Must read: FTSE 100 down again, Fed minutes, Threads, Jet2, Robert Walters

Our head of investment rounds up the morning's big news.

GLOBAL MARKETS

After three sessions of declines for the FTSE 100, the UK blue-chip index has opened in the red again, breaking below support at 7,400. 

Treasury yields and the US dollar made gains after minutes from the Federal Reserve’s June meeting suggested further tightening is to come from. The FOMC minutes were largely interpreted as hawkish by the markets, even though the pace of tightening is likely to slow, and rates were left unchanged last month. The central bank said the economy faces ‘headwinds from tighter credit conditions’. 

• Learn more: SIPP Portfolio Ideas | How SIPPs Work | Transfer a SIPP

THREADS 

Meta Platforms Inc Class A (NASDAQ:META) has launched Threads, a rival app to Twitter on Wednesday as tensions between its CEO Mark Zuckerberg and Twitter’s owner Elon Musk step up a gear. Similar to those on Twitter, posts on Threads have a character limit of 500 with the option to add links, photos and videos. Over 10 million people signed up within the first seven hours.

Twitter has been struggling since Musk’s $44 billion takeover in October. There have been major job cuts, an unpopular shake-up of its verified status feature which makes users pay a fee, and Musk has fallen out with a number of advertisers, putting pressure on ad revenues. Just this week, Musk annoyed Twitter’s loyal active users further by limiting the number tweets people can read in order to stop data scraping. 

The mood is turning sour against Twitter, creating the perfect opportunity for the launch of an alternative micro-blogging site. Thread also has the benefit of being linked to Instagram which should make signing up much forward for its 2 billion monthly users. No doubt there will be bumps in the road, but the injection of some healthy competition will be a welcome development for consumers. It could also provide support to Meta’s share price if Threads turns out to be a success, as its huge number of initial sign ups suggests. 

Shares in Threads’ parent company Meta, jumped 3% on Wednesday, adding to its impressive surge of over 130% so far this year. 

JET2

Jet2 Ordinary Shares (LSE:JET2) reported a 309% surge in full-year revenue to £5.03 billion while statutory profit after tax hit £290.8 million, swinging from a loss of £315.4 million a year ago. Operating profit rose 222% to £394 million. It flew a total of 16.22 million passengers during the year up sharply from just 4.85 million in 2022. 

Meanwhile, executive chairman Philip Meeson has informed the company of his plans to step down. Meeson bought the business in 1983 when it was a small cargo airline and distribution business serving the Channel Islands. He will become non-executive chair during the course of this year until a successor is appointed. 

Despite pressures from cost inflation impacting package holidays and flight-only products, Jet2 has managed to maintain ‘satisfactory’ margins thanks to higher prices. Customers have been swallowing these price increases thanks to robust demand and a rebound in consumer confidence.

Echoing this, recent data from TravelSupermarket suggests that package holidays have risen sharply, with all-inclusive deals to key destinations for British travellers up around 12% versus last year. It appears that individuals and households have been prioritising their summer holidays where they can while cutting costs elsewhere amid the cost-of-living crisis. Some people are reducing the length of their holidays to save money without having to forego their trips altogether.  

Investors have enjoyed strong returns on Jet2 shares this year, which have rallied by over a third, outperforming the wider market. However shares are giving back some of those gains today.

ROBERT WALTERS 

Robert Walters (LSE:RWA) reported a 10% drop in second quarter net income year-on-year to £99.9 million. UK net fee income slumped by 21% to £16 million. Its headcount fell by 3% quarter-on-quarter to 4,280. 

This quarter’s results are a particularly difficult read given the tough comparison versus Q2 2022, which was a record quarter for the recruitment firm. However, it is clear that weak confidence, macroeconomic uncertainty with a sluggish global growth backdrop, elevated inflation and rising interest rates are dampening hiring appetite among corporates.

More and more, businesses are attracted to the temporary hiring market to fill vacancies instead of piling on the additional fixed costs by adding full-time workers. High job vacancies and worker shortages in the UK mean wage costs are going up, also disincentivising businesses from taking on extra staff. As a result, Robert Walters has struggled with earnings, prompting the business to implement hiring freezes and job cuts itself to cut costs. 

Shares in Robert Walters have struggled this year, shedding around 20% since the start of January. Its shares fell sharply last month following a disappointing trading update. New CEO Toby Fowlston who took over from Robert Walters in April has a tricky task at hand.