The FTSE 100 held up in early trading on Wednesday despite a rebound in UK inflation and continued uncertainty over Greenland.
The hope will be that some form of compromise can be found as Donald Trump meets with European leaders and speaks at the World Economic Forum in Davos.
After a difficult day on Wall Street yesterday, US futures point to a modestly higher open when trading resumes later today.
A fresh record high for gold is a reminder of continuing nervousness as people fret over the future of a Nato alliance which has been a key part of the Western world’s firmament in the post-war period.
UK inflation came in slightly hotter than expected which creates uncertainty around the chances of interest rate cuts when the Bank of England meets in February. Gains in the mining sector and well-received results from the retail space helped to keep the FTSE 100 afloat despite weakness in the banking sector.
JD Wetherspoon
Value has always been a key part of Wetherspoon’s appeal, and the business has always had a focus on volumes rather than margins.
While this has been a successful approach over the long term it does leave the company exposed when costs go up. Despite robust sales growth over Christmas, the company warns profit will be lower in 2026 than in 2025.
As a large-scale employer of people on relatively lower wages, Wetherspoon is exposed to increases in the national living wage and employer national insurance contributions.
Maintenance and energy costs continue to tick higher. While Wetherspoon can probably pass some extra costs to customers, it must walk a tightrope as it looks to keep prices keen enough to keep its clientele coming through the doors.
Wetherspoon is looking to expand after a period of retrenchment, but investors will be keeping a close eye on the debt pile – which has nudged higher – to see if this has any impact on its roll-out plans.
Currys
Currys is a rare UK retail success story of recent years with an impressive recovery for the business from its 2023 nadir.
As its festive update amply demonstrates, there is no sign of that letting up as the company delivers yet another upgrade.
Unlike many of its retail peers, Currys shaped up reasonably well during the Covid period as people took the opportunity to upgrade the electronic goods in their home. On the flipside, this left it particularly exposed as households which had already upgraded their kit felt less willing and able to spend as inflation surged coming out of the pandemic. A slowdown in its traditionally strong Nordics business only compounded problems.
An opportunistic takeover bid in early 2024 from US investor Elliott tested the resolve of management but having rebuffed this approach, Currys has hardly looked back.
As specialist and non-specialist competitors have exited the stage Currys has been left as the last electronics retailer of scale. Market share gains in both the UK and Scandinavia are driving impressive levels of growth in a subdued economic environment.
As consumer electronics become more complex and harder for people to navigate, Currys has leaned into its strengths, looking to provide customers with support and guidance and help customers navigate a fast-changing world of consumer technology.
This provides people with limited tech expertise with something they can’t get elsewhere when they are purchasing a new TV or laptop.
It aims to offer this support through the full lifecycle of a product from purchase, credit and installation to repairs and recycling when it has reached the end of its useful life, thereby potentially generating regular revenue from the sale of a single item.
JD Sports
JD Sports’ trading update is a mixed bag, with recent gains in North America and Asia-Pacific offset by weakness in UK and Europe. It’s not a great look as the market had been hoping JD would have regained its balance and have a spring in its step following a miserable time in recent years.
The market reaction is surprisingly positive as the stock has avoided another sell-off. That’s partially down to JD reassuring on 2026 guidance, saying it is comfortable with market expectations.
The turnaround in North America is important given JD now has a large presence in the region through acquisitions. A decision to boost marketing in North America over the coming year is an indication of management confidence and a determination not to get left behind.
Burberry
Burberry is finding its groove again after strategic mistakes on pricing and a prolonged weak spell in the East. Its turnaround plan is dubbed ‘Burberry Forward’ and leans on its luxury heritage, alongside a business revamp with greater focus on cost efficiencies.
The latest trading update is encouraging. Importantly, Chinese demand has picked up alongside gains in other parts of Asia including South Korea.
This momentum is exactly what Burberry needs to get back on top. However, Burberry has been such a disappointment in recent years that many investors are still waiting on the sidelines for more evidence of the turnaround.
The share price might have jumped in early trading, yet the stock remains stuck in the same trading range it has been in since last May. The market wants to see every part of the business strutting its stuff and that’s not happening yet.
The Europe, Middle East and Africa region is dragging its heels as the all-important tourist spend still hasn’t returned in this part of the world. The threat of higher tariffs on UK products sold into the US also doesn’t help matters given that Burberry still manufactures in the UK alongside China and Italy.
Dan Coatsworth: Head of Markets
Dan Coatsworth is AJ Bell's Head of Markets. Dan has been with the company since December 2012 and has more than 18 years' experience in the industry, following the markets and all things investing. He...
