The FTSE 100 and 250 closed in the red on Friday, as this week’s US interest rate cut was offset by a disappointing consumer confidence reading.
The FTSE 100 index closed down 98.73 points, or 1.2%, at 8,229.99. The FTSE 250 ended down 330.87 points, or 1.6%, at 20,831.84, and the AIM All-Share closed down 0.3%, or 2.46 points, at 745.62.
The Cboe UK 100 ended down 1.2% at 823.77, the Cboe UK 250 closed down 1.6% at 18,361.41, and the Cboe Small Companies ended up 0.2% at 16,774.91.
According to the Office for National Statistics on Friday, UK retail sales volumes rose 1.0% in August from July, beating FXStreet-cited consensus of 0.4%. They had risen 0.7% in July from June. That reading was upwardly revised from 0.5%.
Year-on-year, retail sales climbed 2.5% last month, picking up speed from a 1.5% climb in July.
But GfK’s Consumer Confidence Index fell seven points in September to minus 20, with significant drops in predictions for personal finances and the general economy over the coming year.
Expectations for the general economy over the next 12 months fell by 12 points to minus 27, while the forecast for personal finances is down nine points to minus three.
The major purchase index, an indicator of confidence in buying big ticket items, is down 10 points on last month to minus 23, five points higher than a year ago.
This turn in confidence, AJ Bell’s Russ Mould warned, could be a sign of things to come.
‘Chancellor Rachel Reeves’ regular warnings of ’difficult decisions’ in the Budget will be carrying increasing weight after new figures showed public debt as a share of the economy had reached 100% for the first time since the 1960s,’ Mould said.
‘The last time debt was at this level and still rising, in March 1941, Winston Churchill had just dubbed German attacks on the country’s imports and maritime communications as the Battle of the Atlantic.’
Optimism about ‘blockbuster’ retail sales is thus likely to have been tempered ‘by the very weak consumer data’, Mould added.
‘This suggests the government’s downbeat messaging about the economy might become a self-fulfilling prophecy and that last month might be as good as it gets for retail. It will certainly be prompting nervousness among British shopkeepers ahead of their ’Golden Quarter’ in the run-up to Christmas.’
In European equities on Friday, the CAC 40 in Paris ended down 1.5%, while the DAX 40 in Frankfurt ended down 1.5%.
In Germany, house and flat prices in Germany appear to be stabilising after significant declines.
While residential property prices fell by 2.6% year-on-year in the second quarter, they rose by 1.3% compared to the first quarter.
‘This is the first increase compared to a previous quarter since the second quarter of 2022,’ the Federal Statistical Office said.
Weighing on the DAX 40, however, shares in Mercedes fell 6.8% after a profit warning after the European market close on Thursday.
Mercedes cut its year-end guidance noting a ‘further deterioration of the macroeconomic environment, mainly in China’.
The Stuttgart, Germany-based carmaker now expects group adjusted return on sales between 7.5% and 8.5%, down from a previously projected 10% to 11% range.
The pound was quoted at $1.3307 at the London equities close on Friday, up compared to $1.3268 at the close on Thursday.
The euro stood at $1.1164 at the European equities close on Friday, against $1.1145 at the same time on Thursday.
Against the yen, the dollar was trading at JP¥143.85, up compared to JP¥142.94 late Thursday.
The Bank of Japan enacted a ‘doveish hold’ on Friday, pushing out market expectations for its next hike as it left borrowing costs at 0.25%, a policy decision that came as no shock to the market.
Japan’s story differs from other major economies that have lifted interest rates to historic highs to tackle inflation. After decades of battling deflation, the goal has been to get inflation developing sustainably to the BoJ’s 2% target.
Numbers on Friday showed the rate of annual consumer price inflation picked up to 3.0% in August, from 2.8% in July. Excluding fresh food, the pace of yearly price growth accelerated to 2.8% from 2.7%.
Stocks in New York were lower at the London equities close, with the DJIA down 0.2%, the S&P 500 index down 0.3%, and the Nasdaq Composite down 0.4%.
US President Joe Biden will host the leaders of Australia, Japan and India at his Delaware home this weekend to bid farewell to the so-called ‘Quad’ group that he has pushed as a counterweight to China.
Biden chose his hometown of Wilmington for the summit of the four-nation group – the last of his presidency after he dropped out of the 2024 election against Donald Trump and handed the Democratic reins to Kamala Harris.
He will hold one-on-one meetings, starting with Australian Prime Minister Anthony Albanese on Friday night and continuing Saturday with Indian Prime Minister Narendra Modi and Japanese Prime Minister Fumio Kishida.
Biden will then host an ‘intimate’ dinner and full four-way summit on Saturday at his former high school in the city. Vice President Harris will not be attending, the White House said.
China was expected to feature heavily in their discussions amid tensions with Beijing, particularly a series of recent confrontations between Chinese and Philippine vessels in the disputed South China Sea.
Brent oil was quoted at $74.43 a barrel at the London equities close on Friday, down from $75.05 late Thursday.
The People’s Bank of China on Friday left interest rates unchanged. The central bank left its one-year loan prime rate unchanged at 3.35%.
It was a move that surprised some, as the world’s second-largest economy is ailing.
Meanwhile, renewed tensions in the Middle East impacted oil prices, stoking fears of a wider war in the region.
Hezbollah leader Hassan Nasrallah said on Thursday that the back-to-back blasts of electronic devices across Lebanon amount to ‘a declaration of war’, AFP reported.
Gold was quoted at $2,622.00 an ounce at the London equities close on Friday, against $2,585.15 at the close on Thursday.
The yellow metal on Friday hit a historic high of nearly $2,614 an ounce for the first time ever. Gold has risen 27% year to date.
This week, the precious metal climbed above the $2,600 level in a historic move precipitated by the reduction in US interest rates. The US Federal Reserve on Wednesday cut its lending rates by 50 basis points.
In Monday’s UK corporate calendar, there are half-year results from Alphawave IP Group, B90 Holdings, Dianomi, Mirriad Advertising, Oxford Biomedica, and SpaceandPeople. There are also full-year results from Transense Technologies.
The economic calendar has a handful of flash composite PMIs from France, Germany, the UK, and the eurozone, as well as from the US later in the day.
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