The FTSE 100 fell on rates concern on Friday with housebuilders, banks and consumer discretionary stocks among the most heavily hit.

Another day and another shift in sentiment driven by interest rate expectations. On Friday, the concerns were centred on UK interest rates and comments from the Bank of England’s chief economist.

“The higher-for-longer interest rate narrative just became louder. The Bank of England’s chief economist, Huw Pill, has said the bank won’t be quick to cut rates – even if a moderation of inflation occurs,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.

“Simply put, inflation needs to be closer to the 2% target before anyone can get their hopes up that the cost of living and borrowing is about to sweep down to more palatable levels.”

Housebuilders Taylor Wimpey and Barratt Developments struggled with the prospect of higher mortgage rates for an extended period as the two fell more than 1%.

UK banks were also weaker as investors weighed how higher borrowing costs would impact the ability of their customers to repay debt.

Consumer discretionary constituents Kingfisher and JD Sports were down 2.1% and 2.7% respectively.

St James’s Place was the biggest faller following media reports the wealth manager was facing increased scrutiny from the regulator regarding charges.

Red Rock Resources shares jumped on Friday after announcing assay results from their lithium project in Zimbabwe operated by subsidiary African Lithium Resources.

Three sets of 2kg pegmatite samples were sent for testing at an ISO-accredited laboratory in Harare, Zimbabwe. The results were as follows.

These results are supportive of economically viable lithium grades and will spur further evaluation of the project.

Red Rock Resources shares were over 38% higher at the time of writing on Friday.

Red Rock Chairman Andrew Bell commented:

“These high grade Lithium Oxide results show the potential that exists, and we continue discussions with potential customers and contractors. Further news will be released as it becomes available.

“The technical information in this announcement has been reviewed by Mr Joseph Komu, a member of AusIMM and a Manager employed by the Red Rock group. Mr Komu is a member of a recognised professional organisation and has sufficient relevant experience to qualify as a qualified person as defined in the Guidance Note for Mining, Oil and Gas Companies published by AIM.”

St James’s Place shares tanked on Friday on reports the regulator was unhappy with their efforts to make their charging structure fairer for clients and were set to change their fee structure.

St James’s Place shares were down 15% at the time of writing on Friday.

St James’s Place’s complex charging structures are facing further scrutiny following the introduction of the Consumer Duty earlier this year. Many argue St James’s Place’s fee structure is unclear and penalises clients for exiting early.

Consumer Duty required firms to assess their practises and place their customers at the centre of their business decisions. St James’s Place has been under fire for unfair charges for some time and the pressure ramped up this year leading to sharp declines in their share price.

In a statement released on Friday, St James’s Place said:

“As disclosed in our Half-Year Report & Accounts published on 27 July 2023, we continue to build on the work completed for Consumer Duty. This programme includes an assessment of our fees and charging models to ensure we operate with a simple and scalable charging platform for the long term.”

“Whilst the evaluation has not yet been completed and therefore no decision has been made, we are confident that all the options under consideration will ensure value for clients and a strong, secure, and sustainable business for all stakeholders. We naturally continue to engage with all of our primary regulators during this process.”

The FTSE 100 rose on Thursday despite US CPI inflation exceeding expectations in the year to September.

US CPI inflation held steady at 3.7% in September and although it was higher than economists had expected, monthly inflation fell to 0.4%.

The US inflation read did little to knock investor confidence in London on Thursday as BP and Shell rose on higher oil prices helping support the FTSE 100.

US interest rates

A raft of recent comments from US central bankers suggested rates would hold steady in the short term and today’s reading will cloud the outlook for investors. US stocks fell in the immediate reaction.

“US inflation has come in a little higher than expected, leaving the path of interest rates unclear. Headline inflation decelerated to 0.4% from 0.6% in September (on a monthly basis), slightly ahead of consensus expectations of a 0.3% increase,” said Richard Flax, Chief Investment Officer at Moneyfarm.

“Core inflation, which is the important metric followed by the Fed, remained unmoved at 0.3% month on month. Annual headline inflation came out at 3.7% against an expectation of 3.6%. Following recent comments from Fed governors, market-based indicators implied no rate increase at the next meeting. This report suggests that the decision may be more finely balanced than market pricing might suggest.”

The FTSE 100 closed 0.3% higher while US stocks were treading water.

BP was the top gainer adding 3%.

EasyJet shares crashed on Thursday as investors disembarked from the airliner after the company said they would expand their fleet and restart dividends.

EasyJet said that they are aiming to buy up to 257 of the AirBus jets and aim to restore EasyJet’s dividends, which were suspended during COVID.

While the proposed deal with Airbus is still a subject to shareholder approval, EasyJet is reportedly aiming to add up to 157 aircraft and 100 A321neo jets to its existing 330 aircraft.

EasyJet shares are down 7.50%, while AirBus shares are up 0.65% at the time of writing.

In addition to the suspended dividends, the company also recorded substantial losses during the pandemic.

Now, after a record summer, the company forecasts an annual next year profit of up to 460 million GBP. EasyJet further mentioned that they are aiming to hit a medium-term pretax profit of more than 1 billion GBP.

Alas, for all the upbeat targets and strong performance over the summer, investors were nervous about the investment in the new fleet and shares sank on Thursday.

The human tragedy unfolding in Israel causing cancelled flights was also hitting sentiment in the airline sector.

Carbon Capture

Earlier this week, EasyJet also signed up for AirBus’s Carbon Capture Offer, becoming the first airline in the world to join the initiative.

AirBus uses Direct Air Carbon Capture and Storage (DACCS) technology, which utilises high-powered extraction fans to filter and remove CO2 emissions from the air, after which the gases are stored in underground reservoirs.

The DACCS technology is said to have the ability to extract and capture the exact amount of CO2 gas released by any aeroplane’s engine during any flight.

Marine transport tracking and data technology developer Winward (LON: WNWD) has renewed important contracts with the US government and won two additional contracts. It has also won additional contracts in the rest of the world and renewed a $1m contract in Nigeria. This underpins the 2023 and 2024 forecasts. The share price moved ahead by 16% to 25.5p.

Digital health platform company Induction Healthcare (LON: INHC) shares have been consistently rising this wipe after the announcement on Tuesday of three contracts in London worth £1.4m. More potential contracts are being discussed with the NHS. Interim results will be published on 7 November. The share price has risen a further 27.5% to 25.5p and it is 54.5% higher this week.

Executive search business Norman Broadbent (LON: NBB) generated third quarter net fee income of £2.8m – 65% higher than the same period last year. Over nine months the figure is 58% ahead at £7.9m. Management believes the company is on course to achieve EBITDA of £1.25m by 2025. The share price is 13.6% higher at 6.25p.

Hotel Chocolat (LON: HOTC) is starting to see the benefits of the reduction in costs and changes to the range of products. Full year revenues declined from £226.1m to £204.5m and the chocolate products retailer fell into loss. Improved cash flow means that there was net cash of £11m. In the first quarter of the new financial year UK store revenues are 14% higher. Further annualised cost savings of £800,000 have been achieved. The share price rose 8.85% to 141.5p. The share price is still 9% lower this year.

FALLERS

Graphene technology developer Versarien (LON: VRS) has sent a general meeting notice to shareholders to gain approval to reduce the par value of the share capital so that new shares can be issued. The share price slumped 30.3% to 0.655p.

Shield Therapeutics (LON: STX) finance director Hans-Peter Rudolf is stepping down on 20 October. A search has commenced for a replacement. The share price fell 7.46% to 6.2p. The recent fundraising was at 8p/share.

Third quarter production at Block Energy (LON: BLOE) averaged 630 barrels of oil equivalent/day, down from 664 in the second quarter. The share price is 7% lower at 1p.

Marks Electrical (LON: MRK) continues to win market share in the electricals retail market and overall sales grew by one-quarter in the first half. However, margins have come under pressure and full year pre-tax profit forecasts have been downgraded. Canaccord Genuity has reduced its 2023-24 forecast from £7.1m to £5.9m, which is below the previous year, even though revenues have been raised. Wages are rising and there has been investment in installation capacity, which has helped the growth in sales. The share price dipped 5.5% to 103p.

Ex-dividends

Argentex (LON: AGFX) is paying a dividend of 0.75p/share and the share price declined 2.5p to 100.25p.

Caledonia Mining Corporation (LON: CMCL) is paying a dividend of 14 cents/share and the share price is 5p lower at 860p.

i3 energy (LON:I3E) is paying a dividend of 0.26p/share and the share price fell 0.22p to 13.4p.

Inspired Energy (LON: INSE) is paying an interim dividend of 1.4p/share and the share price slipped 1p to 70p.

Likewise (LON: LIKE) is paying a maiden interim dividend of 0.1p/share and the share price is 0.75p lower at 17.5p.

MP Evans (LON: MPE) is paying an interim dividend of 12.5p/share and the share price declined 15p to 719p.

Personal Group Holdings (LON: PGH) is paying an interim dividend of 5.85p/share and the share price fell 7p to 169p.

Panther Securities (LON: PNS) is paying an interim dividend of 6p/share and the share price is unchanged at 295p.