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.