The FTSE 100 dipped on Thursday as investors grappled with a volley of macro developments, including intervention in the US Treasury market, Trump’s latest warning to Iran, and hawkish Fed minutes.
The net result was a FTSE 100 trading down by 0.2%, but within the tight range it has settled into after the last week.
Trump’s warning of unleashing ‘Economic D-Day’ on Iran for not striking a deal with him was the headline news item, but the tepid response shows the market is taking less and less notice of what the US President says. He also took aim at China and other countries that deal with Iran.
“President Trump’s newly announced economic pressure campaign against Iran has added another layer of uncertainty,” said Zaheer Anwari – Co-Founder and CEO at The Revacy Fund.
“The US has threatened consequences for countries providing Tehran with financial or economic support, while ongoing tensions in the Middle East continue to keep oil prices elevated.”
Oil prices rose, with Brent Crude rallying by 2.3%, edging towards $100.
News that US debt has hit $40 trillion will come as a warning to investors, and the market response may have been more pronounced if the US Treasury hadn’t been active in tackling rising bond yields.
“This week’s intervention by the US Treasury to bring down yields on long-term US government bonds may have had the desired effect in the short term. However, the US national debt reaching such eye-watering levels will concentrate minds on deficit risks in the world’s largest economy,” explained Dan Coatsworth, head of markets at AJ Bell.
“It’s particularly important given the ongoing ructions in the Middle East as Donald Trump took to Truth Social to threaten economic D-Day against Iran and action against any party which provides it with help or support.”
Most FTSE 100 stocks were down at the time of writing, although declines were relatively contained, apart from JD Sports, which was at the bottom of the leaderboard.
JD Sports
JD Sports shares tripped over their laces on Thursday after the sports fashion retailer slashed its guidance amid poor sales in the US.
Looking at the JD Sports share price chart, you would have thought they had been on the up over the past few months, but today’s result paints a very different picture, with full-year pre-tax profit guidance cut to between £700m and £800m, down from £750m to £850m.
“JD Sports is offering another glimpse of the darkening clouds gathering over the US economy, with American shoppers looking considerably more cautious,” said Susannah Streeter, Chief Investment Strategist, Wealth Club.
“The sneaker is fast becoming a canary in the coal mine for confidence. Like-for-like sales fell by 6.8% in North America, which accounts for 35% of JD sales, with weaker demand for the latest must-have footwear. More consumers are resisting the lure of hyped brands, which is not surprising when the jobs market is weakening and inflation is still such a concern.”
JD Sports shares were down 14% at the time of writing.
Several financial companies including Legal & General lost the rights to their upcoming dividend on Thursday, adding to the downside pressure on the index. Investec also traded ex-dividend and dipped 4%.
Weir Group was the FTSE 100’s top riser, addng to yesterday’s gains, with another 2% rise.