- Flat open for UK markets mirrors yesterday’s muted session.
- Wall Street hits pause as rally loses steam.
- Gold hovers around record highs.
- Oil spikes as supply story takes a turn.
- JD Sports laces up for a better second half.
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“UK markets opened flat this morning, mirroring yesterday’s muted session as investors digested soft PMI data showing private-sector growth at its weakest since May. Services are still expanding, but momentum is fading, while manufacturing remains stuck in contraction. The OECD offered a mixed outlook – nudging its UK growth forecast up to 1.4% for 2025, but warning inflation could hit 3.5% by year-end, the highest among major economies.
Wall Street hit pause on its rally yesterday, with the S&P 500 slipping 0.6% and the Nasdaq down 0.9%. The pullback came after three straight record closes, as Fed Chair Powell flagged ‘fairly highly valued’ equity prices and investors reassessed the sustainability of recent AI-fuelled gains. Micron bucked the trend with strong earnings and a bullish AI outlook, while Lithium Americas shares soared on news that it may be the US government’s next target for an equity stake.
Gold is hovering near record highs as investors weigh mixed signals from the Fed on inflation and jobs. Powell’s cautious tone was echoed by divided views across the committee, keeping rate cut expectations alive ahead of August’s PCE print, the Fed’s preferred measure of inflation. Add in rising geopolitical tensions and strong ETF inflows, and gold’s appeal is holding firm despite the policy fog.
Oil prices spiked yesterday, reversing earlier weakness after a sharp draw in US inventories and stalled Kurdish exports reignited supply fears. It’s a pivot from the oversupply concerns that weighed on prices earlier in the week, highlighting just how choppy the oil narrative has become. With geopolitical risks still simmering, the market remains caught between disruption-driven rallies and demand-side doubts.“
Aarin Chiekrie, equity analyst, Hargreaves Lansdown:
“JD Sports’ first-half performance was broadly as expected against a tough retail backdrop, with all regions posting like-for-like sales declines. Overall, sales don’t tell the true story here, with total revenue rising by a seemingly impressive 20% in the period. But this growth was fuelled entirely by the acquisitions of Hibbett in the US and Courir in France last year, which are helping to flatter current performance.
Trading across Europe and the UK remains weak, especially in the latter. Year-on-year numbers have come up against some tough comparables, with last year’s sales getting a foot up from the men’s 2024 Euros. The outlook for the UK remains underwhelming, with recent changes to employer taxes and minimum wages bringing a handful of extra costs and challenges.
Across the pond, recent acquisitions cemented the US as the group’s largest region by sales. A shift of focus from expansion to raising brand awareness and squeezing the most out of its existing store footprint is a welcome one, and while like-for-like sales are still in negative territory, there are early signs that sales trends are improving.
With the share price having fallen by more than 40% over the last year, the recent challenges and market softness now look well priced in. Trading at just 6.8 times next year’s earnings, the valuation offers plenty of downside protection. And if investors are patient enough to ride out some uncertainty over the next couple of years, it could prove to be a very attractive entry point.”
