B&M 5% lower on CEO exit plans, M&S falls 3%
Signs that US policymakers are preparing to move more quickly on tightening monetary policy put pressure on European markets today.
Indices in Paris and Frankfurt fell by about 1.5%, although the impact of the weaker pound on overseas earning stocks offered some protection in London as the FTSE 100 index declined by a more modest 0.6% or 46.92 points to 7581.03.
The concerns over US interest rates rising faster than expected were felt by tech-focused growth stocks such as Scottish Mortgage Investment Trust, which dropped 2%.
B&M European Value Retail slid by the most in the FTSE 100 after it emerged that Simon Arora intends to retire after 17 years running the business.
A regional chain of only 21 stores when it was acquired by Simon and brother Bobby Arora in December 2004, B&M now has over 1,100 stores across the UK and France. Shares dropped 5% or 26.4p to 523.6p.
The FTSE 250 index fell 0.5% or 106.35 points to 21,053, with consumer reviews business Trustpilot down 5% and Marks & Spencer off 3% after today’s weak retail sales figures.
In contrast, Homeserve shares jumped 10% after it said last night that it had entered into discussions with Canada’s Brookfield Infrastructure about a potential takeover.
Retail sales weakness hits sterling
Today’s weaker-than-expected retail sales figure put more pressure on sterling, which fell 0.6% to a fresh 15-month low of 1.295 against the US dollar.
Until there’s clarity from the Bank of England on its approach to interest rates, CMC Market analyst Michael Hewson warned that a move towards 1.2800 looked possible.
He said: “This has become much more likely given the perception that the Federal Reserve seems more determined to squeeze down on inflation much harder.”
Hewson said today’s figures may deepen the split between Bank of England policymakers who want to see rates rise by half point and those preferring a more cautious approach.
He added: “The central bank has an unenviable task this summer, facing an inflation problem that it is behind the curve on, and having to consider raising rates further into the teeth of an economic slowdown.”
Consumer confidence near record low
Consumer confidence is near a record low as the cost of living crisis hits home, the closely-watched monthly barometer produced by GfK revealed today.
The headline figure from GfK decreased seven points to minus 38, while the scores looking at the next 12 months for personal finances at -26 and the general economy at -55 are worse than the 2008 financial crash.
The survey’s Major Purchase Index also fell eight points to minus 32 as the current conditions prompt more Britons to think twice about their spending.
GfK client strategy director Joe Staton said: “When rising inflation and interest rates meet low growth and declining incomes, consumers will understandably be extremely cautious about any spending.”
Wall Street spooked by rate rise outlook
The prospect of US interest rates rising by a half percentage point when Federal Reserve policymakers meet next month has sent a shiver through global markets.
Fed chairman Jerome Powell’s signalling of an aggressive stance on tightening monetary policy was hardly a surprise, but his comments to an IMF panel still provided the trigger for a big Wall Street sell-off after European markets had closed.
The Dow Jones Industrial Average lost earlier gains to finish 1.1% lower and the tech-heavy Nasdaq fell 2.1% after Powell said a half point increase was on the table as part of the Fed’s policy of “front-end loading” the fight against inflation.
This fuelled concerns among traders that the Fed might go harder for longer, with another two half percentage points hikes by the end of the summer.
Wall Street’s weakness means Europe markets are set to fall sharply, with CMC Markets forecasting that the FTSE 100 index will open 98 points lower at 7530.
Powell’s comments contributed to downward pressure on the price of oil, with Brent crude more than 1% lower at just under $107 a barrel this morning.