Interest rates, bikes and fashion

“The FTSE 100 was caught on the hop after the Bank of England's Monetary Policy Committee unexpectedly voted by 8-1 against any change in interest rates from their historic low of 0.5% or its £375 billion Quantitative Easing programme,” says AJ Bell Investment Director Russ Mould. “The market quickly sold off, erasing a 1% gain in the FTSE 100 in a matter of seconds, although the UK’s headline index stabilised as it looked ahead to the prospect of monetary easing at the next Bank of England meeting on 4 August.

Away from the clammy clutches of central banks, one of the day’s biggest movers was Superdry brand owner SuperGroup, whose shares were up by 15% in afternoon trading.  The group’s margins were held back by the fashion retailer’s initial forays into China and the USA, although profits still rose and boss Euan Sutherland unveiled both a maiden full-year dividend of 23.2p and a special dividend of 20p, just the sort of thing yield-hungry investors are looking for as the Bank of England debates whether to take interest rates on cash even lower.”

Another retailer, car accessory and bike retailer Halfords, offered a less optimistic outlook. The company reported a 0.6% drop in like-for-like sales and warned of a £3 million hit to earnings in the year to March 2017, thanks to the pound’s plunge against the dollar since the UK’s vote to leave the EU.

Halfords has hedged 75% of its dollar-priced imported products at rate of $1.45 to the pound but added that profits could be further punctured if sterling stayed weak – and the British currency currently trades around $1.32.

White collar recruiter Hays’ trading statement revealed like-for-like fee growth of 8% in its fourth quarter, up from 4% in the third. The FTSE 250 index constituent added that full-year profits would reach around £180 million, to exceed market expectations.

The shares rose by some 4% in response, although the firm did warn private sector clients had become more cautious about hiring permanent, particularly right at the end of the three-month period, following the EU referendum result.

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