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London stocks were poised to decline at the open on Friday after solid gains the previous day, as market participants assessed a drop in consumer confidence alongside stronger-than-anticipated retail sales figures.
The FTSE 100 was projected to open approximately 63 points lower.
Data from the Office for National Statistics indicated that retail sales reached their highest level in over two years in August, surpassing forecasts. Retail sales volumes rose by 1% in August, building on an upwardly revised 0.7% increase in July. These volumes marked the highest levels since July 2022, while analysts had anticipated a 0.4% rise.
In contrast, a survey revealed a significant decline in consumer confidence for September, despite a more stable economic environment. Participants appeared anxious ahead of next month’s Budget announcement. The latest GfK consumer confidence index dropped to -20, reflecting a seven-point decrease from August.
All sub-measures of the index experienced declines. Expectations for personal finances over the next year fell nine points to -3, and predictions for the overall economic situation plunged 12 points to -27. The major purchase index decreased by 10 points to -23, and the savings index also fell by 10 points to -23.
Prior to September’s survey, consumer confidence had shown improvement, buoyed by inflation nearing target levels, a recent reduction in interest rates, and a new government. However, economic growth appears to have stalled, with recent data showing GDP stagnating for the second consecutive month in July, falling short of analysts' forecasts for a slight increase.
The new government is set to announce its first Budget next month and has already indicated a significant shortfall in public finances. Neil Bellamy, consumer insights director at GfK, noted that stable inflation and potential interest rate cuts were not enough to provide reassuring news for the new government. He emphasized the importance of consumer confidence as a driver of economic growth and spending behavior. With the withdrawal of winter fuel payments and warnings of difficult decisions ahead regarding tax and welfare, consumers are apprehensively awaiting the Budget on October 30.
In corporate developments, Volution (LSE:FAN) announced an agreement to acquire Fantech Group in Australasia. Fantech is known for its commercial and residential ventilation solutions in Australia and New Zealand. The acquisition aligns with Volution’s strategy of expanding its portfolio of leading ventilation brands.
Additionally, Investec Group (LSE:INVR) reported a strong first-half financial performance, indicating a rise in pre-provision adjusted operating profit. The group highlighted its strategic initiatives, including the combination with Rathbones, which influenced earnings. Despite facing challenges in the UK market, Investec noted robust revenue momentum and an improved cost-to-income ratio, positioning itself favorably for future growth.
