JD Sports resilient despite shock retail sales numbers, Snapchat owner faces TikTok challenge amid tough advertising market and BP tops the FTSE 100 leaderboard

“The FTSE 100 eked out some gains on Friday to provide hope it may finish in positive territory for the week,” says AJ Bell Investment Director Russ Mould.

“A drop in the pound as retail sales disappointed probably helped since it boosted the relative value of the overseas earnings that dominate the stock index. Stronger oil prices also helped BP to top the FTSE 100 leaderboard.

“The boost from the Platinum Jubilee wasn’t enough to rescue retail sales in June and they were revealing of the pressure on UK consumers. People have stopped buying big ticket items.

“Although not all retailers are having the same experience. JD Sports reported resilient trading, echoing its rival Frasers which reported yesterday.

“This suggests athleisure items are still in demand and perhaps indicates that its younger clientele, who may live at home or rent from a landlord who is picking up some of the slack from rising bills, have seen slightly less disruption to their disposable incomes than the rest of us.

“The UK market is about to go into full-scale holiday mode as most schools in England and Wales start their summer break. Sometimes this can result in increased volatility as trading volumes thin out and many experienced traders are sat on the beach.

“Global markets have been stuck in a tight range since mid-June so it will be interesting to see if that changes in the coming weeks.”

Snap & Advertising Market

“If you want proof that companies are nervous about the economic outlook, just look at how media platforms and marketing agencies are bemoaning a tougher advertising market.

“In April, YouTube’s advertising revenue growth came in below expectations, albeit partially attributed to increased competition from TikTok.

“This week, digital advertising agency S4 Capital issued a fierce profit warning and cut its earnings estimates.

“Now we’ve got Snapchat’s owner issuing its second warning in a matter of months, noting that companies were cutting advertising budgets due to the economic slowdown and inflationary pressures, among other reasons.

“If consumers are cutting back on spending because of the cost-of-living crisis, it makes sense for businesses to rethink how much money they spend on promotions.

“On one hand, there is an argument to increase marketing spend in a downturn to help keep sales volumes ticking over. On the other hand, companies don’t want to be throwing money away if they aren’t getting acceptable returns on the advertising and marketing cash spent.

“Snap’s problems aren’t restricted to advertising spend. TikTok is commanding the attention of millions of people and that means less engagement with other social media platforms. Snapchat might be fun for a while as users muck about with the photo filters, but TikTok has become the dominant force and so consumers – and most likely advertisers – are focusing their main attention on that platform.”

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