Happy Sunday! Hope you’ve all enjoyed the warmer weather; I know I have!
Unfortunately, I’ll be taking a hiatus from these Market Update posts, due to an upcoming surgery. I’m having a leg-lengthening procedure done to correct a 5cm+ discrepancy in my right femur. So, pretty major! I’ll likely return nearer the end of the year.
With that in mind, here’s a look into this week’s events.
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Key Events
UK CPI (Inflation) Data For April 2023
On Wednesday, the inflation reading for April came in, and it came in HOT.
Year-over-year, headline CPI rose 8.7%, well above the 8.2% expected. Month-over-month, CPI rose 1.2% (14.4% annualised), again, well above the 0.8% expected.
Core CPI (excluding food and energy) came in at 6.8% year-over-year, above the 6.2% expected and hitting the highest Core reading in around 30 years. Month-over-month, Core CPI rose by 1.3% (15.6% annualised), above the 0.7% expected.
April was the first time since August 2022, that inflation fell below 10%. However, this was anything but a positive result, with misses across the board. As a result, it’s now highly expected that the Bank of England will continue to raise interest rates above 5.00%.
Energy Price Cap Update
On Thursday, Ofgem announced its energy price cap update for the July-September quarter. In other words, from 1st July 2023, this new cap will be in force.
From 1st July, the average UK household will now pay £2,074 per year, or £173 per month. Depending on your use, you may pay more or less than this. This marks the first reduction in the cap for almost two years.
Previously, for the average household, the price cap sat at around £3,000. This was somewhat irrelevant, due to the government’s £2,500 energy price guarantee. However, seeing prices fall below this cap for the first time will be welcome news for many households.
There is some bad news, however. This winter, the price cap is expected to rise slightly once again. While this cap will still be lower than a year ago, households will not benefit from the government’s £400 energy payments. As such, most households will in fact be worse off this winter.
Stock Market News
Tesla (TSLA) – New Partnership With Ford
This week, in a surprise Twitter Spaces, Tesla and Ford’s CEOs announced a new partnership.
From early 2024, all Ford EV owners will be granted access to all of Tesla’s ~12,000 US supercharging stations. This will be provided via an adaptor, but Ford also announced that its next-generation vehicles, due in 2025, will have native support for Tesla chargers.
To sweeten the deal, Ford’s EV owners will not be expected to download and use the Tesla app. Instead, they will be able to access the superchargers through Ford’s existing app.
Nvidia (NVDA) – Q1 (Fiscal Q1 2024) Earnings
Nvidia exceeded expectations on both revenue and earnings. While revenue fell year-over-year, profits increased. However, the real headline this quarter is their forecast, which almost DOUBLED analysts’ expectations. As a result, Nvidia’s share price jumped ~25%, adding almost $200bn to its market cap.
Key Points:
- Revenue of $7,192m, down from $8,288 (-13.2%) a year ago
- Gross profit of $4,648m, down from $5,431m (-14.4%) a year ago
- Operating profit of $2,140, up from $1,868m (+14.6%) a year ago
- Profit before tax of $2,209m, compared to $1,805m a year ago
- Profit after tax of $2,043m, compared to $1,618 a year ago
- Basic earnings per share of $0.83
- Dividend announced of $0.04 per share, to be paid on 30th June 2023
- Revenue guidance for Q2 of $11,000m, plus or minus 2%. Gross margins are expected to come in between 68.6% and 70.0%. Operating expenses will see a small increase, coming in at around $2,710m
- Strong growth continues in its server business, while its gaming and professional visualization segments continue to recover (though still significantly down year-over-year).
Next Week
Company Earnings
Here’s a list of companies reporting earnings next week:
- Salesforce (CRM) – 31st May
- Dell Technologies (DELL) – 1st June
Let me know your thoughts on this week’s events, in the comments below!
