Daily market update: FTSE 100 hits fresh all-time high, cost pressures hit Wetherspoon

The FTSE 100 reached new record highs in early trading on Friday as investors shrugged off concerns about the US government shutdown.

News of OpenAI’s valuation reaching $500 billion, making it the world’s most valuable private company, helped fire enthusiasm in the tech sector and push US indices to new records yesterday.

There is growing expectation that the shutdown in Washington might continue until mid-October, with the scheduled jobs report due out today unlikely to be released. How long investors remain relaxed about this state of affairs remains hard to predict, but one worry is that it makes it significantly harder for the Federal Reserve to make informed decisions around interest rates.

Asian markets were mixed with Japanese stocks higher as conglomerate Hitachi rose on news of an agreement with OpenAI to provide cooling systems for data centres. Domestic Chinese and South Korean markets were closed for public holidays.

Oil prices remain under the cosh amid speculation that producers’ cartel OPEC+ will announce a substantial increase in production quotas at a meeting to be held this weekend.

In London, precious metals miners Fresnillo and Endeavour Mining flexed their muscles as gold traded just off the all-time highs seen earlier this week.

JD Wetherspoon

Rising costs are a challenge for a business like JD Wetherspoon for whom value is its key selling point and the market has reacted negatively to a warning of continuing pressures in its latest results.

After all, the pubs group must absorb some of these costs to keep its prices low and attract punters through the doors.

The full-year numbers are decent with record sales and profit up by double digits. Wetherspoon is slowly clawing its way back to pre-pandemic profit levels – and getting pre-tax profit back above £100 million would be a key milestone in its recovery from Covid.

It is a clear indication of the inflationary pressures Wetherspoon is facing that profit remains some way below these levels despite revenue being significantly higher than it was before 2020.

Nonetheless, Wetherspoon is clearly benefiting from its scale and the fact that the wider hospitality industry’s struggles are seeing smaller rivals fall by the wayside, thereby improving its competitive position.

Holding the dividend flat suggests management are not feeling overly confident about the outlook – with guidance for a ‘reasonable outcome’ for the current financial year open to interpretation and unlikely to get pulses racing. Though Wetherspoon’s like-for-like sales for August tracked materially above those for the wider sector.