18th June 2021
Everyone’s favourite 00s DJ, David Guetta, has reportedly sold his music back catalogue to Warner Music for $100m. I got a feeling that tonight’s going to be a good night for David.
JP Morgan buys British robo-adviser Nutmeg
Bikes booming at Halfords but supply issues ahead
Yesterday's market moves
FTSE 100 -0.4% 7,153 FTSE 250 -0.4% 22,535
After reaching all time highs in recent weeks, markets came off the boil as investors weighed the prospects of interest rates rises in the US.The US Federal Reserve signalled that it expects to start raising interest rates in 2023, earlier than previously thought, as it projected faster growth and higher inflation.
FINTECHJP Morgan buys British robo-adviser Nutmeg
What’s going on?American banking giant JP Morgan is buying the UK’s largest digital wealth manager, Nutmeg, for an undisclosed amount.Nutmeg is popular with Millennials and has over 130,000 customers and over £3.5bn of assets under management but like a lot of fintech businesses it remains unprofitable.
Why is this important?Nutmeg was the UK’s first digital wealth manager aka robo-adviser, when it launched in 2011. It revolutionised the industry by making investment and wealth management more accessible to the average person and not just millionaires. Nutmeg allows customers to invest in financial products (e.g. stocks and shares) based on a customer's financial circumstances and risk attitude.JP Morgan has made it clear for a while that it wants to enter the UK consumer banking market and is planning to launch its own digital bank, Chase, later this year. The deal with Nutmeg will complement its UK expansion strategy. Being part of huge banking group should help Nutmeg acquire new customers at a lower cost and help improve its trust among over 40s who are generally more sceptical when it comes to entrusting their money with robo-advisors
TakeawayThe UK is home to an increasingly crowded consumer banking market, with challengers like Revolut, Monzo and Starling gaining a largely Millennial following thanks to their digital-only bank accounts.JP Morgan is following in the footsteps of its US rival Goldman Sachs, who entered the UK consumer market in 2018 with the launch of the Marcus bank account. While it’s hard to call who will come out on top, the increased competition should be good for consumers as traditional banks and fintechs fight for our cash.
RETAILBikes booming at Halfords but supply issues ahead
Halfords, the UK’s biggest bike retailer, has had an impressive year with bike sales rising 54% in the 12 months to April. The company also benefited from the growing popularity of electric vehicles with sales of e-bikes and e-scooters almost doubling in the year. Revenue for the year rose by 13% to £1.3bn with profit increasing 72% to £96.3m. Halfords has been a lockdown winner as:
During the pandemic more of us have worked from home and avoided public transport when we did venture out, creating a huge demand for bikes.
The uncertainty surrounding foreign holidays means the more people will be vacationing in the UK with cycling being a popular activity.
Longer term trends like the move toward greener modes of transport is also driving increased adoption of cycling.
This means Halfords is expecting demand to stay strong for the rest of the year but has warned that supply issues could spoil the party. Global bike supplies have been hindered by shortages of parts like brakes. Local lockdowns have also disrupted businesses in Asia which manufacture bikes.The company also flagged that trading could be impacted as uncertainty remains over how quickly normal life returns and whether international travel will reopen to a greater extent.Nonetheless the market reacted positively to the results, shares closed up 5%.
Stat of the day
According to a study by Microsoft, 41% of employees are considering leaving their employer this year enabled by the ability to now work remotely
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