Lingering fears about higher US interest rates for longer kept markets on their toes on Thursday, with London’s FTSE 100 suffering its fifth-successive fall.
A number of stocks going ex-dividend also failed to help the FTSE 100’s cause.
In an ugly day for European equities, things were downright ghastly for Adyen in Amsterdam. Weaker first-half earnings knocked billions off the payments firm’s capitalisation.
The FTSE 100 index fell 46.67 points, 0.6%, at 7,310.21. The FTSE 250 shed 224.71 points, 1.2%, at 18,356.07, and the AIM All-Share fell 7.72 points, 1.0%, at 740.12.
The Cboe UK 100 ended down 0.6% at 728.67, the Cboe UK 250 slumped 1.3% to 16,117.15, although the Cboe Small Companies ended up 0.4% at 13,598.12.
In European equities on Thursday, the CAC 40 in Paris fell 0.9% and the DAX 40 in Frankfurt lost 0.7%.
In New York, the Dow Jones Industrial Average was 0.1% lower at the time of the European equities close. The S&P 500 was also down 0.1%, while the Nasdaq Composite fell by a steeper 0.5%.
The pound was quoted at $1.2746 at the time of the London equities close on Thursday, down from $1.2750 on Wednesday. The euro stood at $1.0872, lower against $1.0906. Against the yen, the dollar was trading at JP¥146.06, up from JP¥145.77.
Equity markets are grappling with higher bond yields and fears that interest rates will be higher for longer.
Fed officials continue to see ‘significant’ upside risks to inflation and suggested further interest rate increases may be necessary, according to minutes from the latest FOMC meeting on Thursday.
At that meeting, the US central bank lifted rates by a further 25 basis points to between 5.25% and 5.50%, the highest level in more than two decades.
The minutes also showed a deepening gap between the central bank’s hawks and doves with some more worried about the lagging impact of monetary policy tightening than others.
‘Almost all’ of the meeting participants were apparently in favour of the rate hike. However, those in opposition said they thought the committee could skip a hike and wait to see how previous increases are impacting economic conditions.
AJ Bell analyst Russ Mould commented: ‘Minutes from the latest Fed meeting have thrown a cat among the pigeons by pointing to upside risks on inflation which might necessitate more rate hikes. It feels like we’re in a constant back and forth between central banks and the markets, with the former having to constantly disabuse the latter of the notion the rate hiking cycle is at an end.’
The next major date in the diary as far as US monetary policy goes is next week’s Jackson Hole Economic Policy Symposium, which kicks off on Thursday.
In London, insurer Hiscox was down 2.6%, gambling firm Entain was down 5.1% and housebuilder Berkeley fell 3.4%, as all three companies went ex-dividend. They were among the worst FTSE 100 performers, as new buyers of their shares no longer qualify for the latest payout.
Elsewhere, Bank of Georgia surged 14%. The Tbilisi-based lender said profit in the first half of 2023 jumped 38% to ₾709.9 million, about £215.3 million, from ₾516.1 million a year before. Profit before income tax expense and one-off items improved 41% to ₾807.5 million from ₾573.7 million.
The bank declared an interim dividend of ₾3.06, up 65% from ₾1.85 a year prior. Furthermore, its board has approved a ₾62 million share buyback programme that is expected to start later this year.
Kin & Carta rose 26%, after it said it expects profit to beat market forecasts for the year ended July 31.
Full year adjusted operating profit should be between £17.9 million and £18.4 million, 11% to 14% ahead of market expectations. Kin & Carta said this reflects ‘a realigned operating model with a lower cost base and improved operational efficiencies’.
Over in Amsterdam, the story of the day was Adyen, which slumped some 38%, knocking billions off its market value.
It said revenue in the first half of 2023 plummeted by 78% to €853.6 million from €3.95 billion a year prior. However net revenue, which excludes costs incurred from financial institutions, increased 21% year-on-year to €739.1 million.
On the other hand its Ebitda fell 10% to €320.0 million, which Adyen put down to wage and salary increases.
One tech share shining was Cisco, up 4.1% in New York.
The computer networks provider said revenue in the fourth quarter ended July 29 surged 16% to $15.20 billion from $13.10 billion.
Net income increased 41% to $3.96 billion from $2.82 billion. Basic net income per share increased to $0.97 from $0.68.
For the full-year, revenue surged 11% to $57.00 billion from $51.56 billion. Net income was 6.8% higher at $12.61 billion from $11.81 billion. Basic net income per share for the year increased to $3.08 from $2.83.
‘This past year was a milestone year for Cisco with record performance in both the full year and Q4,’ Chair and Chief Executive Chuck Robbins said. ‘We are seeing solid customer demand, gaining market share, and innovating in key areas like AI, security, and cloud. This momentum gives us confidence in our ability to capture the many opportunities ahead.’
Brent oil was quoted at $84.68 a barrel late Thursday in London, down from $84.83 late Wednesday. Gold was quoted at $1,893.44 an ounce, down sharply from $1,902.61.
Friday’s economic calendar has a eurozone inflation reading at 1000 BST, after UK retail sales data at 0700 BST.
In the local corporate diary, building materials firm Kingspan Group reports half-year results.
Copyright 2023 Alliance News Ltd. All Rights Reserved.
