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4.30pm: Stocks subdued after rate rise

Blue chip shares fell sharply towards the close, despite a slight uplift earlier as the Bank of England unveiled a smaller than expected interest rate rise.

The 50 basis points increase to 2.25% – the seventh rise in a row – was the lower end of expectations.

The FTSE 100 closed 78.12 points lower at 7,159.52 after the Bank said the UK was probably already in recession but more rate rises are expected.

Sterling rose 0.287% against the dollar at $1.1286.

On the equity market, JD Sports Fashion was down 6.66% as its results disappointed investors, while Hargreaves Lansdown fell 6.3% as its shares went ex-dividend.

JD Sports Fashion

JD Sports said profit before tax and exceptional items for the half year fell to £383.5 million from £439.5m last time.

The figures came in at the top end of management expectations after a period of management upheaval.

An interim dividend of 0.13p per ordinary share has been declared (2021: nil) with the return to more normalised trading justifying the return to a more normalised phasing of dividend payments

The board maintains its view that the headline profit before tax and exceptional items for the year end 28 January 2023 will be in line with the record performance for the year ended 29 January 2022.

Andrew Higginson, chair, said: “Whilst this has been a period of transition for the board, it is reassuring that this has not impacted the financial performance of the Group which continues to deliver strong results.”

Reaction

Russ Mould, investment director at AJ Bell, said: “Life could get a lot tougher for JD Sports given the significant headwinds facing retailers.

“With interest rates set to keep going up for the foreseeable future and consumers starting to feel less confident about job security given the dark clouds over the economy, JD is going to need some highly desirable products on its shelves or its second-half results won’t be a patch on the first-half.

“Interestingly, JD appears to be keeping its eye on the longer-term opportunity rather than retrenching because of the near-term headwinds. It is investing in stores to make them look smarter.

“This should serve the company well in the long term.”

Scotgold Resources

Scotgold, which operates a gold mine near Loch Lomond, said it achieved commercial production in July and continues to generate cash.

Underground power and ventilation upgrades to improve access, operations and increase mining rate and ore extraction completed in late August.

CEO, Phil Day said, “We achieved commercial production in July 2022 and continue to operate as a cash generative business.

“I am hugely encouraged by progress to date, which sees the majority of optimisation initiatives completed, strongly placing us for Q4 2022 and Q1 2023, driving the production ramp up towards Phase 2, and indeed margins, cash generation and profitability, in line with our stated strategy.

“Notwithstanding the reduction in gold production in late August/early September and consequent knock-on reduction of Q3 2022 guidance to c.2,000 ounces of gold, due to the successful, but delayed implementation of the power and ventilation upgrades – I am excited looking ahead.

“The delayed ore extraction from the mine will be negated by the recent upgrades in power and ventilation and Q4 2022/Q1 2023 are set to be very robust quarters in line with our mine plan and forecast to see a significant increase to Q2 and Q3 2022 production.”

Murray Income Trust

Murray Income Trust, which invests principally in UK equities, said total dividends per share increased by 4.3% to 36p, the 49th consecutive rise.

It said it “modestly outperformed” in the first and second quarters of the year followed by underperformance during the third and final quarters.

Neil Rogan, chair, said:  “We find ourselves in a scarcely credible era of uncertainty and without strong political, economic or social leadership. Domestic politics, geopolitical tensions and war, inflation, labour shortages, recession, strikes, energy shortages; all these factors have the capacity to heavily affect the outlook for the companies in which we invest.

“Every one of them is impossible to predict with confidence at the moment. So what is the outlook? In truth, we can’t be sure.”

Full story here

Global markets

London stocks were expected to open lower following heavy falls in the US after the Federal Reserve slashed economic growth forecasts and raised interest rates by a further 75 basis points.

Investors will be looking ahead to the Bank of England’s decision, announced at noon.

The Dow Jones was down 1.7%, the S&P 500 shed 1.7% and the Nasdaq Composite tumbled 1.8%.