💸 Bailey Blindsided

The UK is dealt a surprise jump in inflation, house prices are confirmed to have dropped again in January, housebuilder Vistry ignored that and posted upbeat results, and gin and tonics are about to get more expensive.

March 22, 2023

Good morning. In today’s update - The UK is dealt a surprise jump in inflation, house prices are confirmed to have dropped again in January, housebuilder Vistry ignored that and posted upbeat results, and gin and tonics are about to get more expensive.

Markets

UK equities had a mixed day as investors digested a hotter-than-expected set of inflation numbers, taking some wind out of the recent market resurgence. The FTSE 100 closed up +0.4%, with notable rises for banks who held on to recent gains, whilst the FTSE 250 (-0.1%) edged off slightly.

Top Stories

💸 UK inflation jumps

As if the BoE Governor hadn’t had a stressful enough week with the banking drama, he’s now dealing with an unexpected jump in inflation. Data released on Wednesday showed prices increased 10.4% over the last 12 months to February, up from 10.1% the previous month (and above the 9.1% forecasted by economists). Some of the increase was due to higher alcohol prices, with shortages in fruit and veg also adding significant cost pressures; overall food inflation reached 18% - the highest since 1977.

The BoE will also be particularly worried about the acceleration in annual services inflation (a closely watched measure), which rose 6.6% annually compared to 6.0% in January. The BoE announces its rate decision today.

🏠 UK house prices fall

Official ONS data (the most accurate of all house price indices), showed UK house prices dropped 0.6% between December to January, following a 0.4% fall the previous month. The number of completed transactions is also falling - down 10.6% over 12 months - as sellers wait on the sidelines. Renters are feeling the pain as well - private rental prices increased by 4.7% over the year to February as landlords passed on rate rises to tenants. (Official)

…despite this, housebuilder Vistry posted upbeat results 🎯

The affordable housebuilder beat analyst estimates to report a 21% jump in adjusted pre-tax profits (to £418m), despite “challenging conditions” in the fourth quarter of 2022. CEO Greg Fitzgerald claimed he was “bullish” on the outlook as sales improve and building costs ease. Fitzgerald also noted positive progress on their merger with rival Countryside, with synergies expected to be ahead of original forecasts. (Official)

🍸 Gin and tonics are about to get more expensive

Tonics maker Fevertree reported a 37% drop in profits (to £39.7m) on Wednesday, coming in slightly ahead of market expectations after it previously warned on increased costs. In response to the soaring cost of glass bottles, Fevertree plans to raise prices and localise US production in order to save on freight costs. Markets loved the update and shares jumped 9.5%, however investors still find themselves down around 32% over the past 12 months. (Official)

What Else Happened?

Economics / Politics / General

MPs gave their blessing to Rishi Sunak’s Northern Ireland deal, despite 22 backbenchers rebelling (including BoJo and Liz Truss)

Deals

Advertising giant WPP has acquired influencer marketing agency Goat, whose co-founder previously claimed his new owner hadn’t “quite figured out social yet”

London-based Piclo has raised £8.3m to expand its team and fuel product development for its renewable energy marketplace

Oja, the digital supermarket catering to underserved African and Caribbean consumers in London and Birmingham, has secured pre-seed funding from LocalGlobe and Raheem Sterling

Listed City brokers Cenkos and finnCap are understood to be on the verge of announcing an all-share merger, as the pair battle with a lack of equity raising in UK markets

Company News / Trading Updates

WANdisco, the tech firm who claimed to be eyeing a US listing before disclosing potential fraudulent behaviour about 5 minutes later, has hired the former Chair of Biffa to guide them through the investigation

German B2B buy-now-pay-later firm Mondu is planning an attack on the UK market following its $57m Series A funding round

Travel marketplace Hostelworld benefitted from a continued return of demand, with some of its markets “exceeding” pre-Covid levels

British Gas CEO received a bumper £4.5m pay package for 2022 despite ongoing investigations into forced energy meter installations

🌎 Global Snapshot

The Fed raised rates by 0.25% on Wednesday but softened its tone on potential future hikes, as Chair Jerome Powell admitted that the recent banking turmoil is likely to “take a toll” on economic growth as a result of tighter lending conditions

Shares of troubled car retailer Carvana jumped +6.3% after they announced a narrowing of losses and plans to restructure its huge debt pile (shares are still down around 97% from 2021 highs)

NBA legend Michael Jordan considers selling $1.7bn basketball team Charlotte Hornets, bought in 2010 for just $170m

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