🏥 UK Private Sector on the Mend

Markets roared higher, there’s a glimmer of hope for the troubled UK private sector, car production is on the up, an iconic British music brand is acquired and Moonpig got a mother’s day-sized boost.

March 31, 2023

Good morning. In today’s update - markets roared higher, there’s a glimmer of hope for the troubled UK private sector, car production is on the up, an iconic British music brand is acquired and Moonpig got a mother’s day-sized boost.

Markets

A fourth day of consecutive gains for the FTSE 100 on Thursday as investors shrugged off a further slowdown in the UK private sector (below). The large cap FTSE 100 index closed +0.7% higher, with the FTSE 250 faring even better at +1.5%. Online supermarket Ocado was a notable gainer on Thursday, rising +10.3% after it announced a victory in court over robot patents.

Top Stories

📉 Hope on the Horizon for UK Private Sector Activity

The UK’s private sector saw its eighth straight quarter of contraction in the three months to March, driven by weakness in the services sector. Data from the CBI showed overall output shrank 4% over the period, slightly better than the 6% decrease in February. However, there was light at the end of the tunnel in this month’s report. Growth is expected to return over the next three months for the first time in almost a year, as business volumes and professional services pick up. CBI Lead Economist Alpesh Paleja avoided too much celebration though, claiming the UK was “at best, skirting stagnation-like conditions”. (Official)

🏎️💨  Exports Fuelled UK Car Production Boom

UK car production rose by 13.2% year-on-year in February, driven by exports which made up around 80% of all output (with 60% going to the EU). The report from industry experts SMMT noted production of EVs and hybrids was particularly strong, rising 72% year-on-year and now making up two-fifths of all cars produced. The SMMT also referenced a positive easing in supply chain pressures, particularly in semi-conductors. (Official)

🎸  Music Brand Marshall Acquired By Swedish Partner

The iconic British music equipment brand (favoured by rock stars including Jimi Hendrix) has been acquired by Sweden-based Zound Industries, bringing an end to the family’s sole ownership of the business. The businesses are well known to each other already - Zound has been producing headphones under the Marshall brand for more than 10 years. The Swedish company plans to rename the combined business to ‘Marshall Group’ following the deal, with the FT reporting separately that the enlarged group could be worth more than $400m.

🐷 Mother’s Day Boost for Moonpig

Shares of the online card platform surged on Thursday as it hailed a resilient trading performance so far for the second half of 2023 (year-end April). Moonpig revealed it enjoyed its “largest ever week of sales” in the UK ahead of Mother’s Day and expects 2023 revenue to be in line with expectations (at around £320m). Shares popped 10.7% as investors contrasted Thursday’s announcement to the downbeat update they gave back in December.

What Else Happened?

Economics / Politics / General

Research from the City of London Corp showed New York is now tied with London as the world’s top financial centre - the first time the UK’s capital has lost the sole top spot.

The state of hiring in London neared record lows in March according to a KPMG/REC London survey – despite this, firms are optimistic about the next 12 month’s prospects.

Deals

Owners of both Toys ‘R’ Us and Ben Sherman are reportedly in the market to acquire iconic wellies brand Hunter, with bids due this week.

Another day, another AI startup raises capital - Cambridge-based Fetch.AI fetched $40m in funding to support the development of its ‘autonomous agent’ platform.

Several other exciting startups also announced growth fundraises – commercial property insure-tech Intelligence AI raised £2m; London-based supply chain finance disruptor Finverity raised $5m; Accounting software developer Translucent was backed by LocalGlobe in a £2.7m funding round and Coadjute raised £4m to support growth for its blockchain-based property network.

Company News / Trading Updates

Supermarket Morrisons reported its first quarterly sales growth in two years, with total revenue increasing 3.4% to £4.7bn; CEO David Potts also announced he was targeting £700m in cost savings over the next three years.

FTSE 100 energy giant SSE raised its profit forecast again for the 2022-23 year, as the company increased output from its gas power plants to make up for poor output from renewable energy sources

Petrofrac, the London-listed energy infrastructure company, saw shares rocket 60% on the announcement of a €13bn contract with Dutch group TenneT. (Official)

🌎 Global Snapshot

H&M shares surged 16.3% after the retailer announced better-than-expected Q1 profits and a reduction in inventory levels; reports suggested short sellers exiting their positions may have amplified the share price move

US economic data came in slightly worse on two fronts - the weekly jobless claims report was marginally higher than expected (198k vs 195k forecasted), whilst there was a downward revision to 2022 GDP (2.6% vs 2.7% forecasted).

Roku became the latest company to announce layoffs on Thursday, shedding 6% of the workforce along with a reorganisation of its office footprint.

Good news on the European fight against inflation – Spanish CPI slowed to 3.3% in March, the lowest level since August 2021.

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