date and as it looks to improve returns. FD shares traded above £30 only 18 months ago and now trade at c £6. 

Devolver Digital has experienced the ongoing cost impact of three underperforming titles and weaker-than-forecast sales volumes in December, resulting in lower-than-expected performance in the second half of FY2022. Subsequently, the company has downgraded guidance with greater weighting to H2 revenue. Additionally, Devolver has warned about the carrying value of certain acquired brands and titles. 


NB Prices are as at the previous day’s close.

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