FTSE falls as inflation hits multi-year low, and The Hut shines on its market debut

“The FTSE 100 enjoyed a strong start to the week but that is tailing away as UK inflation drops to its lowest level since 2015, with the index down 0.3% to 6,086.51,” says Russ Mould, Investment Director at AJ Bell.

“Investors may be keeping their powder dry ahead of the latest meeting of the US Federal Reserve with the central bank widely expected to hold rates near zero.

“The housebuilders were under pressure as Redrow missed full-year expectations thanks to the impact of Covid-19 on its profitability and impairments associated with a reorganisation of its London business.

“The market will hope that the company’s aim of returning to a net cash position by the end of the year is more than just wishful thinking as a return to the dividend list in 2021 is eyed.

“Life may become a bit tricky for Redrow and its peers when the stamp duty holiday ends and eligibility for the Help to Buy scheme is narrowed next year.

“Elsewhere hurricane outages helped provide some support to oil prices as Brent Crude regained the $40 per barrel mantle.”

The Hut Group

“E-commerce play The Hut Group has enjoyed a successful start to life as a public company – rising sharply on its debut as it chalks up the largest IPO in the UK since 2015.

“While this might say more about how dormant the UK market has been in recent years than it does about The Hut, it nonetheless reflects strong appetite for the story with lots of fund managers clamouring to get a piece of the action at the 500p issue price.

“A slightly pick and mix collection of assets and businesses probably best known for its Lookfantastic site – which sells beauty products and cosmetics online – The Hut owns its own brands, websites, warehouses and delivery network (as well as some hotels and a gym).

“Much of the excitement around the stock surrounds its Ingenuity e-commerce fulfilment platform. In the same way Ocado’s online groceries solution is sold to third party supermarkets – The Hut is signing up the likes of Nestle and Procter & Gamble to Ingenuity and this is seen as the big growth opportunity for the business.

“The company is investing heavily to achieve this growth and like Ocado remains loss-making on most metrics for the time being.

“Eyebrows have been raised over some governance issues attached to the stock including the fact management are incentivised on share price performance.

“In addition the limited free float and founder share held by Matthew Moulding prevent the shares from qualifying for inclusion in FTSE indices.”

These articles are for information purposes only and are not a personal recommendation or advice.