The FTSE 100 slipped on Thursday with heavy-hitting dividend payers trading ex-dividend and Burberry dragging on the index after lowering profit forecasts for the year.
London’s leading index was down 0.6% at the time of writing on Thursday while the German Dax added 0.6% and French CAX lost 0.25%.
Companies trading ex-dividend on Thursday included Shell, Unilever, GSK and Hargreaves Lansdown.
The hype around lower CPI readings in the UK and US has started to subside, and markets are settling back into a familiar wait-and-see mode with key central bank meetings on the horizon.
“The market may be in something of a holding pattern until the next central bank meetings land in early to mid-December – although takeover action has offered some excitement today,” said AJ Bell investment director Russ Mould.
Mould also remarked on President Biden’s trip to meet Chinese leader Xi Jinping in which he called his counterpart a ‘dicator’. The meeting was meant to repair relations but the resultant headlines have focused on Biden comments. China responded saying his comments were incorrect.
Biden’s words unnevered markets and caused minor weakness in equities.
“A mixed response to a meeting between President Joe Biden and Chinese Premier Xi Jinping saw Asian stocks retreat a little,” Mould said.
Burberry
Burberry shares sank on Thursday after the luxury group said slowing demand would hit earnings this year. Shares in the company were down 9.7% at the time of writing and were by far the FTSE 100’s worst performer.
“The shine is dimming on the luxury sector as even higher end consumers tighten their belts. Heralded as a more resilient corner of the economy, suggestions of missing targets and lower-end profits aren’t what investors have come to expect and that has consequences for valuations,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.
“Specifically for Burberry, it doesn’t have a basket of other brands or products to help diversify risk in this scenario. The work the group’s done to become a more premium luxury house is to be commended and will improve strength in the long-term, but there’s no getting away from the fact that particularly aspirational, younger shoppers are thinking twice before swiping their cards. There could be further pressure to come before things improve, especially if a broader pull back in spending comes through in 2024 after the glut of festive trading.”
The step back in enthusiasm around interest rates was felt by Ocado shares which fell 4% on Thursday.
Halma was the FTSE 100’s top performer after the health technology company released a very robust set of earnings. Revenue and earnings rose by solid single digit percentages as the group achieved record revenue in the period.