FTSE 100 higher as resources stocks rally, Spirent recommends new bid, JD Sports shares jump and AO World profit to be at top end of guidance

“The FTSE 100 was higher ahead of the Easter weekend, lifted by strength in the resources sector as Chinese markets rallied,” says AJ Bell Investment Director Russ Mould.

“The UK market continues to shrink quicker than a cashmere sweater on a 60-degree cycle with telecoms testing specialist Spirent Communications succumbing to a new bid from US electronics outfit Keysight after previous interest from Viavi.

“Later today a final estimate of US GDP and a consumer sentiment reading from the University of Michigan are set to dominate the agenda. These releases will offer some insight into whether the US Federal Reserve is achieving a ‘soft landing’ for the economy as it moves towards interest rate cuts.

“News the UK’s recession is ever so slightly shallower than previously feared provided a very modest amount of succour.”

JD Sports

“Amid cracks in the athleisure and footwear sector, JD Sports has managed to outperform the market and is upbeat about prospects for the year ahead. That’s quite a different message from other key players in the sector such as Lululemon and Nike which both disappointed with their latest updates as consumers rein in spending and competition heats up.

“JD Sports isn’t completely immune. The marketplace is awash with discounting and a lack of new products to excite shoppers. Interest rates remain high and consumer spending habits are unlikely to show a drastic improvement until we’ve seen several rate cuts by central banks. However, JD continues to open new stores which might help it grow sales at a faster rate than the average peer.

“JD’s success has been driven by consumers racing to buy the latest trainers, pairs of which often costing hundreds of pounds. It has also been able to extract more money from the same type of customer by convincing them to snap up expensive tracksuits and running tops. The company’s scale and deep relationships with important brands has given it an advantage over many rivals and enabled it to expand across different geographies and become a major force in the sports retail world.

“The current blip in the trading environment is certainly testing its abilities to hunker down and keep the tills ringing, yet when the backdrop improves JD has the right ingredients to continue its goal of increasing market share.”

AO World

“Online white goods seller AO World’s life as a public company has had more ups and downs than a rollercoaster and investors will hope today’s ascent for the share price does not presage a rapid descent to come.

“Like many online-based retail businesses, AO was well-placed during lockdown but subsequently its fortunes took a turn for the worse. Having returned to a more sustainable path towards profit and cash flow in its financial year to the end of March 2023 the company has now confirmed revenue guidance for the current year and flagged profit at the top end of what was previously guided.

“For the year about to start, the group still hopes to see strong revenue growth and is sticking with its medium-term margin target.

“The basics of retail are fairly simple – have the right amount and the right kind of stock, sell it a price customers will stomach but which still allows you to make a decent profit, and make sure the customer experience is such that they will buy from you again. AO World seems to be getting more of this right and that’s coming through in its financial performance.”

These articles are for information purposes only and are not a personal recommendation or advice.