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FTSE slumps as slew of companies axe dividends for new shareholders

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Anglo American, GSK, London Stock Exchange, Aviva, HSBC, M&G, Legal & General and Imperial Brands have all announced anyone buying shares now will not be eligible to receive the companies’ next dividend payments.

It comes a day after the Office for National Statistics confirmed inflation rose to 10.1% in July, with the Bank of England predicting it will hit 13% this autumn.

Earlier this week think tank the Resolution Foundation published analysis of ONS employment figures and calculated that UK regular wage growth has plummeted to a 45-year low in real terms.

Danni Hewson, financial analyst at AJ Bell, said: “After yesterday’s UK inflation figure shock, it’s no wonder investors weren’t feeling too hungry for equities this morning. European markets didn’t want to get out of bed, with minimal movements across the main indices.”

The FTSE 100 was dragged down by some big names trading without the rights to their next dividend, with the index slipping 0.2% in early trading. Relevant names going ex-dividend included Anglo American, GSK, London Stock Exchange, Aviva, HSBC, M&G, Legal & General and Imperial Brands.

Hargreaves Lansdown’s senior investment analyst Susannah Streeter said: “Inertia has struck the financial markets as uncertainty reigns about just how high interest rates may have to rise before inflation shows significant signs of being brought under control.”

However, there were some big movements among small-cap stocks, including a 14.5% jump in electrical goods seller AO.

Streeter said the update from AO World was “greeted with a shrug of ‘it could have been even worse’ from investors,” particularly with signs that the next financial year may be kinder to the electrical retailer.

Meanwhile, with record heatwaves and hose pipe bans spreading across the country, fishing equipment seller Angling Direct was “unable to catch a whopper” with its latest trading update, Hewson noted.

“The hot weather has not been kind to lakes and rivers, with some favourite fishing spots running dry,” said Hewson. “That’s had a negative impact on demand for fishing equipment, as has the cost-of-living crisis with many people simply not able to afford their usual treats or hobbies.”

Upmarket online furniture retailer Made.com also reported tough times this morning.

Hewson said: “Turns out that selling on-trend but relatively pricey furniture is not a great model in the current economic environment.

“Made.com looks like it is being forced to pursue an emergency fundraise, which had been euphemistically hinted at in a statement a month ago when it said it was ‘exploring ways to strengthen its financial position’.”

Investors have seen the shares lose more than 90% of their value this year and this morning saw the share price slump 10% following its results.

Streeter said: “Bigger ticket items like furniture are much harder to shift as many consumers who are facing squeezed budgets are tightening the purse strings. A plush new sofa may be nice to have but its far from essential expenditure, when grocery bills are rising so fast.”

Made.com has continued to win market share but now faces a scramble to reduce costs in order to keep trading.

“Made.com needs to sort out inventory issues by effectively clearing out excess stock by selling at a discount,” said Hewson. “It will need to hope this doesn’t undermine the brand and make it difficult to sell at full price in the future.”