The FTSE 100 looked set for its first positive day of 2024 on Thursday as firmer oil prices provided support for the index.
BP and Shell helped offset sharp declines in JD Sports after the sports retailer issued a shock profit warning following a slower festive trading period.
“The FTSE 100 started Thursday on the front foot despite selling in Asia and the US overnight,” said AJ Bell investment director Russ Mould.
“There were decent gains for BP and Shell as oil prices extended their recent upwards movement on concerns over Middle Eastern supply. The region remains a tinder box due to the Israel-Gaza war, and disruption to shipping routes through the Red Sea is also a key factor behind the surge in crude.
“A big drawdown in US crude supplies – robust North American production played a key part in keeping a lid on prices in 2023 – is also a contributing factor.”
The FTSE 100 was trading up 0.35% at the time of writing.
Next
Next was the FTSE 100’s top gainer after the retailer again produced a sterling trading update and upgraded their guidance for the year.
Next shares were over 4% higher at the time of writing as the group said it was increasing full-year profit before tax guidance by £20m to £905m.
While Next provided a reason for investors to be cheerful, FTSE 100 retailing peer JD Sports’ shock profit warning would have been a major disappointment for shareholders used to positive updates.
Earlier in 2023, JD Sports had guided for pre-tax profits in excess of £1 billion. This guidance was rolled back today after the group said margins were pressured by increased promotional activity.
JD Sports said they now expected profit for the year to be £915m and £935m, the lowest profit since 2021.
“When one of the biggest names in retail issues a profit warning, you know life is hard for the sector,” said Russ Mould.
“For JD, issuing a profit warning is a terrible start to the new year. It will put pressure on management to up their game and find innovative ways to shift more stock without sacrificing too much margin. Any interest rate cuts from the Bank of England will be a gift to the consumer and therefore to companies like JD, but there is no guarantee that will happen any time soon.”
JD Sports shares were down 22.9% on Thursday.
