It was a bad ending to a mostly bad week of London equity trading, as disappointing UK retail sales data sent the pound plunging to lows not seen in decades.
This paints a bleak picture of the UK economy, ahead of a slew of interest rate decisions next week, including from the Bank of England on Thursday.
“Investors have become increasingly nervous about the scale and pace of interest rate increases after the recent surge in inflation data and next week we have some serious decisions to make from some of the banks.” major plants,” said Russ Mould, chief investment officer at AJ Bell.
The US Federal Reserve reveals its interest rate decision on Wednesday, the Bank of England will announce its own decision on Thursday.
The FTSE 100 Index closed down 45.39 points, or 0.6%, at 7,236.68 on Friday, ending the week down 1.6%.
The FTSE 250 ended down 89.18 points, or 0.5%, at 18,797.14; ended the week down 2.0%. The AIM All-Share closed down 4.10 points, or 0.5%, at 863.28, ending the week down 2.0%.
The Cboe UK 100 ended down 0.7% at 722.77, the Cboe UK 250 closed down 0.4% at 16,187.94 and the Cboe Small Companies ended down 0.7% at 12,693.84.
UK retail sales slumped in August amid cost-of-living pressures on consumers, figures from the Office for National Statistics showed.
Retail sales fell 1.6% month-on-month, much worse than the expected 0.5% decline, according to consensus cited by FXStreet. This reversed a 0.4% rise in July.
The ONS said the August data continued ‘a downward trend from the summer of 2021 following the lifting of restrictions on hospitality; In recent months, rising prices and cost of living are also affecting sales volumes.’
All major sectors (food, non-food, non-store retail, and food) fell during the month, something that has not happened since July 2021, when all Covid restrictions on hospitality were lifted.
The pound was trading at $1.1431 at the close of the London Stock Exchange on Friday, down from $1.1494 at the close on Thursday. Around noon, the British pound was trading at its lowest level since 1985 against the dollar.
In European stocks on Friday, the Paris CAC 40 ended down 1.3%, while the Frankfurt DAX 40 ended down 1.7%.
The eurozone’s annual inflation rate was confirmed at a new high of 9.1% in August.
According to Eurostat, the single currency bloc’s annual inflation rate accelerated to 9.1% in August from 8.9% in July. The figure was in line with a previous estimate.
The annual inflation rate has increased for four months in a row. It stood at 3.0% in August 2021.
The European Central Bank targets an annual inflation rate of 2%.
The euro was at $1.0025 at the close in European stocks on Friday, versus $0.9996 at the same time on Thursday.
Against the yen, the dollar was trading at JP¥142.93 on Friday night, down from JP¥143.36 on Thursday night.
On the FTSE 100, Sports Direct owner Frasers fell 1.9% after MySale Group said the company’s £14m takeover bid was too low.
At two pence a share, MySale said the offer was the lowest Frasers could have offered, under City rules.
Frasers in June acquired just a 29% stake in MySale. It is currently attempting to take full ownership of the online retailer.
Shares of AIM-listed MySale soared 14% as the offering closed.
On the FTSE 250, Royal Mail fell 7.4% as the postal and courier services company denied allegations that the company is in talks with a private equity group about a takeover.
He said the allegations were made by Dave Ward, general secretary of the Communications Workers Union.
The CWU is the main union for the telecommunications and postal delivery industries in the UK. Union members launched a strike against Royal Mail on Thursday, in a worsening dispute over wages and conditions.
A Royal Mail spokesman said: “The irony is that by taking its members on strike and refusing to discuss the changes needed to modernize Royal Mail, Dave Ward is increasing the possibility that we will become a takeover target, precisely the CWU is now telling its members to fear.’
Elsewhere in London, Capita jumped 13% with a contract extension with Barnet Council and the sale of its Pay360 subsidiary to Access PaySuite.
The London-based outsourcing services secured a contract extension with North London Council worth £42.7m. However, with indexing and possible additional work, the contract could be worth up to £57m, he added.
From its sale of the Pay360 payments business, Capita expects to receive gross proceeds of £156m.
Stocks in New York were in the red at the close for London stocks, with the Dow Jones Industrial Average down 1.0%, the S&P 500 Index down 1.3% and the Nasdaq Composite down 1.6%.
Brent oil was trading at $92.24 a barrel at the close of the London stock exchange on Friday, down from $90.04 late Thursday.
Gold was trading at $1,677.01 an ounce at the close of the London Stock Exchange on Friday, down from $1,667.03 at the close on Thursday.
On Monday, London’s financial markets will be closed for the state funeral of Queen Elizabeth II.
Markets in Japan will be closed for Respect for the Aged Day.
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