FTSE Heads Lower As Covid Fears Overshadow Retail Sales

Following on from a weak performance on Wall Street overnight and a mildly stronger effort in Asia, European bourses are heading southwards on the open.

Charts (5)

Following on from a weak performance on Wall Street overnight and a mildly stronger effort in Asia, European bourses are heading southwards on the open. Indices are mildly in the red as markets take stock of a week which has seen coronavirus cases rise steeply in Europe and central banks sit on their hands for another month.

The FTSE is lagging behind its European peers as fears of a second lockdown overshadow upbeat retail sales. As the number of new daily covid cases continues to rise, the health secretary has refused to rule out a second national lockdown. His comments come as the government’s test and trace system is “barely functional” and as almost 11 million people are facing enhanced lockdown measures. Airlines, travel stock and retailers are under pressure.

UK retail sales are on the rise for the 4th straight month, rising +0.8% MoM in August, down from July’s 3.6% surge but ahead of 0.7% expected. Britain’s newfound love for DIY continued in August with spending on DIY and household goods reporting strong growth, offsetting lacklustre clothes sales, which highlight the ongoing struggles that our High Street retailers face. 

Oil surges across the week
Oil prices have seen their fair share of volatility this week. A combination of inventory draws, Hurricane Sally stopping and starting production, demand concerns have played with the price. WTI is on track for gains of over 10% and Brent exceeding 9%. The latest drive higher in prices comes after OPEC cracks down on non -member states. OPEC urged members to conform with production cuts in its online meeting.

US consumer confidence
Looking ahead the economic calendar is fairly quiet, with US consumer confidence expected to show an increase to 75 in September, up from 74.1. This would be some welcomed good news after the slew of disappointing numbers stateside yesterday. With Congress seemingly still considerable distance from agreeing an additional rescue package, any signs of consumer confidence slipping could negatively impact of sentiment. 


More from FTSE 100

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.