FTSE Saw A Mildly Positive End To A Tricky End-Of-Summer Trade

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On Friday, the UK's primary stock indexes showed signs of recovery, providing some respite to investors after a challenging week in global markets. Easing U.S. bond yields and a stabilization in crude oil prices contributed to this positive sentiment. The FTSE 100 index, which is heavily influenced by exports, began the day with a 0.3% increase.

Investors also found reassurance in a Bank of England survey released on Thursday, indicating that businesses were preparing for the lowest price increases since February 2022. This prospect of reduced inflationary pressures had a positive impact, particularly on stocks sensitive to inflation, such as retailers, which saw a 1.0% increase and led sectoral gains.

JD Sports Fashion saw its shares rise by 2.7%, reaching 138 points, following a positive move from Berenberg, which increased its price target (PT) from 210 points to 225 points while maintaining a "buy" rating on the stock. Berenberg's analysis highlighted that JD Sports Fashion is somewhat undervalued in terms of its status as a global brand and a prominent destination for sports lifestyle enthusiasts.

The brokerage firm believes that this aspect of JD's identity is not fully appreciated by the market. Furthermore, Berenberg expressed confidence that JD Sports Fashion will reaffirm its guidance during its H1 results, which they anticipate will help allay investor concerns and stimulate a positive market response.

The brokerage also noted robust international demand for JD Sports Fashion and expressed optimism about the attainability of the company's store targets. Year-to-date, JD Sports Fashion's stock has demonstrated a 9.3% increase. JD Sports were pipped to the top spot by Ladbrokes owner Entain, who notched up a 3.3% gain into the close.

On the negative side of the ledger, ConvaTec Group, a British medical products and technologies company, experienced a 2.8% drop, making it one of the top percentage losers on London's blue-chip index. This drop came as a result of the company terminating its relationship agreement with its largest shareholder, Novo Holdings.

Novo Holdings serves as the asset and fund manager for the Dutch charity organisation Novo Nordisk, which holds a substantial 19.3% stake in ConvaTec Group. As part of the agreement, Novo Holdings had a board representative, Sten Scheibye, who will step down from the board following the termination of the relationship agreement.

Novo Holdings cited the increasing momentum and their high confidence in ConvaTec Group's management as reasons for relinquishing their board position, signalling a shift in their involvement with the company. If the current trend persists, ConvaTec Group is on course to record its most substantial losses since Sept. 27, 2022. Including the losses from this session, the stock has seen a decline of approximately 4% year-to-date.

The heaviest losses of the day were seen in Melrose Industries, which was sitting at the bottom of the index and nursing losses of 4.1%.


FTSE Bias: Bullish Above & Bearish Below the 7525 Level

  • Above 7550 would open up a move toward 7576
  • Primary resistance is seen at 7625
  • The primary objective is the 7335 level
  • The 20-day VWAP is bearish. The five-day VWAP is bearish

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