FTSE 100 grounded despite strong US cues, Dunelm impresses against a tough backdrop

“Despite the tailwind of a US market which flew higher amid strong numbers for Delta Airlines, the FTSE 100 was firmly grounded ahead of the Easter break, trading modestly lower on Thursday morning,” says Danni Hewson, Financial Analyst at AJ Bell.

“The top riser was British Airways owner International Consolidated Airlines which took heart from Delta’s update, which suggests people are prioritising air travel despite the pressures on their finances.

“After so long of having their travel restricted, it seems the appeal of jetting away is very strong.

“Several big US banks are due to report across the Atlantic, while the latest brush strokes in the global interest rate picture will be painted by the European Central Bank later as it meets to decide whether to follow the Bank of England and US Federal Reserve in hiking rates.

“The expectation is that ECB chief Christine Lagarde and her colleagues will sit on their hands but the runaway nature of inflation in the Eurozone is bringing considerable pressure to bear on the central bank.

“Recruiter Hays became the latest firm to warn on the impact of its exit from Russia more positively, and despite the uncertain economic outlook, the company continues to see a very competitive jobs market with considerable difficulty for businesses in attracting the staff they need. This puts the services of a company like Hays at a real premium.”

Dunelm

“While there were some more troubling details in soft furnishings seller Dunelm’s latest quarterly update there were also plenty of items to cushion the blow for shareholders.

“The recent strength in the company’s sales is testament to the chain’s appeal to customers. Dunelm is getting the basics of retail exactly right, serving up what people want, when and where they want it.

“A big part of the recent transformation of the group has been the development of its online proposition and it is not sitting on its laurels here, continuing to refine and improve things.

“There are costs associated with keeping up with shoppers’ needs, including footing the bill for having lots of extra inventory to mitigate any supply chain problems.

“Ultimately this is much better than visitors to its stores regularly coming away without the item they wanted and eventually becoming disillusioned with the brand.

“It is impressive that despite these extra costs and rising freight and raw material inputs the company is for now able to sustain and even improve margins.

“There may be tough times ahead as the cost of living crisis continues to bite into Britons’ household budgets, however Dunelm and its management look to be doing everything under their control to set the business on the right path.

“And innovations like its partnership with the Natural History Museum show it is thinking of new ways to broaden and deepen its market appeal.”

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