FTSE 100 Live August 18: US Federal Reserve interest rate outlook fuels market caution

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Made.com shares fall again on cash injection

Shares in beleaguered furniture retailer Made.com fell another 10% in early trading today as the company confirmed it may seek a cash injection.

This follows last month’s 40% plunge as markets reacted to a trade warning that included a strategic overhaul of its business and potential layoffs. Shares have fallen nearly 95% in the past year.

In response to the reports, Made – founded by Brent Hoberman and investor Ning Li – said it would consider “all options to allow it to strengthen its balance sheet”.

“Made confirms that these options include a possible capital increase…a further announcement will be made if and when appropriate.”

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FTSE 100 down, Angling Direct down 18%

Angling Direct shares fell 18% after the tackle retailer warned of the impact of the heat wave on sales in one of its peak months.

Recent poor fishing conditions added to cost of living pressures as the chain lowered its revenue forecast and said it now expects revenue of between £3m and £3.4m for 2023, up from £4.3m previously.

Angling Direct, which has 43 stores as well as online operations, said it continued to increase market share but shares fell 18% or 6.5p to 30p on AIM today. The stock had been above 80p in 2021 after interest in the sport was boosted during the Covid pandemic.

The biggest fish in the London market were also under pressure today after the FTSE 100 index fell 19.17 points to 7496.58. The decline came as sentiment weakened on the prospect of further large interest rate hikes in the UK and US.

The Elite’s decline also reflects a large number of stocks that are now trading without entitlement to their most recent dividend. They included Legal & General, Berkeley, GSK, Anglo American, Prudential, LSE, Aviva and HSBC.

Support for the FTSE 100 came from BP, Persimmon and Glencore after their shares rose more than 1%.

The UK-focused FTSE 250 was just 2.07 points lower at 20,024.97 but Balfour Beatty added another 10.4p to 330p after UBS raised its price target to 400p after yesterday’s better than expected half-year results.

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FTSE 100 slips, Balfour Beatty adds 2%

The FTSE 100 index was down 12.57 points to 7503 as sentiment was hit by the prospect of further large interest rate hikes in the UK and US.

The Elite’s decline also reflected a large number of stocks trading without entitlement to their most recent dividend. They included Legal & General, Berkeley, GSK, Anglo American, Prudential, LSE, Aviva and HSBC.

The biggest risers in the FTSE 100 were Ocado, Persimmon and Barratt Developments after gains of more than 1%.

The UK-focused FTSE 250 edged up 49.35 points to 20,076.39, with construction and infrastructure group Balfour Beatty adding another 2% to the 10% rise seen yesterday thanks to solid half-year results.

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AO World posts £37m loss but shares rise

Online electrical retailer AO World’s annual results highlighted the impact of supply chain disruption, labor shortages and a growing cost of living crisis for consumers.

Revenue of £1.37bn in the UK was down 4.6% from the strong performance in 2021 during the Covid shutdowns, but represented a 52% increase on a like-for-like basis before the pandemic .

Various logistical challenges encountered during the year reduced underlying profit to £8.5m and meant the Bolton-based company posted a net loss of £37m, compared to a profit of £20 million the previous year.

Shares fell from over 230p in September to under 40p but rose 10% to 44p today after AO said its estimate of the costs of closing its German business would be at the bottom of its previous forecast at no more than £5 million.

Recent transactions in the UK have been in line with AO’s expectations for FY 2023, which calls for revenue of between £1-1.25 billion and underlying profit of between £20-30 million sterling.

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Fed rate hike outlook hits US markets

Evidence that Federal Reserve policymakers are not yet ready to change their hawkish view on interest rates weighed on US markets yesterday.

Minutes from the Fed’s last meeting at the end of July showed little change in the commitment to bring inflation back towards 2%, although members raised concerns about tightening excessive given the delayed impact of rate hikes.

They said it would become “appropriate at some point to slow the pace of policy rate increases”, but there was little in the report to back up recent optimism in equity markets about the emergence of a “pivot of the Fed”.

Inflation data released since the meeting has been better than expected and policymakers will have a fresh set of price and employment figures to digest before their next decision on September 21.

US rates are currently in a target range of 2.25% to 2.5%, but comments from Fed officials point to a further 1.5% hike by the end of the year.

The Dow Jones Industrial Average fell 0.5% and the technology-focused Nasdaq Composite lost more than 1% as disappointing earnings reports also contributed to the poor performance.

The FTSE 100 fell 0.3% to 7515 yesterday after a three-day winning streak and is expected to open slightly lower today.

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