The FTSE 100 (^FTSE) finished the week on a low on Friday, as July's retail sales data from the UK missed expectations.
Poor weather meant lower footfall particularly in supermarkets, meaning sluggish sales for both clothing and food, according to the Office for National Statistics (ONS). Retail sales fell by 1.2% in July, following a 0.6% rise in June.
Retailers indicated that the increased cost of living and food prices continued to affect sales volumes.
"The wet weather did mean a good month for online retailing, as discounting plus consumers shopping from the comfort of their homes boosted sales," commented ONS deputy director for surveys and economic indicators Heather Bovill.
Shoppers switching to online shopping because of poor weather and increased promotions led to 27.4% of retail sales taking place online in July, up from 26.0% in June 2023; this is the highest proportion since February 2022.
"Retailers will be starting to look ahead to the peak shopping season as Black Friday sales and Christmas loom. Supply chains are tight and currency volatility remains so businesses will need to ensure they are well-prepared to capitalise on the hoped-for rebound in shopper activity," said Phil Monkhouse, head of sales at global financial services firm Ebury.
The pound (GBPUSD=X) was hovering above the $1.27 mark.
The FTSE was around 1.2% lower by the afternoon before recovering to around 0.7% lower, compounding losses from the day before. The DAX (^GDAXI) in Germany was also down 7% and the CAC (^FCHI) in Paris lost 0.5%.
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We round off the day with a small update on the dollar from IG's Axel Rudolph, senior market analyst:
The greenback benefitted from flight-to-safety flows amid China's woes and has seen five consecutive weeks of gains, the most since May 2022. This in turn has led to the gold price hitting a five-month low while U.S. long dated yields rallied to levels last seen during the 2008 financial crisis. Investors wonder whether next week's Jackson Hole symposium could add fuel to the fire."
The latest on crypto by yours truly:
Bitcoin was trading as low as $25,409 on Friday. Photo: Omar Marques/SOPA Images/LightRocket via Getty Images
Where there's a Wilko there's a way?
The Press Association has news on the potential fate of beleaguered discount store Wilko.
GMB Union said there are "grounds for hope" on its rescue.
“GMB has met with administrators and the company as part of the formal consultation process,” said Andy Prendergast, GMB national secretary.
“We can confirm there have been expressions of interest from organisations who are considering taking over at least some parts of the business.
“These are still at an early stage, but means there are genuine grounds for hope.
“Whilst this process continues staff will continue to be paid and kept on. All stores are continuing to trade, and deliveries of new stock will continue.”
AJ Bell investment director Russ Mould is, in part, putting market volatility down to Chinese property giant Evergrand filing for bankruptcy.
Here's his take:
News China real estate giant Evergrande has filed for bankruptcy protection in the US would have prompted some alarm in isolation but when you combine it with its peer Country Garden’s decision to suspend payments on some of its bonds and the words ‘dominos’ and ‘falling’ start to come to mind.
China-exposed stocks on the FTSE 100 like Prudential and the miners are taking heat on Friday morning, helping to put the index on course for yet another down day. The FTSE is currently demonstrating all the pep and get up and go of a teenager at 8am on a school day.
Later on today we'll get EU inflation data which is bound to move markets. Right now indices across the world are looking distinctly rouge. If the US and UK's readings are anything to go by Europe will be lucky to escape another wobbly print.
Chart: Yahoo Finance UK
Here's what the pound is doing against the dollar in early trade. It's been flirting with the $1.27 mark all week. We have to remember that earlier in the month it was trading as high as $1.31.
Overnight in the US and Asia
Stocks in both the US and Asia finished in the red overnight as markets continue to feel the knock-on impact of minutes from the Federal Reserve, which suggested more rate hiking is in store.
Asia is also still jittery amid concerns of stagnating growth in China reflected across multiple data points and a lack of action from the government. This has led to worries about debt defaults.
Japan's Nikkei (^N225) was down 0.6%, the SSE Composite (000001.SS) closed 0.8% lower and Hong Kong's Hang Seng (^HSI) lost 1.8%. The Hang Seng has suffered its worst week since June, losing around 5% in the last five trading days.
US Treasury yields had risen to 15-year highs yesterday amid concerns of a recession.
Morning! Yet more data to dig through from the Office for National Statistics today to kick us off. It's a grey day in London, so let's begin.
Watch: Bigger than expected drop in retail sales after July's wet weather