Market Report: Investors in AO World are betting on wildly optimistic prospects

Shore Capital threw a spanner in the works for AO World, claiming that the online washing machine to TV retailer is “priced beyond perfection”.

Investors are betting on wildly optimistic growth prospects, according to the analyst Clive Black, who has calculated that even “if the online penetration rate reached 100 per cent and AO sold every single major domestic appliance in the UK” its 267p price would still be 22 times higher than earnings per share. Mr Black initiated coverage with a sell, arguing 173p would be a fair price. AO World lost 13.7p to 257.5p.

The first half of the year ended with a whimper rather than a bang on the FTSE 100, with the index closing down 13.83 points at 6,743.94. EasyJet led the fallers, off 94p at 1,365p, after a downgrade from Bank of America Merrill Lynch. The bank attacked the “lazy consensus” about the airline, claiming it is no longer a growth story.

Sports Direct fell 17p to 706.5p after denying it was planning a bid for shoe shop Office. The statement wrong-footed many in the City, where Mike Ashley’s discount retailer is more often thought to be plotting a continental acquisition.

Speculation of a defensive bid for Diageo from SABMiller sent both drinks companies higher. Diageo added 18.5p to 1,866p, while Peroni-brewer SABMiller was 22p better at 3,388p. SAB is often named as a potential takeover target for the giant brewer Ab-InBev.

Cable & Wireless advanced 0.81p to 49.25p on strong volumes amid rumours that US giant AT&T could be interested in a bid for the telecoms operator at around 75p.

Genel Energy rose 13p to 1015p, after Iraq’s Supreme Court rejected a bid by the Baghdad oil ministry to block exports from Kurdistan, while Afren welled up 1.7p to 145p.

Sir Stelios Haji-Ioannou’s new budget accommodation business EasyHotel got off to a decent start on Aim, climbing to 87.5p after listing at 80p.

William Sinclair, the compost and garden supplier, jumped 15p to 67.5p despite widening half-year losses, after announcing it was to get £12.25m in compensation for the ending of peat bog operations at Bolton Fell Moss.