Stock News Highlights
Weekly round up
Volatility has certainly been the theme of 2022 so far and this week was no exception with the FTSE 100 Index rallying and falling throughout the week, gaining 1% to end the week around the 7,400 point level.
Retail sales unexpectedly rose 1.4% month-on-month in April, rebounding from falls in the previous two months and beating market forecasts of a 0.2% fall. Increases were seen in sales at food stores of 2.8%, namely alcohol and tobacco in supermarkets, non-food retailers increased 3.7%, namely clothing, and automotive fuel sales rose by 1.4%.
The latest data showed the UK annual inflation rate hit 9%, the highest since 1982 due to April’s big rise in energy bills, another sign consumers’ living standards continue to be squeezed. The British pound fell below $1.25 as investors continued to worry over stagflation and the risk of a recession. The Bank of England Governor, Andrew Bailey, said the current surge in inflation was the Central Bank’s biggest challenge since it gained independence in 1997.
The GfK Consumer Confidence index in the United Kingdom hit a new low of -40 in May 2022, surpassing the previous record low of -39 set in July 2008, amid growing concern over the cost of living crisis. Consumer confidence is now weaker than in the darkest days of the global financial crisis, the impact of Brexit on the economy, and the Covid shutdown.
In the commodity markets Brent crude futures held around $111 per barrel on Friday and are set to end the week little changed as investors weigh an expected demand recovery in China and a looming EU ban on Russian oil, against fears about a global economic slowdown. Oil demand is expected to rebound in China as authorities in Shanghai lifted some Covid curbs and gave residents freedom to go out to shop for groceries for the first time in nearly two months. The EU also proposed this month a total ban on oil imports from Russia, with approval being delayed due to a holdout from some member states.
Gold rose to around $1,845 an ounce on Friday and is headed for its first weekly gain since mid-April as continued softness in US economic data, amid the Federal Reserve’s aggressive monetary tightening, fuelled growth concerns. Fears of a US economic slowdown dragged down the dollar and sent US Treasury yields lower, boosting gold’s safe haven appeal.
US equity futures rose on Friday following another negative session on Wall Street, with the S&P 500 trading close to bear market territory. During Thursday’s regular trading session the Dow Jones Industrial Average fell by 0.78%, the Nasdaq Composite fell 0.78% and the S&P 500 declined 0.58%, now more than 19% below an intraday all time high reached in early January.
Stocks came under pressure this week as disappointing quarterly results from major retailers raised concerns about diminishing margins due to surging inflation and weaker consumer demand. Home sales in the US declined by 2.4% and are down for a third consecutive month, a sign that the housing market is cooling, as higher home prices and mortgage rates have reduced buyer activity. The Federal Reserve has already raised its benchmark policy rate by 0.75% this year and is on track to increase rates further, by 0.5% at each of the next two meetings in June and July. Fed chair, Jerome Powell, has stated that the central bank is intent on using its tools to bring down multi-decade high inflation even if it involves moving past broadly understood neutral levels, increasing the risk of a recession.
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