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London open: Weak retail sales data weigh on Footsie
London stocks dipped lower in early trading following the release of weaker than expected data on UK retail sales for August.
The FTSE 100 was trading off by 5.16 points to 6,864.32 as of 0835 BST, even as most European equity benchmarks moved slightly higher.
“With the worst of the quiet summer period now behind us and US traders returning from the bank holiday weekend, we can expect to see trading volumes pick up significantly this week, just in time for a number of key central bank events. Between BoE Governor Mark Carney’s appearance before the Treasury Select Committee on Wednesday, the Bank of Canada decision shortly after and the ECB on Thursday, we’re certainly not short of market moving events this week,” said Craig Erlam, senior market analyst at Oanda.
Trading on the main Asian bourses overnight was generally upbeat, with the Shanghai Stoxk Exchange´s Composite Index gaining 0.61% and Tokyo´s Topix advancing 0.65%.
Like-for-like retail sales in Britain fell back sharply in August, at a 0.9% year-on-year clip (consensus: 1.1%), according to the British Retail Consortium.
“August’s BRC report shows that consumer spending is not as resilient to the consequences of the Brexit vote as July’s official retail sales figures implied.
“It appears consumers shifted some non-food spending from August to July, perhaps due to July’s good weather. Still, the average year-over-year growth rate of BRC sales in the two months since the referendum, 0.8%, is below the average of the previous twelve months, 1.2%,” said Pantheon Macroeconomics´s chief UK economist Samuel Tombs.
Acting as a backdrop, some market commentary was highlighting the recent rise in US dollar interbank rates (LIBOR) and how that has been prompting Chinese corporates to pay back loans denominated in the American currency, thus weakening the yuan.
On the economic calendar, Markit’s US services PMI was scheduled for release at 1445 BST, while the ISM´s own non-manufacturing gauge was expected at 1500 BST.
“The services sector is hugely important to the US economy and so this data offers important insight into how the main engine of growth is likely to perform in the months ahead. While the number is forecast to remain solid for another month – at 55 – the trend of slowing growth that we’ve seen over the last year is expected to continue,” Erlam added.
In corporate news, FTSE 100 listed budget airline EasyJet increased passenger numbers by 6.4% in August, compared to the same month the previous year, as the load factor, the number of passengers as proportion of the number of seats available, increased by 0.5%.
For the rolling 12 months ended 31 August passenger numbers were up 6.8% as the load factor also rose by 0.4%.
Housebuilder and property developer Berkeley Group issued an interim management statement for the period from 1 May to 31 August on Tuesday, as investors gathered for its annual general meeting.
The firm said it entered 2016/17 with record cash due on forward sales of £3.25bn and future estimated land bank gross margin of £6.15b, respectively.
FTSE 250 housebuilder Redrow reported a jump in pre-tax profit for the full year as revenue grew and the company lifted its dividend.
For the year to the end of June, pre-tax profit was up 23% to £250m on revenue of £1.38bn, up 20% from the year before. Legal completions rose 17% and the company upped its full-year dividend to 10p from 6p.
Cycling and motoring retailer Halfords increased revenue due to growth in bike sales and a recent acquisition. For the five months ended 19 August, revenue increased by 4.8% as retail revenues rose 4.8%, while those from autocentres jumped 4.6% when compared to the same period last year. Services related sales grew 13.9%.
Like-for-like revenue grew 1.2%, split between a 1.1% gain in like-for-like revenues for retail and a 1.8% increase at autocentres.
Ashmore’s full-year revenues and assets under management came under pressure during the company´s last financial year, even as management sounded an optimistic note on the prospects for the emerging market space.
