LONDON MARKET MIDDAY: Stocks mixed as investors weigh US Fed minutes

(Alliance News) - Midday trade in London on Thursday was cautious, following the latest Federal Reserve minutes which added to concerns over price pressures and central bank moves following red-hot UK inflation data earlier this week.

The FTSE 100 index was down just 1.98 points at 7,513.77. The FTSE 250 was up 32.84 points, or 0.2%, at 20,059.88, and the AIM All-Share was down 3.56 points, or 0.4%, at 923.11.

The Cboe UK 100 was flat at 750.79, the Cboe UK 250 was up 0.2% at 17,383.92, and the Cboe Small Companies down 0.1% at 14,397.28.

In European equities on Thursday, the CAC 40 in Paris was up 0.4%, while the DAX 40 in Frankfurt was up 0.7%.

Trade in Europe was mixed after minutes from the Federal Reserve's latest meeting prompted caution, with investors digesting the central bank's warning that inflation could remain "uncomfortably high for some time".

The central bank reaffirmed its commitment to reducing historically high levels of inflation back to its near 2.0% target levels, but could rein in the pace of interest rate increases "at some point"

However, participants stressed that moving to an "appropriately restrictive stance of policy was essential for avoiding an unanchoring of inflation expectations", once high levels of inflation were under control.

"Inertia has struck the financial markets...as uncertainty reigns about just how high interest rates may have to rise before inflation shows significant signs of being brought under control. Closely watched minutes of the last Federal Reserve meeting show US central bank policymakers are set to stay firmly on the path of rate rises, but could slow the pace of hikes if there were clear signs the spiral was unwinding," said Susannah Streeter, markets analyst at Hargreaves Lansdown.

The Fed minutes compounded concern over central bank moves after official data Thursday showed UK inflation accelerated at the fastest pace in 40 years, with the consumer price index surging by 10.1% on an annual basis in July, topping FXStreet-cited market consensus of 9.8%.

The pound was quoted at USD1.2055 at midday Thursday, up compared to USD1.2040 at the close on Wednesday.

Inflationary pressures, intensifying the UK's cost-of-living crisis, bode ill for consumer-facing stocks. Shares in online furniture retailer Made.com were down 10% at 8.88 pence at midday on Thursday - down more than 95% from its June 2021 IPO price.

The stock fell after confirming it is "considering all options to allow it to strengthen its balance sheet".

"Made confirms that these options include a potential equity capital raise. Made continues to consider its options and a further announcement will be made if and when appropriate," the London-based sofa seller stated.

Late Wednesday, Sky News reported the furniture retailer has hired professional services firm PricewaterhouseCoopers to help with repairing its balance sheet, including plans for a share sale to raise around GBP50 million.

"There is clear evidence that the scale of the pressures on household budgets is preventing people from buying big-ticket items like a new sofa," said Danni Hewson, financial analyst at AJ Bell.

Elsewhere in London, the FTSE 100 was being weighed down by ex-dividend stocks. abrdn was down 3.1%, Anglo American was down 2.4% and Aviva was down 4.2%. The trio were among the stocks to go ex-dividend on Thursday, meaning shareholders no longer qualify for the latest payouts.

FTSE 250-listed Balfour Beatty continued its positive momentum, rising a further 3.3% after Wednesday's 11% rally. The construction firm on Wednesday had raised its full-year profit outlook boosted its interim dividend by 17% to 3.5p.

Cineworld was rebounding from Wednesday's 60% fall, meanwhile, with shares trading 39% higher at 11.45p on Thursday. However, the stock remains 46% lower since the week began after a warning over lower-than-expected cinema goers and a risk of shareholder dilution as it tries to strengthen its balance sheet.

Fishing tackle retailer Angling Direct was down 15% as it warned full-year revenue will be "marginally below current market expectations" as a result of the recent heatwave, which has created adverse fishing conditions.

It said this has affected river levels and fish health, thus impacting its "busy" trading for August, as well as sales growth and profit.

The company reported a minor 1.3% increase in interim revenue to GBP38.9 million from GBP38.4 million a year before.

AO World soared 21% as the online electricals retailer looks ahead to a year of "realignment" following a swing to annual loss. However, the stock is still down 56% overall since 2022 began.

Results for the year to March 31 saw revenue fall 6.3% to GBP1.56 billion from GBP1.66 billion. AO swung to a pretax loss of GBP37.2 million from a GBP20.2 million profit.

Adjusted earnings before interest, tax, depreciation and amortisation of GBP8.5 million was down sharply from GBP64.4 million the year before, which the firm blamed on increased staff costs as well as higher marketing and logistics expenses - however, for the year ahead, it expects a significant improvement in earnings to around GBP20 million to GBP30 million.

Stocks in New York were called higher, with the Dow Jones and the S&P 500 index seen up 0.1%, while the Nasdaq Composite was called just marginally higher.

To come in Thursday's economic events calendar are the latest US jobless claims numbers at 1330 BST.

The euro stood at USD1.0174 at midday Thursday, up against USD1.0155 late Wednesday after figures confirmed the annual eurozone inflation rate surged at a record pace of 8.9% in July, picking up steam from 8.6% in June.

Against the yen, the dollar was trading at JPY135.24, down compared to JPY135.44 late Wednesday.

Brent oil was quoted at USD94.86 a barrel midday Thursday, up from USD93.38 late Wednesday. Gold was quoted at USD1,768.94 an ounce, up against USD1,753.55 at the close on Wednesday.

By Dominique Pretorius; dominiquepretorius@alliancenews.com

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