FTSE Struggles to Recover Lost Ground – JD Sports Cuts Profit Forecast
The index has lost some shine as bond yields rise on budget concerns and BoE policy. JD Sports’ profit cut highlights weaker consumer demand.
- JD Sports cuts profit forecast by £40 million for 2025
- Stock price plunges 12%
- Bond yields continue to pressure stocks
The FTSE opened down 0.20% before recovering in this morning’s trading as the market comes to grips with more signs of a weak economy and central bank policy shift.
JD Sports Sees Togher Market for 2025
The British sportswear retailer, JD Sports, owns over 4,500 stores worldwide, cited concerns of promotional activity from competitor and a decline for demand in Nike goods.
JD Sports cut its profit forecast to £915-935 million, the downgrade comes after weaker trading in the United States and United Kingdom. The reduction in profits equals £40 million or 4%, the stock dropped 12%.
JD Sports’ shares have already taken a hit of 27% over the past 3 months, and stock prices are near a five-year low of 84 pence.
The downgrade in profits forecast indicates a weaker consumer demand, in this case for sportswear. It may also be due to a shift in consumer affection for the Nike brand, which represents 45% of JD Sports’ sales.
FTSE Live Chart
Bond Yields Maintain Momentum
UK gilts continue their bear market and push yields higher. Gilt yields this week reached levels not seen since July 2008.
The 10-year yield is at 4.88 today after touching 4.925% last week. The progressive rise in rates is due to two concerns. On one side, the government will need to borrow more and then the BoE will be restricted in cutting rates.
There seems to be a disconnect between the stock market and bond market. In that the bond market sees dangers that would clearly affect the stock market also.
While the stock market has been trading in a wide sideways range, there seems to be no clear trend. YTD the FTSE is up 1.06%, the lack of a clear trend indicates uncertainty, whereas the bond market seems sure about the risks going into 2025.
