Lackluster Action Leaves The FTSE Just Off Three Month Lows

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The FTSE has continued to trade with a lackluster tone hovering just above three-month lows printed in Monday's session. BT Group PLC experienced a significant decline, with its shares falling 4% leaving the company at the bottom of the index today, as UBS warned that rising interest rates could force the telecom company to cut its dividend in half. UBS analysts expressed their belief that the market has underestimated the impact of increasing interest rates and accounting changes related to BT Sport, which will affect free cash flow. The Swiss bank stated, "Without a dividend cut, BT Group will have to borrow more than £900 million per year over the next three years." To manage the risks associated with borrowing to fund both the dividend and pension deficit payments, especially with rising debt costs, UBS assumed that the dividend would be halved from 7.7p to 3.85p. As a result, UBS downgraded its rating on BT Group from 'neutral' to 'sell' and lowered its price target from 146p to 120p. Hot on BT’s heels is JD Sports Fashion, with its shares falling as much as 3.41%. The sportswear retailer reported a softening in its North American business during June. However, it reassured investors that inventories in its North American operations are at normal levels and stated that promotional activity would be kept at the necessary level to remain competitive.

On the positive side of the ledger Ocado Group shares continue to shine sitting at the top of the index again posting gains of 4.6% investors cheered the addition of for Ted Baker CEO to the Non Executive board, prior to Rachel’s stint at Ted Baker she was the Chief Financial Officer at Debenhams, Rahel is viewed as a very positive addition to the Non Exec team with expansive experience in international retail & consumer businesses.

FTSE Bias: Intraday Bullish Above Bearish below 7510

  • Below 7510 opens 7435
  • Primary resistanceis 7660
  • Primary objective 7430
  • 20 Day VWAP bearish, 5 Day VWAP bearish

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