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London open: Stocks fall as investors mull retail sales, consumer confidence data
London stocks fell in early trade on Friday as investors continued to assess the impact of the latest interest rate hike, with retail sales and consumer confidence data in focus.
At 0840 BST, the FTSE 100 was down 0.3% at 7,478.31.
Matt Britzman, equity analyst at Hargreaves Lansdown, said: “Yesterday’s super-hike to UK interest rates, and the fact there’s likely more to come, continue to play on investors’ minds as they weigh up the impact on corporate earnings.”
Markets participants were also digesting data from the Office for National Statistics, which showed that retail sales unexpectedly rose in May, by 0.3%, following a 0.5% increase in April. Analysts were expecting a 0.2% decline.
Non-store retailing sales volumes rose by 2.7%, mainly thanks to strong sales by online retailers selling outdoor goods and summer clothing. This was boosted by the warm weather in the second half of the month, the ONS said.
Ruth Gregory, deputy chief UK economist at Capital Economics, said: “The further rebound in retail sales volumes in May suggests the recent resilience in economic activity hasn’t yet faded. But we think it’s too soon to conclude the rebound in retail sales will be sustained and the economy will avoid a recession.”
In addition, a survey out earlier showed that consumer confidence continued to push higher in June despite the ongoing cost-of-living squeeze.
The latest consumer confidence index from GfK showed a three-point rise in June to -24. While still in negative territory, the index is now well above the same month a year previously, when it was -41.
It is also the fifth consecutive increase, and the best showing for 17 months.
Within that, the personal financial situation measure for the coming year jumped seven points to -1, while the forward-looking general economic situation rose five points to -25.
The major purchase index, however, dipped a point to -25.
Joe Staton, client strategy director at GfK, said: “Despite the fierce economic headwinds of the cost-of-living crisis, double-digit grocery price increases and the mortgage squeeze severely impacting both homeowners and renters alike, the index improved by three points.
“Consumers are showing remarkable resilience in the face of inflation that is currently refusing to yield.
“If consumers continue to weather the current economic storm, this will provide a firm foundation for getting back to growth.”
The survey was carried out before the Bank of England’s latest decision on interest rates, which saw the Monetary Policy Committee on Thursday up the cost of borrowing by a larger-than-expected 50 basis points, to 5%. Inflation currently stands at 8.7%, unchanged on the previous month.
In equity markets, Ocado was the worst performer on the FTSE 100, having surged on Thursday amid speculation it was a takeover target for Amazon.
Housebuilders were also under the cosh as investors fretted about the impact of surging borrowing costs. Berkeley, Persimmon, Barratt, Taylor Wimpey, Redrow, Crest Nicholson and Bellway all slumped.
On the upside, GSK rallied after the pharmaceuticals group said that a Zantac trial that was due to begin next month in California was dismissed after a confidential settlement was agreed. Haleon also gained on the news.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Gsk Plc | +5.97% | +81.20 | 1,440.20 |
| 2 |  |
British American Tobacco Plc | +1.85% | +48.00 | 2,637.50 |
| 3 |  |
Croda International Plc | +1.47% | +80.00 | 5,532.00 |
| 4 |  |
Pearson Plc | +1.11% | +9.00 | 820.00 |
| 5 |  |
Severn Trent Plc | +0.82% | +22.00 | 2,710.00 |
| 6 |  |
Imperial Brands Plc | +0.74% | +13.00 | 1,767.00 |
| 7 |  |
Hikma Pharmaceuticals Plc | +0.73% | +13.50 | 1,870.00 |
| 8 |  |
United Utilities Group Plc | +0.60% | +6.00 | 1,007.00 |
| 9 |  |
Associated British Foods Plc | +0.59% | +11.50 | 1,948.00 |
| 10 |  |
National Grid Plc | +0.53% | +5.50 | 1,041.50 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ocado Group Plc | -7.50% | -42.60 | 525.20 |
| 2 |  |
Smith (ds) Plc | -3.74% | -10.50 | 269.90 |
| 3 |  |
Berkeley Group Holdings (the) Plc | -3.25% | -126.00 | 3,746.00 |
| 4 |  |
Persimmon Plc | -2.95% | -32.50 | 1,071.00 |
| 5 |  |
Tui Ag | -2.88% | -16.50 | 556.50 |
| 6 |  |
Taylor Wimpey Plc | -2.14% | -2.20 | 100.50 |
| 7 |  |
Bunzl Plc | -2.08% | -63.00 | 2,969.00 |
| 8 |  |
Barratt Developments Plc | -1.98% | -8.30 | 410.00 |
| 9 |  |
Kingfisher Plc | -1.98% | -4.50 | 222.70 |
| 10 |  |
Easyjet Plc | -1.86% | -9.20 | 486.00 |
US close: Stocks mostly higher as investors shrug off Fed concerns
US stock markets saw a mixed but generally positive close on Thursday, largely shaking off earlier jitters.
A 50 basis point rate hike from the Bank of England across the pond was also in focus.
At the close of business, the Dow Jones Industrial Average was nearly flat, down just 0.01%, to settle at 33,946.71 points.
In contrast, the S&P 500 gained 0.37% to close at 4,381.89 points, while the technology-heavy Nasdaq Composite was the day’s top performer, closing up 0.95% at 13,630.61.
In currencies, the dollar saw a slight uptick of 0.01% on sterling to trade at 78.46p, while it witnessed a marginal decrease of 0.01% against the common currency to 91.27 euro cents.
The greenback meanwhile decreased 0.03% against the yen to change hands at JPY 143.06.
“Oil bulls will be fervently hoping for a renewal of seasonal demand, since today’s 2% drop seems to suggest a new leg lower is at hand,” said IG chief market analyst Chris Beauchamp earlier.
“The Bank of England’s renewed love for tighter policy is viewed as a step change among central banks, and the risks for oil demand are clear.”
Job market maintains steadiness amid slight fluctuations in unemployment claims
The tightness in the US job market showed little variation last week, according to the latest data from the US Department of Labor.
The report, which provides an overview of the nation’s employment situation, indicated that initial unemployment claims stayed static at 264,000 for the week ended 17 June.
While the number of new claims filed didn’t change, the count for the previous week was modestly revised upward by 2,000.
Meanwhile, the four-week moving average, which offers a broader and more stable perspective of employment trends, saw a slight uptick.
The measure rose by 8,500 to reach 255,750. This increase suggests a marginal shift in the job market dynamics over the past month.
In terms of secondary unemployment claims – those not being made for the first time and covering the week until June 10 – there was a notable decline.
Those claims fell by 13,000 to a total of 1.759 million.
Tesla rebounds while Boeing faces headwinds
In equities, Tesla saw its shares rise 1.98% despite a downgrade from Morgan Stanley to an ‘equalweight’ rating.
On the other side of the spectrum, Boeing, encountered turbulence with its shares dropping by 3.05%.
This downward movement came after workers at Spirit Aerosystems, a key Boeing supplier, rejected a proposed wage offer and chose to strike.
Friday newspaper round-up: Rail strikes, homeowners, Activision/Microsoft
A fresh round of rail strikes is expected to disrupt national networks during July, after the RMT union announced that 20,000 workers would stage three days of stoppages. The move dashes any hopes of an imminent resolution to a bitter labour dispute that has caused frequent disruption to rail lines across the country throughout 2023. – Guardian
Poor countries will be able to pause their debt repayments if hit by climate disaster, under plans announced by the World Bank at the finance summit in Paris. The international development organisation said it would insert new clauses in any agreements with developing countries, allowing them to suspend debt payments in the case of extreme weather events, starting with some of the poorest and most vulnerable nations.- Guardian
Homeowners are facing three more years of mortgage pain after Andrew Bailey warned that price rises were “much more persistent” than the Bank of England predicted. The Governor of the Bank said decisive action was needed to keep a lid on inflation as policymakers surprised economists with a 0.5-point increase in interest rates to 5pc. Mr Bailey said: “The economy is doing better than expected, but inflation is still too high and we’ve got to deal with it.” – Telegraph
Buying Activision Blizzard would hand Microsoft the ability and incentive to damage competition, America’s top watchdog claimed at the start of a courtroom showdown. The technology company denied the allegation as it fights to save the $68.7 billion takeover, its biggest acquisition to date and the largest yet in the video games industry. It countered that the deal would be “good news for consumers”. – The Times
The former boss of Vodafone who was ousted after failing to revive the struggling telecoms group and its share price was paid almost £4 million last year. Nick Read, 58, whose departure was announced in December after four years in charge, received almost £3.9 million last year, including a £900,000 annual bonus. He also was paid about £270,000 in the first three months of this year when he was an adviser to the board and will be paid more than £730,000 over the remainder of his 12-month notice period. – The Times
