FTSE 100 slumps as Fed minutes point to further rate hikes, Currys results a Nordic noir as it pulls dividend and Jet2 founder to step down

“You don’t necessarily think of meeting minutes, often associated with the likes of parish council meetings or the AGM of the local bird spotting club, having a big impact but the record of the Federal Reserve’s latest rate-setting summit has put stocks firmly on the back foot,” says AJ Bell Investment Director Russ Mould.

“They suggest the Fed remains committed to further rate hikes as it looks to get inflation under control. These dashed hopes, lifted by data showing easing inflation across the Atlantic last week, that the US might be pretty much at the end of its rate-hiking cycle.

“The listed water utilities, United Utilities, Severn Trent and Pennon, whose share prices sprung a leak amid the Thames Water crisis, were among the few risers on the London market as they recovered some of their lost ground.

“Consumer-facing stocks and housebuilders fell as investors weighed the impact of continued increases in borrowing costs.”

Currys

“The problem in Currys’ Nordics business, first reported last year, was only supposed to be short-term in nature. Yet we’re well into 2023 and the electronics retailer’s Scandinavian division is struggling to such an extent it has had to pull its dividend.

“This is a salutary lesson in the reality that problems often take much longer to fix than companies initially think.

“The Scandinavian business used to get barely any attention and just hummed along nicely in the background serving an affluent clientele in these markets. It now looks like the initial diagnosis for this business turning sickly – namely competitors selling off excess stock at a discount – was not providing the full picture. Or, if it was, then its full extent was not understood.

“The big frustration for Currys is it has made decent strides in getting its business in the UK and Ireland on track, despite the difficult consumer backdrop putting pressure on sales. Profit in this part of the business was up by an eye-catching 45% as it eked out significant cost savings to compensate for lower volumes.

“The bumper loss reported today is a bit misleading as it includes a £511 million accounting charge relating to the 2014 merger of Dixons and Carphone – it’s important to note that this does not represent cash going out of the business.”

Jet2

“One way to measure the respect for a leader of a company is to look at what happens to the share price on news of their departure. A big fall in Jet2, with executive chairman Philip Meeson announcing he plans to step down from the board, is therefore revealing.

“He led the takeover of a group of cargo airlines and then invested heavily to expand both the fleet and a ground transportation arm. Twenty years ago, the group expanded into the passenger airline industry, serving customers from the North of England. It subsequently sold the freight distribution operations and focused on Jet2, which today is one of the UK’s most popular choices for flights and package holidays.

“Meeson was seen as the captain of the company’s success, building up a greatly admired British business and showing that it was possible to disrupt the airline industry.

“Jet2 is no longer the start-up, snapping at rivals’ heels. It is seen as a trailblazer and gained massive respect from the nation when it was one of the few airlines to treat customers properly with refunds during the pandemic and not fob them off with vouchers when flights were cancelled.

“The key question now is when will Meeson start selling down his 18.3% stake in the business? He is the largest shareholder in Jet2 by a mile and it is natural to expect someone stepping down, and at his age (75), to want to crystallise some of the gains he’s made over the years.”

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