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The FTSE 100 index showed resilience on Thursday, edging higher despite sharp declines in key retail stocks and ongoing caution over the UK economic outlook. Gains in select financial and industrial names offset losses in household names such as Next, which slumped after results, and Pets at Home, which tumbled on a profit warning and surprise leadership change.
Shares in Pets at Home sank 22% to £177.1 after the pet care group cut its profit outlook and announced the immediate departure of chief executive Lyssa McGowan.
The company warned that underlying profit would fall to between £90 million and £100 million, well below earlier guidance of up to £125 million. A weaker performance in the Retail division, including a 5% drop in store sales year-to-date, was blamed for the downgrade.
Next shares fell 6% or 750p to £11,250, making it the FTSE 100’s biggest faller. Despite reporting a half-year profit increase of 13.8% to £515 million, the retailer’s traditionally cautious outlook unnerved investors.
Chief executive Lord Wolfson warned of an “anaemic” UK economy, citing slowing job creation, regulatory headwinds, and rising costs.
The broader FTSE 100 managed to rise 16 points to 9224, thanks to strength in financials and select industrial stocks. RELX PLC advanced 2.55% to £631.58, reflecting optimism in the professional services and analytics sector.
The 3i Group climbed 1.91% to £372.91, supported by private equity gains, while Halma added 1.71% to £124.22. Intermediate Capital Group (ICG PLC) rose 1.68% to £65.74, continuing good momentum in the alternative asset management sector.
These moves highlighted the differences in the market, with the institutional names having steady investor demand for their stock, while consumer-facing stocks suffered.
Investors are now waiting for the policy decision by Bank of England, with rates expected to remain at 4% after the cut in August. Meanwhile, inflation remains stubbornly elevated at 3.8%, dampening prospects of further easing this year.
Meanwhile, global sentiments were shaped by the US Federal Reserve's first rate cut of 2025, taking the federal funds rate to 4-4.25%.
The Federal Reserve hinted at the possibility of two more rate cuts this year, although Chair Jerome Powell stressed that inflation risks remain, tempering the excitement. US futures were up in Asian trading hours, while Japan’s Nikkei 225 was up 1.3%.
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With the FTSE 100 steady but retail heavyweights struggling, the market’s near-term trajectory hinges on central bank decisions and the resilience of consumer demand. Analysts suggest that while corporate investment announcements from US firms are lifting sentiment, UK equities remain vulnerable to economic headwinds.
