UK service sector PMI returns to growth ‘quicker than expected’

Liam Roche
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UK service sector PMI returns to growth ‘quicker than expected’

IHS Market PMI for services at 56.3

The UK services sector made a return to growth last month as unemployment, business activities and new orders returned to growth from February.

Data that emerged on Wednesday shows that the UK’s so far successful roll-out of vaccines has led the economy to bounce back quicker than first expected.

The IHS Market purchasing managers index (PMI) for services came in at 56.3 for March, which indicates growth as it is above 50, the marker for stagnation.

In February the service sector contracted slightly, scoring 49.5 on the PMI.

The 56.3 score in March is the first time PMI has been above 50 since October 2020.

In a positive sign for employment figures, the number of staff hires increased overall for the first time since the pandemic started.

Tim Moore, Economics Director at IHS Markit, which compiles the survey, provided further context to the positive service sector news:

“UK service providers were back in expansion mode in March as confidence in the roadmap for easing lockdown restrictions provided a strong uplift to new orders. Total business activity increased at the fastest rate since August 2020 and this return to growth ended a four-month sequence of decline,” Moore said.

“Forward bookings for consumer services and rising optimism about recovery prospects resulted in extra staff hiring across the service economy for the first time since the start of the pandemic. Business optimism improved for the fifth month running in March and was the highest since December 2006.”

“Around two-thirds of the survey panel forecast an increase in output during the year ahead, which reflected signs of pent up demand and a boost to growth projections from the successful UK vaccine rollout. Of the small minority citing downbeat expectations in March, this was often linked to uncertainty about international travel restrictions.”

“There were further signs that strong cost pressures have spilled over from manufacturers to the service economy, especially for imported items. Higher prices paid for raw materials, alongside rising transport costs and utility bills, meant that operating expenses across the service sector increased at the strongest rate since June 2018.”

Cash conserved as CyanConnode growth accelerates

Andrew Hore
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Cash conserved as CyanConnode growth accelerates

Good news from narrowband radio frequency communications networks developer CyanConnode (LON: CYAN) where full year revenues have soared in the past year. More importantly, the cash position is positive.
Revenues are better than expected. In the year to March 2021, revenues will be more than double the £2.5m achieved in the 15 months to March 2020. Arden had forecast a figure of £5.8m for 2020-21, but it will be around £6.2m. That is an impressive second half performance considering that interim revenues were £1.5m.
Management has been promising growth in demand and contracts have been won, bu...

Jamie Dimon predicts post-pandemic boom for US economy

Liam Roche
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Jamie Dimon predicts post-pandemic boom for US economy

Jamie Dimon’s letter showed support for high government spending

The chief of JP Morgan, Jamie Dimon, has said a vast increase in US government spending will boost the US economy over the next 24 months.

Dimon provided a positive outlook in his yearly letter to his company’s shareholders. He noted that high savings rates, stimulus programmes, a potential infrastructure package and the mood around the pandemic coming to an end would combine to get the US economy moving.

“It is possible that we will have a Goldilocks moment — fast growth, inflation that moves up gently (but not too much) and interest rates that rise (but not too much),” said the banker, who believes a sustained spending could to lead to an extended period of growth.

Dimon said that both companies and consumers were in good shape as the US begins to emerge from the coronavirus crisis.

Prior to the President’s $1.9trn stimulus package passing in March, the investment bank suggested that retail customers were storing around $2trn in extra savings.

Dimon also stated that the expansionary policies carried out by central banks across the globe will have a “compounding global affect”.

If Dimon’s prediction of a boom does come to fruition then high valuations equity markets could be justified, though it would be difficult to support the price of Treasury bonds due to an oversupply of US debt, he said.

A key theme within Dimon’s letter was his support for high government spending as a means to addressing some of the country’s issues, including ageing infrastructure, expensive healthcare and economic inequality.

“Spent wisely, it will create more economic opportunity for everyone,” he said, while including that there are risks it can be ineffective when tied up in bureaucracy.

Dimon’s points come as Joe Biden is seeking to pass a $2trn infrastructure plan following his $5.8trn stimulus outlet designed to stimulate the economy during the pandemic.

UK retail investors could be shunning domestic equities at their peril

UK Investor Magazine
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UK retail investors could be shunning domestic equities at their peril

Recent data from the The Investment Association revealed UK retail investors took a further £1 billion out of UK Equity Funds in February. This means retail investors have removed a total of £18 billion from UK Equity Fund since 2016 and the decision to leave the EU.

We question whether Retail investor are simply driven more by sentiment around the UK or misunderstand the composition of UK markets given the significant level of revenue earned outside of the UK by FTSE 100 companies. 

Whilst investors took cash out of UK Funds they added to Global Funds meaning UK Retail investors may be under exposed to rerating in UK Equity as its lags other major indices that have enjoyed recent rallies.

We discuss Ananda Developments (LON:ANA), Kavango Resources (LON:KAV) and Mosman Oil and Gas (LON:MSMN).

Register for the upcoming UK Investor Magazine Virtual Conference here.

FTSE 100 closes in on 13-month high

Liam Roche
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FTSE 100 closes in on 13-month high

As it did on Tuesday, the FTSE 100 led the way after the bell, adding another 0.8%. Touching 6,875, the index is at a near 3-month high. If it can add another 40 or so points in the coming days, it will hit its best levels in over 13 months.

“Despite the third wave in Europe, concerns over the AstraZeneca vaccine, and reported worries about an incoming slowdown in the UK’s vaccination programme, yesterday’s IMF growth upgrades have helped keep the markets feeling fresh,” said Connor Campbell, financial analyst at Spreadex.

While its gains were half of that of its blue-chip big brother, the FTSE 250’s 0.4% rise put it above 22,000 for the first time in history.

“That, more so than the gains made by the multinational-focused FTSE 100, is a sign of investor optimism over a post-covid recovery in the UK,” Campbell added.

FTSE 100 Top Movers

Land Securities (3.47%), British Land (2.49%) and Taylor Wimpey headed up the FTSE 100 early on Tuesday.

Avast (-1.76%), Flutter Entertainment (-1.56%) and Evraz (-1.00%) are the day’s biggest fallers so far.

Shell

Royal Dutch Shell today confirmed that the impact of the Texas winter storm will see the company lose out on $200m in the first quarter of 2021. This is despite the crude oil price rising over the same period.

The FTSE 100 company’s production of oil was reduced by between 10,000 to 20,000 barrels per day, however the company is still anticipating average output to come in between 2,400,000 and 2,475,000 barrels per day. This would result in a swing to a profit following a prior Q4 loss.

Supermarket clothing sales double to £313m

Liam Roche
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Supermarket clothing sales double to £313m

Total supermarket sales were down by 2.9% from the year before

Clothing sales at supermarkets surged in March as shoppers took advantage of the opportunity to buy garments in-person while other non-essential outlets remained closed.

The figures come as a signal of pent up demand as shops get ready to reopen across the UK.

In the four weeks ended 27 March sales at supermarkets doubled to £313m.

Additionally, home and garden sales also boomed to £175m in anticipation of outdoor socialising ahead of spring and into summer.

Total supermarket sales were down by 2.9% from the year before, according to Nielsen research. In March 2020 many people were stockpiling and panic buying, fearing the worst ahead of the oncoming lockdowns.

UK shoppers spent £1bn more on goods compared to the same period in 2019, which was before the coronavirus pandemic.

The fastest grown supermarket over the past three months was Lidl, followed by Iceland and Aldi.

Out of the big four supermarkets, Asda and Morrisons grew the fastest.

Mike Watkins, NielsenIQ’s UK head of retailer and business insight, commented: “It’s clear that as we draw ever closer to the end of lockdown, consumers have been looking ahead to spring and indulging in some retail therapy, ranging from Easter chocolate to some new clothing or accessories for the home and garden.”

finnCap reveals better than expected results following strong March

Liam Roche
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finnCap reveals better than expected results following strong March

finnCap total income up 83% from year before

finnCap Group (LON:FCAP), provider of strategic advisory and capital raising services to growth companies, today confirmed its results for the year ended on 31 March 2021.

The company said its unaudited total income for the year is around £47.3m, up 83% from the year before.

finnCap said its performance had been stronger than expected in March across the company, thanks to successful completion of further equity fundraisings, private M&A transactions and the company’s fourth IPO of the year.

Among projects the AIM-listed firm advised on in March was ready meals group Parsley Box’s London float.

Sam Smith, CEO of finnCap, commented on the company’s recent performance.

“The Group continued to perform strongly in March, surpassing our expectations. We acted on secondary equity issues raising a total of £66m, completed the £83.8m IPO of Parsley Box PLC, advised on several private M&A transactions including the sale of David Rubin & Partners, and secured £52m of debt funding for Rockpool Investments’ acquisition of Cambridge Maintenance Services,” Smith.

“This performance is testament to the platform that we have built to service the strategic and financial needs of ambitious growing companies and their management teams. Our pipeline for Q1 is healthy and I look forward to announcing our full year results in July.”

finnCap provides financial services to growth companies both public and private. It provides advisory, broking and research services to companies on AIM and on the London Stock Exchange Main Market and also advises on M&A, with a specialism in sell-side M&A through Cavendish, as well as arranging corporate debt and private company fundraisings.

Texas freeze cost Shell $200m in Q1

Liam Roche
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Texas freeze cost Shell $200m in Q1

Shell average output to be between 2,400,000 and 2,475,000 barrels per day

Royal Dutch Shell (LON:RDSB) today confirmed that the impact of the Texas winter storm will see the company lose out on $200m in the first quarter of 2021.

This is despite the crude oil price rising over the same period.

Shell’s production of oil was reduced by between 10,000 to 20,000 barrels per day, however the company is still anticipating average output to come in between 2,400,000 and 2,475,000 barrels per day. This would result in a swing to a profit following a prior Q4 loss.

Crude oil prices rose to $59.5 per barrel from $48, with every extra $10 adding $3bn to the company’s revenue.

Shell says its integrated gas production will be between 920,000 and 960,000 barrels per day, which is up on previous estimates, however LNG volumes will be lower at 7.8m-8.4m tonnes.

This division was relatively unimpacted by the weather in the Lone Star State although Shell did confirm that its results had come in below average.

Refinery utilisation was lower than expected in the last update at 71-75%, as was oil product sales and chemical plant throughput.

Director dealings: Ebiquity

Andrew Hore
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Director dealings: Ebiquity

Ebiquity (LON: EBQ) non-executive chairman Rob Woodward is the latest director to buy shares in the media consultancy following the publication of its 2020 results at the end of March. He has invested nearly £15,000 in 41,759 shares at 35.9p each. That takes his stake to 147,280 shares. Woodward is a former boss of STV.
Chief executive Nick Waters, who joined last July from Dentsu Aegis, bought 50,000 shares at 32p each, which was his first purchase, while non-executive director Richard Nichols doubled the number of shares owned by him by buying 100,000 shares at 30.729p each.
Business
Ebiquit...

FTSE 250 recovers to pre-pandemic levels

Liam Roche
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0
FTSE 250 recovers to pre-pandemic levels

The FTSE 250 has now recovered to its level prior to the coronavirus pandemic as the index jumped up today following the Easter break.

The index, which includes Royal Mail and Domino’s Pizza Group, is up 1.2%, or 261.81 points, to 21,994.48 on market closing.

Prior to when the stock market crashed in February 2020, the FTSE 250 peaked at just below 21,900.

The FTSE 100 also crept upwards, by 1.36%, getting above 6,800 on early Tuesday trading to 6,829.09, marking a four-month high.

Markets across the continent put in strong performances, albeit not as strong. The DAX was back above 14,500 following a 0.4% increase, while the CAC is nearing 6,050 once again after adding 10 or so points.

Optimism around a worldwide recover is ever-growing as employment numbers in the US, still the world’s largest economy, far exceeded expectations.

Closer to home, confidence is on the rise as prime minister Boris Johnson confirmed that the reopening of non-essential shops and pub gardens on schedule. Johnson added that there was no reason to to think that there would be any reason to delay the UK’s current roadmap out of lockdown.

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