The FTSE 100 struggled for direction on Thursday. A mix of corporate updates and political upheaval resulted in flat trading for the broader index as investors awaited US Non-Farm Payrolls data tomorrow.
“The French political crisis failed to knock European indices off course, with the CAC 40 up 0.6% and the FTSE 100 holding firm. That might be the calm before the storm if the pressure grows on president Emmanuel Macron to resign and there is a full breakdown of the current regime,” said Dan Coatsworth, investment analyst at AJ Bell.
“Financials led the way on the UK stock market with Admiral and Barclays at the top of the FTSE leaderboard. Admiral was given a boost by positive broker comment as Deutsche Bank moved its stock rating to ‘buy’ from ‘hold’.”
A 12% drop in Frasers Group shares weighed on the FTSE 100 on Thursday and offset positivity elsewhere in the market.
“Frasers’ revenue has taken a tumble in the first half, driven by weakness in retail sales. The higher price points within Premium lifestyle felt the worst with a 14% decline,” said Derren Nathan, head of equity research, Hargreaves Lansdown.
“UK Sports Retail was down 7.6% but this is a more diverse category than the title suggests. Some of the pull back here was due to a scale back in some of the group’s underperforming businesses such as video games retailer Game UK. But marketing initiatives and brand partnerships saw further sales growth at the flagship brand Sports Direct.
“Pricing discipline and efficiency gains limited the decline in underlying pre-tax profit (PTP)to a low single digit number. However, that wasn’t enough to prevent a small decrease in guidance, with the group noting weaker consumer confidence both sides of the UK Budget.”
The guidance reduction was the most damaging element of Frasers Group’s update. Given the recent spate of repeat downgrades by some retailers, there will be concerns that Frasers will lower guidance again. The festive period will be key.
Vodafone shares showed marginal signs of positivity after the CMA waved through the merger between Vodafone and Three as the companies pursue economies of scale.
“Vodafone and Three have secured regulatory approval for their merger, combining the UK’s third and fourth-largest mobile operators into a stronger competitor,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.
“While the full details are yet to emerge, this is a significant regulatory shift after years of blocked telecom deals. A streamlined three-player market, seen in countries like the Netherlands and Switzerland, could lift profitability and encourage much-needed investment in the UK’s lagging networks. This is a small win for the sector but doesn’t change the tough market dynamics.”