📊 Sticky inflation

Markets

• Markets struggled across the board on Wednesday after investors digested the prospect of lingering inflation than expected (below)

• Housebuilders led the downturn as markets considered the negative impacts of higher interest rates on the sector - Persimmon (-5.5%), Taylor Wimpey (-4.6%), Barratt Developments (-3.6%) and Berkeley Group (-4.3%) all finished weaker.

   

Corporate News

Shares in Marks & Spencer surged 12.9% on Wednesday after the retailer reported a sharp increase in profits over the year to April, as well as a return to paying a dividend for the first time since the pandemic; pre-tax profits jumped 21%, driven by strong sales across both Food and Clothing & Home units. (Link, M&S)

B&Q owner Kingfisher saw shares slip 2.6% after it reported the “unusually poor” spring weather took a bite out of Q1 sales, with like-for-like revenue down 3.3% compared to last year. (Link, Kingfisher)

FTSE 100 energy company SSE almost doubled its profits (to £2.2bn) for the year to March, driven by outperformance in its Thermal & Gas unit; the energy company also pledged to invest £40bn in clean energy over the next decade, as part of its Net Zero Acceleration Programme. (Link, SSE)

FTSE 100 insurer Aviva’s shares dipped 5.9% as “challenging market conditions” weighed on its wealth management business; on the upside - the company reported a 25% jump in the number of private health insurance policies, as a result of NHS struggles. (Link, Aviva)

FTSE 250 merchant banker Close Brothers delivered a robust trading update for the last quarter, with its loan book growing 2% thanks to strong growth in new business; on the downside - the group said retail investor appetite remained “subdued”, hitting its trading business Winterflood. (Link, CB)

Deals

Private equity group Exponent kicked off a process to sell Big Bus Tours - the sightseeing operator whose buses are commonplace on central London roads; Exponent are supposedly hoping to bag around £600m for the sale, having bought the business in 2015 for a reported £300m. (Link)

UK asset manager Legal & General picked up $250m of an Ecuadorian ‘debt-for-nature’ swap - a transaction that allows the country to swap $1.6bn in bonds for a new $650m loan, on the basis that it will spend the money on environment conservation; in this case, the money will mostly be heading to the Galapagos Islands. (FT)

Shares in listed real estate company CT Property Trust (a Columbia Threadneedle vehicle) jumped 25.6% on Thursday after it agreed to be acquired by rival LondonMetric for £199m - a 34.3% premium to the latest share price. (Link)

Microsoft formally lodged an appeal against the UK’s Competition and Markets Authority decision to block its $69bn acquisition of Activision; the Competition Appeal Tribunal will now decide if the argument has any merit. (Link)

Todays VC update:

• DataOps.live - a data products company which grew annual recurring revenue by 400% in FY23 - bagged a $17.5m Series A fundraise led by Notion Capital. (Link)

• Laced - a UK-based marketplace for authentic sneakers - raised a $12m Series A led by Talis Capital, with participation from H&M’s venture capital arm, among others. (Link)

• Satellite Vu - a climate tech company helping clients understand energy efficiency and carbon footprint - raised a £13m Series A extension round ahead of its launch next month. (Link)

Economy / General

UK inflation slowed less than expected in April - CPI fell to 8.7% for the month, down from the 10.1% recorded in March but higher than the 8.2% print economists were hoping for. Moreover, core inflation (a key measure for the BoE which strips out volatile energy, food, alcohol and tobacco prices) unexpectedly rose to 6.8%, up from 6.2% in March. (Link, ONS)

Official figures from the ONS showed house prices dropped for the fourth consecutive month in a row during March, falling 1.2% month-over-month following the 0.1% decrease in February. (Link, ONS)

The UK has beaten Spain in the race for Tata Group’s (owner of Jaguar Land Rover) new electric battery car factory; the government are reportedly on the verge of signing a deal with Tata that would bring around 9k jobs to Somerset. (Link)

🌎 Global Snapshot

Nvidia shares jumped 18% in after-hours trading after it smashed market forecasts for earnings in the latest quarter, driven by “surging demand” for its data centre products following the rise in generative AI. (Link, Nvidia)

Citigroup has reportedly scrapped plans for a $7bn sale of Banamex - its Mexican consumer banking unit - opting instead for an IPO at some point in 2025; markets weren’t impressed - Citi shares dropped 3% on the day. (Link)

Japan’s biggest taxi hailing app, Go Inc., bagged a $72m investment from Goldman Sachs (valuing the firm at $1bn), saying it plans to use the funds to further develop the app and find mobility solutions for “various societal issues”. (Link)

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