London’s FTSE 100 opened lower on Thursday after the US Federal Reserve brought forward the timeline to begin tightening interest rates, with two hikes now forecast in 2023.
AJ Bell financial analyst Danni Hewson commented: ‘For now investors seem to largely be taking these developments in their stride – perhaps reassured by Fed chair Jay Powell’s comments that the guidance for two interest rate hikes in 2023 should be taken with a “grain of salt”.
‘However, it is a reminder that investors will eventually have to confront the reality that the current ultra-loose monetary policy won’t last forever and there were signs of volatility in the bond market off the back of the Fed’s announcement with the dollar also rising to multi-month highs.’
By 8.40 am, the blue chip benchmark was off 0.3% at 7,164.9 points, while the domestically-focused FTSE 250 was down 0.4% at 22,520.2.
In corporate news, Premier Inn owner Whitbread (WTB) was marked up 3.7% to £34.10 on the news occupancy levels surged nearly 50% in the first two weeks of May, as the UK government eased travel restrictions and limits on overnight stays.
‘Trading in the UK since May 17, when overnight leisure stays were permitted, and when our restaurants fully reopened for indoor service, has been encouraging,’ enthused CEO Alison Brittain.
‘Additionally, our forward bookings continue to improve, benefiting from the anticipated post-lockdown bounce in leisure demand, and a continued gradual improvement in business bookings.’
DR. MARTENS BOOTED LOWER
In the retail sector, iconic footwear brand Dr. Martens (DOCS) dipped 8.6% to 452p after reporting a 30% drop in pre-tax profit to £71 million for the year to March 2021, one struck after exceptional costs related to its initial public offering (IPO) and with retail revenue impacted by the pandemic.
Nevertheless, the British boot maker said it will start paying a dividend in the current financial year and left guidance given at the time of its IPO unchanged, with the company confident it can deliver high teens revenue growth this year as its laps last year’s Covid-clobbered comparatives.
And car parts-to-bicycles seller Halfords (HFD) edged up 0.5% to 408p after posting impressive full year results driven by market share gains in cycling and motoring services, with underlying pre-tax profits up 72.3% to £96.3 million.
Positive momentum has carried forward into the first nine weeks of the new financial year, although Halfords warned of ‘acute’ supply chain challenges in cycling, said motoring price cuts may crimp gross margin and issued a cautious outlook for the current year.
Halfords is now targeting pre-tax profits of ‘above £75 million’ this year, though it will accelerate investment in its transformation and management is ‘conscious of continued Covid-19 volatility’.
OTHER RISERS AND FALLERS
Elsewhere, thermal energy management and niche pumping specialist Spirax-Sarco Engineering (SPX) slid 2% lower to £133 as it launched its refreshed sustainability strategy and announced new targets designed to accelerate sustainability performance.
Infrastructure and services provider Fulcrum Utility Services (FCRM:AIM) firmed 3% to 34p after winning a £5.5 million contract to deliver electricity, gas and water infrastructure for Greencoat Capital’s greenhouse near Ely, Cambridgeshire.