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- FTSE 100 up 16 points
- Bunzl (LON:BNZL) soars
- BP (LON:BP), Shell (LON:SHEL) climb after oil prices surge
Retail sales fall for third successive month
Confederation of British Industry (CBI) data on Tuesday morning showed retail sales have fallen for a third successive month in August.
Some 27% of retailers reported lower sales in August, the CBI reported, against 43% in July and above expectations for 11%.
Sentiment amongst retailers weakened in August, with firms expecting their business situation to deteriorate moderately over the next three months #DTS pic.twitter.com/kS1rzCFxiU— CBI Economics (@CBI_Economics) August 27, 2024
Despite moderating, this marked the second-weakest reading since April, with the CBI adding retailers expected another decline in September.
“Retail sales volumes continued to disappoint in the year to August, with contractions also being seen in the wholesale and motor trade sectors,” CBI economist Martin Sartorius commented.
“Retailers reported increased caution regarding their investment and hiring plans, which seemed to reflect concerns about persistently weak demand conditions.”
Primark owner, housebuilders weigh on FTSE 100
The FTSE 100 gave up gains seen earlier in the day on Tuesday, as Primark owner Associated British Foods (LON:ABF) and housebuilders looked to weigh on the index.
ABF moved 2.4% lower following a downgrade by Deutsche Bank (ETR:DBKGn) analysts earlier in the day to sit among the day’s biggest fallers.
Deutsche pushed ABF from a ‘hold’ to a ‘sell’ rating, noting “the Primark margin recovery story has played out” and profitability at subsidiary British Sugar looked set to decrease.
Housebuilders also weighed on the index in the meantime, with Berkeley Group Holdings PLC (LON:BKGH) (LSE:BKG) leading fallers, as Vistry Group (LON:VTYV) PLC (LSE:VTY), Barratt Developments PLC (LSE:LON:BDEV), Persimmon PLC (LSE:LON:PSN) and Taylor Wimpey PLC (LSE:TW.) also dipped after gains in recent weeks.
Come mid-morning, the FTSE 100 was 9 points up at 8,336.
easyJet soars as Ryanair reassures on fares
easyJet PLC (LON:EZJ) soared over 4% to sit among the FTSE 100’s biggest risers on Tuesday morning after low-cost peer Ryanair Holdings PLC (LSE:RYA) reassured on falling fares.
Ryanair (LON:0RYA) boss Michael O’Leary said in an interview that fares would likely fall closer to 5% this summer, against anticipations last month of a 10% drop.
He had previously warned of an “ugly scenario” for carriers, but told Reuters on Tuesday such a situation “looks like it has disappeared”.
“While fares were kind of softening during April, May and June, that has levelled out,” he added.
Peel Hunt (LON:PEEL) analysts said easyJet and British Airways-owner IAG (LON:ICAG) would likely outperform Ryanair this year, despite its reassurances.
“We anticipate that the indication [...] fares would fall is likely to see the group report much a worse yield performance than its UK-listed peers,” Peel Hunt said on Ryanair.
easyJet climbed 4.4% to 467.70p on Tuesday, while Ryanair ticked up almost 6% to €16.01.
Hobbycraft scooped up by retail investor Modella
Hobbycraft has changed hands for an undisclosed fee after 14 years of ownership by Bridgepoint.
Specialist retail investor Modella was confirmed to have taken over the arts and crafts retailer on Tuesday, after Hobbycraft had been put up for sale in February.
Under Bridgepoint, Hobbycraft grew from 47 stores in 2010 to 124 today, with some 2,000 staff now employed by the retailer.
Modella managing director Joseph Price said the firm would continue “accelerating the team’s growth strategy through investment in [...] physical footprint”.
“[This displays] a real commitment to bricks and mortar retail,” he added, after Britain’s highstreets have come under pressure in recent years following the pandemic and cost of living crisis in quick succession.
Surging copper prices aid miners
Copper was also among commodities to surge early on in the week, aiding gains for miners as iron ore prices also looked to return to growth.
At US$4.29 a pound, copper sat at its highest since mid-July on Tuesday morning as optimism around a US base rate cut soon remained following Fed chair Jerome Powell’s Jackson Hole speech last week.
Anglo American (JO:AGLJ) and Rio Tinto (LON:RIO) remained among the FTSE 100’s risers on Tuesday morning, also aided by an improving outlook for iron ore on falling stockpiles in China.
Germany economy confirmed to have shrunk
Official data on Tuesday morning confirmed that the German economy shrunk over the second quarter compared to the first.
The Federal Statistical Office Destatis said gross domestic product contracted by 0.1% quarter-on-quarter in its final report for the period.
ING economists noted the fall was due to “weak private consumption and plunging activity in the construction sector”.
The contraction followed a 0.2% uptick over the first quarter, with a 2% drop in investment over the latest three months offsetting an increase in government consumption.
“With disappointing second-quarter growth and almost all confidence sentiment indicators pointing south, the German economy is currently back where it was a year ago: stuck in stagnation as the growth laggard of the entire eurozone,” ING added.
The pound ticked up 0.14% against the euro on the back of the data to reach €1.1832.