LIVE BUSINESS: Oil prices rise on conflict fears; JD Sports sales record; AO World eyes acquisition of Music Magpie

Susannah Streeter, head of money and markets at Hargreaves Lansdown:

‘A muted tone has hit trading as markets brace for further fallout from the Middle East crisis.

‘The FTSE 100 has risen in early trading, partly due to its defensive nature, helped by the strength in energy stocks as oil prices continue their march higher.

‘Uncertainty has made safe-haven assets like gold more popular, with demand for the precious metal rising near record levels, as violence spreads further across the Middle East, briefly rising above levels. $2,670 per ounce. Already sought, amid concerns that inflationary pressures would persist, a new geopolitical fracture has increased demand for gold.

‘The dollar has stabilized after gaining ground and US Treasuries have proven more popular, as indicated by falling yields, as investors have sought reliable havens amid the widening conflict.

‘Oil prices are rising, with Brent crude approaching $75 a barrel, as supply concerns swirl again, sparked by increased aggression. These concerns are being mitigated by expectations that Saudi Arabia will open the taps further and lower demand from China, but upward pressure is likely to continue as uncertainty reigns over how far the conflict will extend.

“This has been accompanied by a rise in the Vix Index, the so-called ‘Fear Index’, as there is speculation about the extent to which the United States could be drawn into the war, given its promise to support Israel.”

Holiday group Saga is in talks with Belgian company Ageas over a possible partnership for its insurance business.

Saga, which specializes in holidays and insurance for people over 50, has been struggling with its insurance business and mounting debt.

The company has taken steps including raising prices in its insurance underwriting business and reducing its workforce in an effort to control costs.

Naeem Aslam, Chief Investment Officer at Zaye Capital Markets:

‘The current rise in (oil) prices does not indicate that the conflict will expand significantly.

The current spike simply indicates that, like previous events, we may witness a larger scale response from Iran, but beyond that, there will be no further developments.

‘Essentially, oil traders are not currently considering the possibility of a full-scale war with Iran. This is because in such scenarios, oil prices would likely rise, and the only significant price level they could easily reach would be the $100 mark.

‘It is crucial to remember that global central banks have only been able to reduce interest rates thanks to stable oil prices. If oil prices start to rise, they will have no choice but to raise interest rates once again.’

Aarin Chiekrie, equity analyst at Hargreaves Lansdown:

‘After a difficult period of volatile conditions and unmet market expectations, JD Sports appears to be back on top.

‘Recent retail data had pointed to an increase in in-store discounts to help keep checkouts going. While that’s good news for customers, it’s typically not good news for retailers who tend to feel the effect of larger price cuts on their profit lines.

‘But JD’s store shelves are filled with exclusive items from brands like Nike and Adidas. JD is known for his strong relationships with brands and is even Nike’s largest partner globally.

‘Offering these ‘JD Exclusives’ has helped continue to attract customers into stores and paying full price, so profitability has remained in good shape.

“Sales have improved during the first half, with double-digit growth in North America and Europe helping to keep full-year guidance on track, pointing to pre-tax profits of between 955 and 1,035 million of pounds”.

Manufacturers have suffered the sharpest drop in confidence since the start of the pandemic, in the latest evidence that Chancellor Rachel Reeves’s doom and gloom speeches are weighing on the economy.

AO World is set to buy used smartphones and electronics from retailer musicMagpie for just £10m, in an effort to boost its mobile and consumer technology businesses.

The offer of 9.07 pence per share represents a 58 per cent premium to musicMagpie’s closing share price on Tuesday.

“With highly complementary business models, this acquisition will allow us to expand our offering to customers while advancing our sustainability objectives,” said AO World non-executive chairman Geoff Cooper.

JD Sports Fashion beat consensus forecasts for first-half profits amid record £5bn sales as the retailer said it was on track to meet full-year guidance, showing its multi-brand strategy is working in a time when Nike is struggling.

The FTSE 100-listed group, which sells Nike, Adidas, On, HOKA and other brands in Britain, Europe and the United States, would meet its targets, despite what it called a competitive and promotional market.

Nike on Tuesday posted disappointing quarterly sales growth and warned that its holiday season would likely be filled with discounts.

Chief Régis Schultz said: ‘Our success is a direct reflection of the strength and agility of our global multi-brand strategy, which allows us to adapt quickly to rapidly changing industrial trends around the world, and of our excellence operational.

“This ensures we continue to offer an industry-leading customer proposition, both in-store and online.”

Brent crude oil prices have risen 4.8 percent in the past 24 hours to $74.61, as investors fear a further escalation of the conflict in the Middle East could restrict oil supplies from the region.