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LONDON MARKET CLOSE: Stocks unnerved by rate worries as Adyen plunges

17th Aug 2023 16:59

(Alliance News) - London's FTSE 100 extended its losing streak to five days on Thursday, as lingering interest rate worries continued to keep a lid on enthusiasm.

A slew of stocks going ex-dividend also kept London's large-cap index in check.

Over in Amsterdam, eyes were on shares in payments company Adyen, which tumbled after reporting weaker half-year earnings.

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 USD1.2746 at the time of the London equities close on Thursday, down from USD1.2750 on Wednesday. The euro stood at USD1.0872, lower against USD1.0906. Against the yen, the dollar was trading at JPY146.06, up from JPY145.77.

"Global stock markets remain on the back foot. Bond yields continue to move higher, unsettling investors and diminishing the appeal of equities after their generally positive year so far. Signs of fear are everywhere, from a rising Vix to a surging put/call ratio, and for the moment buyers are few and far between," IG analyst Chris Beauchamp commented.

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 GEL709.9 million, about GBP215.3 million, from GEL516.1 million a year before. Profit before income tax expense and one-off items improved 41% to GEL807.5 million from GEL573.7 million.

The bank declared an interim dividend of GEL3.06, up 65% from GEL1.85 a year prior. Furthermore, its board has approved a GEL62 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 GBP17.9 million and GBP18.4 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 EUR853.6 million from EUR3.95 billion a year prior. However net revenue, which excludes costs incurred from financial institutions, increased 21% year-on-year to EUR739.1 million.

On the other hand its Ebitda fell 10% to EUR320.0 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 USD15.20 billion from USD13.10 billion.

Net income increased 41% to USD3.96 billion from USD2.82 billion. Basic net income per share increased to USD0.97 from USD0.68.

For the full-year, revenue surged 11% to USD57.00 billion from USD51.56 billion. Net income was 6.8% higher at USD12.61 billion from USD11.81 billion. Basic net income per share for the year increased to USD3.08 from USD2.83.

"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 USD84.68 a barrel late Thursday in London, down from USD84.83 late Wednesday. Gold was quoted at USD1,893.44 an ounce, down sharply from USD1,902.61.

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.

By Eric Cunha, Alliance News news editor

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