London markets steady, JD Sports shares down, Burger King UK serves up strong numbers, hospitality sector warns of riots impact

“London markets have been steady this Monday, a vastly different story from last week’s meltdown. comments Danni Hewson, AJ Bell Head of Financial Analysis

“But the difference in fortunes between the more robust blue-chip index and the sluggish FTSE 250 hints at a degree of investor trepidation as we head deeper into a data fuelled week.

“Will UK inflation have ticked up? Will wage growth continue to throw doubt on more interest rate cuts? And how will the damp start to the great British summer have played into those GDP figures?

“Then there’s those retail sales figures which help us understand the consumer. How confident do they feel? How much can they contribute to the hoped for growth as the days shorten?

“It was fear about the strength of the US economy which set in motion last week’s volatility and, just to add a bit of extra spice to the week, we get inflation and retail sales data from over the pond as well.

“Recent earnings updates from the likes of McDonalds and Pepsi have revealed lower earning American’s have been pushed to the limits and they’ve taken evasive action to protect household budgets.

“With Home Depot and Walmart both on the slate for this week, investors will be probing the extent of the consumer pull-back with half an eye on, whisper it, Christmas trading.

JD Sports

“The biggest faller on the FTSE 100 today is all too aware of the potential impact of a wary shopper.

“JD Sports shares dropped more than 4% following a broker downgrade amidst concerns that spending in the once mighty athleisure sector is looking a bit subdued.

“And with increased exposure to the US consumer after its takeover of Hibbert earlier this year, JD Sports could be in for a rocky couple of quarters.

Burger King UK

“But Burger King UK proves that the right ingredients, served the right way, at the right time can change the course of the game.

“Whilst burger sales in the US looked less than tasty, here in the UK that special sauce has tickled diners’ taste buds.

“Location is important and finding new markets has helped boost sales for the fast-food giant.

“But it’s also about service and competitors like McDonald’s need to consider how to cater to the growing number of delivery drivers whilst also making good on its ‘fast’ prefix for walk in diners, as well as taking a fresh look at pricing.

Riots / Hospitality

“No one will be surprised to learn that footfall in UK towns and cities has been impacted by last week’s riots.

“Why risk popping out for a pint if you’re worried about your safety? Many venues shut up shop anyway to protect staff and customers just in case further disorder materialised.

“It will have been a particularly galling predicament considering the weekend delivered what could have been the last hurrah of summer, perfect warm nights designed to seduce drinkers into supping late into the evening.

“UK Hospitality reckon sales fell by up to 40% in some areas and many pubs and shops will be trying to deal with the headache and heartache of claiming for destruction and theft.

“This week’s data won’t give us any insight into the true cost of the riots on our high streets, that’s for the months to come, but it will give us a clue as to the state of the economy that was battered by those ugly scenes no one wants to see repeated.”

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