European Market Open: UK retail sales down but consumer confidence growing

European markets are expected to open largely lower today as investors prepare for PMI data this morning, following UK consumer confidence and retail sales figures released this morning.

Downtrend 3

  • G7 leaders to hold a virtual meeting today to discuss vaccines, the global economic recovery and the challenges posed by China.
  • UK consumer confidence has risen to its highest level since the pandemic began, while retail sales plunged in January after the country re-entered lockdown after the holiday season.
  • Facebook continues to draw criticism for its news blackout in Australia, while Uber is waiting for the UK Supreme Court to make a landmark ruling on the gig economy today.
  • The recent rally in oil prices has ended, as concerns about reduced demand and increased supply weigh on prices.
  • The economic calendar is dominated by PMIs from Europe, the UK and the US.


FTSE 100 to open lower

The FTSE 100 is set to open 0.5% lower this morning at 6299.6.


European markets struggle to find higher ground

France’s CAC 40 is set to open 0.2% lower at 5737.5.

Germany’s DAX is called to open broadly flat today at 13928.0.

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UK retail sales plunged after country re-entered lockdown

UK retail sales were 8.2% lower in January than in December as the country re-entered lockdown after the holiday season.

The Office for National Statistics said volumes were down in every sector except for online retailers and food stores. Notably, all sectors say an increase in the proportion of sales being made online, with online food sales reaching a new all-time record high.

‘Retail sales volumes were 5.5% lower than before the pandemic in February 2020 indicating that the impact of restrictions on the retail sector was not as large as that seen in April 2020 during the first full month of retail restrictions when sales fell by 22.2% when compared with levels before the pandemic,’ the ONS said.


UK consumer confidence grows to highest level since pandemic erupted

UK consumers have never been as confident about the economy since the coronavirus pandemic erupted last year, the latest survey from GfK showed, boosted by hopes that the country’s successful vaccine programme will allow the economy to reopen quicker this year.

The latest survey said consumer confidence rose to -23, thanks to a 14-point rise on hopes about the economy recovering over the next 12 months. That was also better than the -27 expected by economists, according to a Reuters poll. That is the best score since the pandemic erupted but below the -7 reported in February 2020, a month before lockdown was introduced.

‘We need to be cautious because the positive tailwinds of the vaccination roll-out are being met by the very strong headwinds of unemployment, the threat of inflation and the difficulty that many face in affording day-to-day living costs,’ said GfK’s client strategy director Joe Station.


Pandemic a priority as G7 leaders prepare to hold virtual meeting

The UK will host a virtual meeting of G7 leaders today, as prime minister Boris Johnson leads a meeting with leaders from the EU, the US, Canada, France, Germany, Italy and Japan.

The top topic of discussion, which will occur at 1400 GMT, will be the response to the pandemic and the rollout of vaccines and how the global community should work together to get the global economy back up and running. The leaders will also discuss how richer countries can help poorer ones access jabs.

It will also provide an opportunity for new leaders, namely US president Joe Biden and Italian prime minister Mario Draghi, to make their debut at a global meeting. Biden is reported to be keen to discuss the challenge posed by China.

The formal G7 summit is to be held in Cornwall this June, when leaders from Australia, India and South Korea will also attend as guests.


Robinhood CEO denies allegations in GameStop testimony

Vladimir Tenev, the chief executive of commission-free trading app Robinhood, has denied wrongdoing during his testimony to a committee of the House of Representatives investigating the Reddit rally last month that caused wild price movements in stocks like GameStop.

Robinhood was facing questions about why it halted trading on certain stocks and whether it was being influenced by the hedge funds it does business with. Tenev denied any wrongdoing, said the company was not influenced by outsiders, and that trading had to be briefly suspended solely to meet regulatory capital requirements.

Tenev admitted the suspension of trading ‘can’t happen again’ and apologised to customers, but refuted any claims the company actively looked to put small retail traders at a disadvantage to the big hedge funds.

‘Any allegation that Robinhood acted to help hedge funds or other special interests to the detriment of our customers is absolutely false and market-distorting rhetoric,’ Tenev said.


Australia undeterred by Facebook news blackout

Australia’s prime minister Scott Morrison has said the country will move ahead with plans to introduce new laws requiring Facebook and others to pay news outlets for content, despite the social media platform removing all news from its feeds yesterday.

Morrison said leaders from the UK, Canada, France and India had all voiced their support for the country and said there ‘is a lot of interest in what Australia is doing’.

‘That is why I invite ... Facebook to constructively engage because they know that what Australia will do here is likely to be followed by many other Western jurisdictions,’ the prime minister warned.

You can read our complete guide to Facebook here, and discover more about the increasing regulation facing Big Tech at home and abroad here.

Separately, Facebook was facing further criticism after its messaging app Whatsapp said it would go ahead with its new privacy policy despite criticisms that it will allow certain data to be shared with other firms in its portfolio.


Uber faces UK Supreme Court ruling on gig economy workers

The UK Supreme Court is due to make a landmark decision on Uber’s gig workers today, potentially setting a precedent for the wider industry here and abroad.

A London employment tribunal ruled in 2016 that gig workers should receive minimum rights such as holiday pay and minimum wage but Uber has appealed the ruling for years. The Supreme Court is due to make a decision at 0945 GMT.

Uber drivers, alongside many other gig workers, are classed as self-employed and therefore not offered the same protections offered to standard employees. The ruling could have a major impact not just on Uber but all sorts of companies that utilise gig workers. Europe is thought to be watching closely considering it too is considering what to do with the gig economy.


Forex: Will cable break through 1.40?

GBP/USD was trading slightly lower this morning after rallying yesterday, trading at 1.39696. Analyst Joe Perry has a look at whether GBP/USD can break through the 1.40 mark and what could happen to cable afterwards.

EUR/GBP was up 0.1% this morning at 0.86578 as it rebounds from hitting fresh lows during trade yesterday.

Meanwhile, EUR/USD was broadly flat this morning at 1.20946.

Start trading the opportunities in the forex market today.


Commodities: Oil prices fall from recent highs

The recent rally in oil prices has peaked as they lose ground on concerns that the cold snap in Texas will reduce demand from refineries in the US oil-rich state while OPEC+ is expected to increase output over the coming months, pumping further supply into the market.

Although Texans are hoping for warmer weather by this weekend, it is expected to be some time before refineries and other operations return to normal. While millions of barrels of oil in daily production is being lost right now, a longer shutdown of refineries is expected to reduce demand even more.

Brent was trading down 0.5% this morning at $62.95 a barrel while WTI was down 0.8% at $59.78.

Analyst Joe Perry conducts some technical analysis on WTI after it dipped back below the $60 threshold.

The Baker Hughes US oil rig count, which shows the level of drilling activity in the country, is due out at 1800 GMT.

Start trading the volatility in oil markets today.

Gold traded down 0.2% this morning at $1772 per ounce, while silver was down 0.5% at $26.90.


Economic calendar: key events to watch out for today

Today’s economic calendar is all about preliminary PMIs. France goes first at 0815 GMT, then Germany at 0830 GMT, followed by the wider eurozone at 0900 GMT and the UK at 0930 GMT, and then the US at 1445 GMT.

Elsewhere, the Bank of England’s Gertjan Vlieghe will be giving a speech at 1200 GMT. There is also Canadian retail sales pencilled in for 1330 GMT and a speech from the US Fed’s Eric Rosengren at 1500 GMT.

Look at all the scheduled events for today using our economic calendar, and stay up to date with the latest news and analysis here.


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