FTSE continues to climb as investor sentiment high, Fedex soars on cost cutting and Nike trips up on outlook

“After a stunning session on Thursday, the FTSE 100 continued its ascent at the end of the trading week with a 0.6% rise to 7,930. Little by little it is edging back towards the 8,000 mark which was hit in February 2023,” says Russ Mould, Investment Director at AJ Bell.

“It’s been quite the week for news flow. Naturally, everything has centred around central bank interest rate decisions and while the US and UK kept their rates level, it’s all about what could happen next, and confidence is growing that we’ll see rate cuts soon.

“Risk appetite is increasing; corporates are slowly becoming more upbeat and people are making money. That environment is favourable for equity markets and it certainly helps that AI darling Nvidia continues to enjoy a rising share price – its investor-favourite status implies that if its shares are moving higher, sentiment will stay positive.

“There was a ticker tape parade for Reddit’s IPO yesterday after the shares jumped 48% on their first day of trading. The IPO was fairly priced and demand was high for the stock given the big opportunity for Reddit to sell its data to feed AI models and to deploy artificial intelligence to improve user engagement and drive more advertising income. While the business is loss-making there are a lot of levers it can pull to be a more commercial entity and finally make a profit.

“A 12% rise in Fedex’s share price in pre-market trading is noteworthy given the logistics company is seen as a global economic bellwether. Admittedly, the share price joy was centred upon cost cutting, with good news on operating margins being the key takeaway rather than an improvement in the business environment. This is a recovery story and any progress internally or externally is taken as a major win by the market.

“Life insurer Phoenix is incredibly popular with retirees thanks to its generous dividends and shareholders will be celebrating a near-8% rise in the share price after better-than-expected results and a positive outlook for cash generation and debt reduction.”

Nike

“Sportswear and trainers giant Nike is on the naughty step with investors and Chinese and European consumers right now.

“Its latest earnings may have seen decent growth in the US with earnings and revenue topping expectations. However, in China, Europe and the Middle East and Africa sales fell short of what had been pencilled in.

“The outlook for the current quarter is soggy thanks to factors like unfavourable currency movements and changes in the amount of product being bought directly from Nike as well as broader pressures on discretionary spend. The company is cutting costs and driving efficiency to try and maintain margins in a scenario where people are less willing to stump up big sums for its latest sneakers and apparel.

“More concerning is the market share the company is losing to emerging specialists in different segments like Hoka and On Running and to more established brands like New Balance. Nike’s reliance on its Jordan brand and basketball shoes in general may mean it has taken its eye off the ball elsewhere.

“Management is trying to run a tight ship but in keeping close control of the purse strings it still needs to invest in innovation to remain relevant in what is a crowded and competitive market.

“Facing up to these challenges, the company could do without a furore over the England football kit. Its ‘playful’ reimagining of the national flag has prompted vocal disquiet in some quarters.”

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