Daily market update: Kingfisher sticks with guidance despite UK beat and Pets at Home solid

“The FTSE 100 ticked higher after an increase in US consumer confidence and a delay on the punishing EU tariffs announced by the Trump administration helped US stocks to surge overnight,” says AJ Bell investment director Russ Mould.

“However, with US futures pointing to some retrenchment when Wall Street resumes trading later, it’s clear there is still some latent nervousness in the market.

“Quite a lot may ride on Nvidia’s results later, with investors likely to be watching the numbers and particularly the outlook closely to see what impact, if any, tariff uncertainty is having on the business.

“Like a headteacher taking a more relaxed attitude in the summer term, the IMF has given Chancellor Rachel Reeves scope for a bit more wiggle room on her fiscal rules. At present a nudge here or there in Office for Budget Responsibility forecasts can wipe out Reeves’ headroom.

“The IMF is suggesting just one forecast each year, with changes to how this is communicated and protocols in place to prevent a minor breach of the rules forcing tax increases or spending cuts. However, Reeves won’t exactly be putting out the sun lounger – the fund is warning of a need to hike taxes or slash spending if shocks arise.”

Kingfisher

“DIY retailer Kingfisher got hammered for its last update and despite some bright spots in its latest release, it is apparent the business still needs some renovation.

“The company is sticking with guidance despite a better-than-expected showing from B&Q and other UK brands Screwfix and Tradepoint. This reflects the fact its French and Polish businesses are struggling. The latter partly as a result of a tricky geopolitical backdrop – with the country close to the frontline of one of the world’s key flashpoints thanks to its relative proximity to Russia.

“There may be some scepticism about how sustainable the performance in the UK can be too – as clearly some of it has been driven by the good weather during April and May.

“Given the big divergence in performance between the company’s UK business and its main overseas operations in France and Poland, questions may begin to surface about whether it might look to focus its attention on these shores and divest other parts of the group.”

Pets at Home

“Full-year results from Pets at Home very much followed the recent trend with its vets business delivering all the growth and the pet retail arm struggling by comparison.

“A few things are working against the retail side of the business. The boom it experienced during the pandemic when the lockdown puppy and kitten phenomenon took hold has eased off. Competition from non-specialists, like the supermarkets, has ramped up. And, while Britons are famously devoted to their feathered and furry friends, pressure on consumer spending means they are less likely to splash out on extras like toys and treats and are focusing instead on the basics.

“At the same time, costs – particularly relating to wages – have gone up. The veterinary side of the business is a much happier story – although the competition regulator’s probe into the sector will continue to cast a pall until it is fully resolved.

“The company is ramping up returns to shareholders, providing a signal of some confidence in the future outlook and has made underlying progress with its digital offering and distribution network. Assuming it comes out relatively unscathed from the CMA review, Pets at Home may be able to recover its pep.”