- S&P 500 closes 1% off all-time high
- US job data gets a major downward revision
- Brent oil approaches January lows
- JD Sports sees like-for-like sales up 2.4%
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“It’s a quiet day for the UK’s largest index, and the FTSE 100 opened a touch higher without too many catalysts at play. Retail giant JD Sport will be grabbing attention after releasing its second-quarter trading update. It had a point to prove, with shares down 20% before today’s release, after a profit warning in January shook investor confidence. More reaction below.
US markets tiptoed higher yesterday evening despite a slow day for trading volumes. Traders are taking a wait-and-see approach, with volumes at some of the lowest they’ve been all year. But that hasn’t stopped the momentum, and the S&P 500 is now just 1% shy of its all-time high of 5667, quite a remarkable turnaround from where we were only a couple of weeks ago. Perhaps the biggest corporate story came from Target, with shares up 11.2% after reporting higher sales and profit than analysts had expected. There’s been a string of results from the likes of Target, and Walmart last week, that continue to show a resilient US consumer, one willing to spend if the price is right.
That doesn’t mean it’s all rosy, and yesterday’s revised employment data is a stark reminder that the picture can quickly shift. The massive downward revision will give the Fed more reason to act, and all roads look like they lead to rate cuts next month. The question becomes how much, and with yesterday’s Fed meeting notes showing some officials had considered a 25 basis point cut back in July, there will be fresh debate about whether a 50 basis point cut could be on the cards given yesterday’s jobs data.
Brent oil futures are hovering around the $76 mark, nearing their lowest level since January, as a slew of poor economic data points weigh on the demand outlook. Rate cuts in the US could act as a near-term catalyst, or at least a support level, should the Fed decide to act at next month’s meeting.”
Aarin Chiekrie, equity analyst, Hargreaves Lansdown:
“After a challenging period of volatile conditions and guidance downgrades, JD Sports got back on the front foot in the second quarter. Like-for-like sales were up 2.4% in the period with the strongest growth coming from North America. Despite the tough economic conditions, the group hasn’t shied away from its expansion in North America and Europe. The Hibbett acquisition was completed in late July, expanding the group’s presence in the US through its 1,179 stores, which will further strengthen its foothold in the world’s largest sportswear market. The full-year outlook remains on track, with management expecting pre-tax profits to land in the £955-£1,035mn range, on a pre-Hibbett basis.
