Market Prognosis

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

July 31, 2023

Will macro data support a soft landing narrative?

Macro & Overnight

Optimism for a soft landing for the US economy has led to a widening global equity market rally over the last week.

This week the market needs to absorb Eurozone GDP and inflation data, US PMI data, a UK rate decision Thursday and end with US jobs data on Friday.

Let’s see if a soft landing is still the main market narrative by next weekend.

UK Company News

Chrysalis said that its unaudited NAV was 136.86p. A 5.3% increase since 31 March. It is encouraged by the slightly more active IPO market over the last quarter, particularly as it has several later-stage assets that are either profitable or funded to anticipated profitability and should make excellent IPO candidates in due course. It has cash of approximately £30m and a position in Wise of £10m, to give a total liquidity position of c. £40m.

Sparta is sticking the boot in on Dr Martens taking an activist position. 

Fraser’s increased its stake in Boohoo. 

GlobalData reported H1 revenue growth of 21% with underlying growth of 8%. It saw further margin expansion to 39% and expects to deliver results aligned with increased market expectations. Operating cash flow grew 12% to £63.0m (HY 2022: £56.1m), 118% of Adjusted EBITDA. Uncertainty continues to drive demand for its ‘gold standard’ data.

Marshalls updated that like-for-like basis revenue contracted by 13% amid challenging market conditions with persistent weakness in new build housing and private housing RMI. It is implementing several measures to align capacity and costs with demand, with a strong focus on managing cash. It is well placed to deliver profitable long-term growth when market conditions improve and will continue to focus on executing its key strategic initiatives. Previously anticipating a recovery in market conditions in the second half of the year, the Board now believes that an improvement in the second-half performance is unlikely given the macroeconomic backdrop. The second half will be markedly weaker than the first, and it expects to deliver a lower FY result than its previous expectations.

RBG said that Ian Rosenblatt will return to the Board. He is both the Group’s largest shareholder and individual revenue generator. 

Spectris said sales were up 23%, its operating margin increased 180bps to 14.5%, and profit for the half was year up 41%. It reported a cash conversion of 117%. It now expects organic sales growth for the FY to be ahead of previous guidance, expecting double-digit year-on-year growth.

Yellow Cake said the spot uranium price increased from US$50.65/lb on 31 March 2023 to US$56.00/lb on 30 June. Its net asset value on 30 June 20223 was £4.50. Its growing focus on term uranium contracting will contribute to the expected increase in spot market demand as nuclear utilities acquire additional strategic inventory to supplement multi-year purchase agreements under negotiation, likely at prices above the prevailing spot market. Since the Russian invasion of Ukraine in February 2022, the threat of restrictions on Russian-sourced nuclear fuel deliveries into the European Union, United Kingdom and the United States has persisted. An impediment to those deliveries through sanctions or logistical challenges would likely impact the global nuclear fuel markets and result in further upward price pressures.

Prognosticator 

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