FTSE 100 bounces back from poor retail sales

Thursday 18th June 2009

The FTSE 100 was hit today as retail figures proved worse than expected, but the index managed to pull itself out of the doldrums.

The index dropped to 4241.21 at lunch, but saw a turn around in the afternoon leading it up to the 4300 mark.

However, the index closed at 4,280.86 – a rise of 0.06 per cent - aided by a solid performance in the US.

At 11:34 EDT (16:34 BST) the Dow was up 0.72 per cent to 8,558.55, while the S&P 500 was up 0.72 per cent.

Data from the Office for National Statistics showed retail sales volumes unexpectedly fell by 0.6 per cent month-on-month in May – compared to a 0.3 per cent rise that was predicted.

However, non-food sales rose 0.3 per cent.

"While a slowdown in retail sales was always likely after they had been boosted in April by this year's later Easter and particularly good weather over the holiday period, the extent of the fall in May raises serious concern about the state of consumer spending," said Howard Archer, chief UK economist at IHS Global Insight.

He added consumer spending was expected to be muted for some considerable time to come.

On the FTSE 100, the biggest gains of the day went to cruise ship operator Carnival – up 7.16 per cent.

Man Group rose 4.09 per cent, Lloyds Banking gained 3.28 per cent and RSA Insurance climbed 2.83 per cent.

Meanwhile Rio Tinto continued its recent poor form – down 4.87 per cent – as copper fell for a fifth day on the London Metal Exchange.

Rexam was down 3.59 per cent, Aviva lost 3.27 per cent, Intercontinental Hotels was down 2.76 per cent and silver miner Fresnillo dropped 3.08 per cent.

Anthony Grech, market strategist at IG Index, said: "The worse-than-expected retail sales figures published earlier set the tone for the UK market for most of the day.

"With fresh talk of green shoots almost a daily occurrence now – and often on the back of fairly minor and insignificant economic news – the poor display in the retail sector will unavoidably dent some of the pervasive optimism.

"Nevertheless, after a positive start from the Dow, the FTSE managed to rally strongly in late-afternoon trading and the full force of the retail figures will be felt in the currency market, where the pound fell to its lowest level against the dollar in over a week."

Related News

<< Back To News Listings

News Article Search