📈 Inflation Isn't Going Anywhere

UK inflation remained stubbornly high in March due to food and recreation prices, average UK house prices fell for the third straight month and Lidl overcame Tesco in a logo legal battle.

April 20, 2023

Good morning. In today’s update - markets ended their winning streak, UK inflation remained stubbornly high in March due to food and recreation prices, average UK house prices fell for the third straight month and Lidl overcame Tesco in a logo legal battle.

Markets

UK stocks ended their winning streak on Wednesday after the disappointing economic data in the morning. The FTSE 100 fell 0.1%, whilst the more domestically-focussed FTSE 250 dropped 0.5%, as markets priced in the increased likelihood of further rate hikes. Real estate firms were amongst the biggest losers, being one of the most economically-sensitive sectors. Miners were also lower after a downbeat market update from Antofagasta, giving back most of the previous day’s China-led gains.

Top Stories

🏛️ UK inflation remains sticky

In a further headache for the BoE, ONS data showed inflation fell less than expected in March, remaining in double digits at 10.1% on an annual basis - economists had forecast a drop to 9.8%. The ONS said that further increases in food costs, along with price rises in recreation and culture, more than offset positive trends in motor fuels and household services. Another disappointment for the central bank will be the closely watched ‘Core’ inflation measure (which strips out volatile energy, food and alcohol prices) - this held steady at 6.2%. Wednesday’s data, along with Tuesday’s labour print, makes it even more likely the BoE raises rates again at its next meeting - the MPC are due to meet on 4th May. (ONS full report here)

🏠 House prices slow again

Official data showed annual house price growth slowed to 5.5% in February - down from 6.5% in January. The price of a home in the UK has now dropped for three consecutive months from November’s peak, with the average house now costing £288k (or £532k if you live in London). (ONS report here)

🥊 Lidl wins battle of the logos

German discount supermarket Lidl has defeated Tesco in a trademark dispute over use of its Clubcard loyalty scheme logo. Lidl argued that Tesco was using the yellow circle logo on a blue background (which, to be fair, is pretty similar to Lidl's) to "deceive" customers into thinking it was price matching or offering the same value. Tesco confirmed it would appeal the ruling.

What Else Happened?

Economics / Politics / General

Apple is attempting to head off an investigation by the UK’s Competition and Markets Authority by allowing in-app payments for the first time; the regulator is now inviting feedback by mid-May before making its final decision.

Deals

London-based private equity firm Apax Partners was reportedly in talks with listed healthcare firm Alliance Pharma about a potential £400m acquisition, but called off discussions this week. Alliance shares rose 3.2% on the news.

Today’s top VC deals - SME working capital finance provider Trivier raised a £7m seed round led by Stride; Social Value Portal - a platform for measuring social impact - raised an £8.5m Series B round led by Mercia; biodiversity measuring platform Pivotal raised a £4.5m seed round led by Octopus Ventures and game studio World Makers raised $4m to support the launch of its newest release, Deceit 2.

Company News / Trading Updates

Takeaway delivery company JustEat announced a fresh share buyback scheme on Wednesday after increasing its full-year profit forecast, despite reporting a 14% drop in customer orders during Q1.

Trading platform Plus500 reported a 100% increase in Q1 EBITDA this year, owing to improved customer retention and a push into the US market.

Asset manager Liontrust saw shares drop 6.9% despite upgrading its forecasted profit for the year, as it also reported net outflows of £2bn in assets over the first three months of the year.

Redde Northgate, the FTSE 250 commercial vehicle rental business, announced it was trading ahead of expectations and would beat profit estimates, owing to strong demand and insurance contract wins; shares closed 4.3% higher.

🌎 Global Snapshot

A consortium of investors including Advent, Bain Capital and TPG are reportedly teaming up for a $10bn acquisition of sandwich shop Subway.

Morgan Stanley beat analysts estimates for Q1, despite posting a 20% drop in net income; an 11% jump in wealth management revenue was offset by a slump in advisory fees as dealmaking dried up.

Tesla shares fell in after-hours trading despite announcing Q1 financials broadly in-line with market expectations; markets were also reacting to the car makers second price cut this month.

German insurer and asset manager Allianz is reportedly looking to offload a 5% stake in digital bank N26, at a 68% discount to its 2021 valuation of $9bn.

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