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Highlights
FTSE 100 and FTSE 250 opened higher despite weaker May retail sales
Pound stabilised after early gains, trading flat against the dollar
GSK, IG Design, and Kerry Group released notable corporate updates
FTSE 100 and FTSE 250 indices opened on a positive note, registering slight gains even as recent data revealed a significant drop in May retail sales volumes. The upbeat market tone came in the wake of improving consumer sentiment, as highlighted by the latest GfK survey showing better confidence in June.
The pound, which had initially strengthened, pared gains and now trades flat against the dollar. Meanwhile, UK gilt yields are trending lower, aligning with a broader decline seen in European bond markets, although the movement in UK bonds is somewhat less pronounced across longer maturities.
Retail Sales See Steepest Decline Since Previous Year
Retail volumes recorded a notable drop, with May marking the sharpest monthly decline since the early months of the prior year. The Office for National Statistics attributed this fall to reduced consumer spending across multiple sectors, impacted in part by weather conditions and general cost-of-living pressures.
This unexpected dip in retail activity has tempered earlier optimism that had surrounded signs of a consumer-led recovery. Still, the GfK consumer confidence survey suggests underlying resilience in household sentiment going into the summer months.
Pound Loses Momentum After Data Release
Sterling's earlier upward momentum eased following the release of disappointing retail data. The currency now trades in a tight band between dollar benchmarks, reflecting cautious investor sentiment in the wake of weaker-than-anticipated domestic consumption figures.
Currency traders appear to be factoring in both the softer macro data and broader global developments. This has contributed to a stabilisation in sterling’s movement after recent volatility.
Government Deficit Undershoots Forecast
Separately, the UK’s public finances offered a mildly supportive narrative, with the latest figures showing a lower-than-expected budget deficit. The data provided a modest fiscal cushion, possibly aiding sentiment in both bond and equity markets.
Despite this development, broader concerns remain over fiscal sustainability amid persistent inflationary pressures and public spending commitments.
GSK, Kerry Group, and IG Design in Focus
Several FTSE 350 constituents issued updates this morning. Drugmaker GSK (LON:GSK) announced that its RSV vaccine Arexvy has been submitted for regulatory approval in Japan. If cleared, the vaccine would be the first of its kind for adults aged under fifty in that market segment.
IG Design (LON:IGR) confirmed that its Chief Executive Officer, Paul Bal, will step down with immediate effect. The company, known for its greetings and creative products, did not name a successor but stated that leadership continuity measures are in place.
Meanwhile, Kerry Group (LSE:KYGA), an Ireland-based food ingredients firm, unveiled a significant share repurchase initiative. The move is being seen as a strategic capital allocation decision amidst evolving sector dynamics.
Market Outlook Anchored by Mixed Signals
Market participants are parsing through the conflicting signals presented by macroeconomic data and company-specific announcements. While the drop in retail sales has raised short-term concerns, gains in major indices and a neutral pound suggest a measured approach from equity and currency markets.
Bond markets are also showing signs of adjustment, with yields declining across the UK and Europe, albeit at varying paces. Investors continue to monitor developments for indications of policy direction and consumer resilience.
