FTSE fights to sustain momentum, markets eye US banking season, JD's new chair and Vistry upbeat despite rising costs

“It’s been a chaotic week for politics and a rollercoaster ride for investors as markets experienced yet more wild swings,” says Russ Mould, Investment Director at AJ Bell.

“The FTSE 100 is trying its very best to hold on to this week’s winning streak, but it looks touch and go as to whether the index will have the stamina to stay higher for the whole of Friday.

“Investors continue to lock on to oil stocks, with BP, Shell and Harbour Energy among the top risers. JD Sports also got a lift as it found a new chairman.

“Housebuilders didn’t fare as well, with Taylor Wimpey and Persimmon taking a knock amid mixed messages about the sector which is battling materials, energy and labour cost inflation. There is also a growing sense that the property market can’t sustain its positive momentum if we get a recession.

“The US banking season kicks off next week and investors will be looking at deal flows for corporate banks and evidence of bad debts among consumer customers. While banks normally benefit from a rising interest rate environment, as that provides an opportunity to increase earnings by charging more for lending, the market typically worries about the sector if recession strikes.”

JD Sports

“JD Sports has made the first step towards rebuilding its senior leadership team following the departure of executive chairman Peter Cowgill.

“Consumer-facing business expert Andy Higginson has been appointed as the new chair of JD Sports, bringing experience from years of service at supermarkets Tesco and Morrisons as well as Unilever, Guinness and Laura Ashley.

“His role is to lead the board of directors and set high governance standards. This was something which was perhaps a weak point under the reign of Cowgill, given questions about why he had the joint chair and CEO role, as well as the circumstances of his exit - Cowgill left suddenly after a review of JD’s internal governance and controls.

“During his leadership the company came under fire for the design of bonuses, the way store leases were restructured at its camping gear chain Go Outdoors, and various dealings linked to JD’s failed attempt at buying trainers group Footasylum.

“Given how JD’s share price has slumped in recent months amid market worries about consumer spending and the surprise departure of Cowgill, Higginson will be under pressure from day one to try and improve the company’s reputation from a boardroom perspective, and to find the right person to lead the business.

“Despite all the drama, JD has been a resounding success and its core business model certainly doesn’t need a rethink.”

Vistry

“Vistry chief executive Greg Fitzgerald was a well-regarded industry figure when he joined what was then Bovis Homes – a housebuilder in a pretty sorry state – in 2017.

“Despite the challenges posed by Covid and the economic turbulence in the interim he has burnished those credentials by rebuilding the company’s reputation.

“The purchase of Galliford Try’s housebuilding and regeneration businesses in early 2020 may not have been optimally timed but they now look like smart acquisitions.

“The regeneration arm – Vistry Partnerships – is performing particularly strongly and arguably gives Vistry a bit of an edge over its peers, which are solely focused on building new homes.

“The company sailed past first-half expectations and performance at the top end of full-year forecasts is now expected.

“The company was notably upbeat on margins, unlike its rival Persimmon yesterday, and seems confident of its ability to offset cost increases, underpinned by strong demand.

“It wouldn’t be a set of housebuilder results without a grumble about planning. This is not without cause; many local planning departments have been starved of resources and this is neutering the industry’s ability to build the volume of new homes at the pace the country clearly needs.”

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