FTSE 100 Live April 22: Retail sales fall on cost of living squeeze, US rate fear hits stocks
US stocks fall as investors brace for Fed rate hike
U.S. stocks fell in the opening minutes of trading in New York as investors braced for a possible tightening of monetary policy from the Federal Reserve amid rising inflation.
The S&P fell 0.8%, dragged down by 1.7% losses in healthcare stocks.
The dollar rose slightly against the pound after reports of weaker consumer spending in the UK.
Germany at risk of recession if Russia’s energy ban continues
Germany would slide into recession if the country cut off energy supplies from Russia, the German central bank has said.
The German economy would take a 180 billion euro hit, resulting in a 2% drop in GDP, according to Bundesbank forecasts, with inflation expected to be higher for a longer period.
It follows guidelines issued by the EU advising citizens to drive less and work more from home in a bid to reduce the bloc’s reliance on Russian energy.
Spike in business insolvencies
The number of businesses going bankrupt in England and Wales has more than doubled in the past month, official government figures show, as the end of pandemic support begins to be felt.
The number of closed businesses skyrocketed to 2,114 last month from 999 in March last year. This number was 34% higher than the number recorded before the coronavirus pandemic in March 2019.
Tailwinds from higher taxes, rising inflation and the ongoing war in Ukraine have rocked the economy, along with the end of pandemic-era support measures.
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B&M boss leaves after 17 years
The billionaire boss of low-cost retailer B&M Value Retail is stepping down after 17 years at the helm of the company.
The company said Simon Arora, 52, will leave in 12 months once a successor has been found.
B&M said Arora was leaving to plan for retirement. He said it had been a “privilege” to lead the business and he was “tremendously proud of the incredible journey we have had”.
Arora and his brother Bobby acquired the Liverpool-based chain in 2004 and grew it from 21 stores to 1,100. Brother Bobby Arora will remain as commercial director of the business.
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Ocado drops to 2-year low on retail figures
Ocado shares fell to their lowest price in two years due to weak retail sales in March.
Shares fell 4% at Ocado and 2.3% at M&S, with whom the company has a delivery partnership.
Ocado’s market capitalization has more than halved over the past year as investors weigh the prospects of continued consumer demand for online deliveries following the easing of coronavirus restrictions.
Sainsbury’s shares were flat, while Tesco shares edged up 0.7%.
Falling consumer confidence raises fears of recession
A sharp drop in consumer confidence could mean a recession is looming, according to research from Bank of America.
Current levels of consumer confidence, which reliably tracks consumer spending, suggest a 35% probability of a recession, according to the research.
However, some analysts hope that the British economy can hold back from entering a recession.
Thomas Pugh, economist at RSM, said: “Despite the huge fall in real incomes this year, we believe the UK will narrowly avoid recession due to strong household balance sheets, a labor market tense and the timing of inflation and bank spikes. vacation this year.
“However, the UK economy faces a difficult year whether the technical definition of a recession is met or not.”
Renault and Volvo warn of semiconductor shortages
Two of Europe’s biggest automakers have sounded the alarm over the global semiconductor shortage ravaging the auto industry today, warning that the war in Ukraine has made the problem worse.
French automaker Renault said its order book hit a 15-year high in the first quarter as a semiconductor shortage dampened production. Volvo boss Martin Lundstedt has warned of a “strained” supply chain, with war in Ukraine and the spread of Covid-19 in China compounding existing problems.
Renault’s first-quarter revenue fell 2.7% due to production issues and the company estimated a production loss of 300,000 vehicles in 2022.
Sweden’s Volvo held up better, with sales up 12% in the first quarter, driven by a 6% increase in truck sales. The manufacturer said it had parts in stock, which helped it deal with shortages in the first months of the year.
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War in Ukraine boosts charitable donations
Charity donations have soared over the past month as Britons donate money to help Ukrainian refugees.
Nationwide said its members gave £60million to good causes last month, up 44% in February and 45% more than in March 2021.
Mark Nalder, head of payments at Nationwide, said: “It is perhaps unsurprising that this coincided with the conflict in Ukraine, as people sought to donate money to support Ukraine and the humanitarian effort.
Rate hike fears hit European markets
Signs that US rate officials are gearing up to step up their response to runaway inflation put European markets in trouble today.
The Federal Reserve is set to raise interest rates by 0.5% in May, but comments from its Chairman Jerome Powell last night fueled speculation of further hikes of a similar magnitude before the end of the summer.
Wall Street fell sharply after Powell’s “initial loading” remarks before an IMF panel, setting the tone for a weak session in Europe.
The French presidential election and talk of a rate hike by the European Central Bank as early as July led to a drop of more than 1% in the Frankfurt and Paris-based markets.
London’s FTSE 100 index proved more resilient as sterling weakness supported dollar stocks and limited the elite’s decline to 26.05 points at 7601.90.
Fallers included Scottish Mortgage Investment Trust, which fell 14.6p to 917.4p on the potential impact of US rate hikes on a technology-focused portfolio that includes Tesla and Amazon.
The pressure on mining stocks continued as more analysts revised price targets following some disappointing production updates. Anglo American was the biggest victim, falling 72p to 3607p after Swiss bank UBS cut to 3,000p.
Homebuilder Berkeley led the FTSE 100 after Jefferies raised its target to 5587p, prompting shares to rise 133p to 4207p.
Weakness in retail stocks, including Marks & Spencer, sent the FTSE 250 index down 71.35 points to 21,088.33.
But home repair firm Homeserve jumped 12% or 105.5p to 959p after it revealed it had opened talks with Brookfield Infrastructure in Canada over a potential takeover.
Ray-Ban owner boosted by summer sunglasses sales
Holidaymakers preparing for their first real summer getaway in two years boosted sunglasses maker Ray-Ban EssilorLuxotica, with a 38% jump in first-quarter sales to 5.6 billion euros (4, £7 billion).
The French giant said it recorded “double-digit” growth in sales of Ray-Ban and Oakley-branded eyewear, as well as strong sales through its Sunglasses Hut retail subsidiary.
Chief executive Francesco Milleri said the company was “set for a good solar season” as “demand for luxury brands continues”.
The shares are trading down 1.7% in Paris.