- The FTSE100 lost 1.4% as the UK retail sales data came worse than expected.
- The Fed’s plan to hike half a percent interest rates weighs on the markets.
- Technically, the index has broken down the 20-day SMA.
The blue-chip FTSE 100 lost 1.4%, while the mid-cap FTSE 250 dropped 1.3% on Friday.
UK stocks tumbled on Friday due to a sharp drop in domestic retail sales and the growing prospect of aggressive monetary tightening.
Top Gainers & Losers
| Stock | Price | Gain % |
| RENTOKIL INITIAL PLC | 534.4 | 10.40 (1.98%) |
| AVAST PLC | 556.8 | 8.80 (1.61%) |
| INTERTEK GROUP PLC | 5,130.00 | 68.00 (1.34%) |
| SEVERN TRENT PLC | 3,048.00 | 27.00 (0.89%) |
| NATIONAL GRID PLC | 1,172.50 | 10.00 (0.86%) |
| SSE PLC | 1,828.00 | 14.00 (0.77%) |
| UNILEVER PLC | 3,541.00 | 26.00 (0.74%) |
| UNITED UTILITIES GROUP PLC | 1,128.00 | 7.00 (0.62%) |
| Stock | Price | Gain % |
| B&M EUROPEAN VALUE RETAIL S.A. | 516.6 | -33.40 (-6.07%) |
| ANGLO AMERICAN PLC | 3,460.50 | -218.50 (-5.94%) |
| ROLLS-ROYCE HOLDINGS PLC | 91.57 | -5.03 (-5.21%) |
| WHITBREAD PLC | 2,851.00 | -145.00 (-4.84%) |
| SCHRODERS PLC | 3,012.00 | -150.00 (-4.74%) |
| KINGFISHER PLC | 256 | -12.50 (-4.66%) |
| OCADO GROUP PLC | 1,042.00 | -48.00 (-4.40%) |
| MELROSE INDUSTRIES PLC | 123.55 | -5.10 (-3.96%) |
Retail sales in the UK fell more than expected in March versus February, while consumer confidence plunged to an all-time low in April due to rising inflation.
ING’s James Smith, an advanced market economist said that it is increasingly difficult to see consumer spending avoiding a recession this summer, even if it is modest by historical standards.
The blue-chip index was pressured by the declines of banks, life insurers, and miners. As a result, there was a weekly decline of more than 1% in the FTSE 100 Index.
“The UK is still at risk of entering a recession. Despite repeated inflation surprises, we think the Bank of England will be more cautious about raising interest rates than markets expect,” Smith added.
According to Governor Andrew Bailey of the Bank of England, the central bank is trying to balance fighting inflation with avoiding a recession, with the main concern being the labor market’s strength.
Following the news that Simon Arora would retire from the company after more than 17 years as CEO of B&M, the discounter’s shares fell 6.1%.
Berkeley Group shares gained 0.4% after Jefferies upgraded the company’s stock rating from hold to buy.
Brookfield Asset Management, a Canadian asset management firm, talks with HomeServe Plc about acquiring a home renovation company.
Jerome Powell, US Federal Reserve Chairman, stated that an increase of half a percentage point is on the table at the Fed’s next meeting.
Federal Reserve Chairman Powell announced Thursday that the discount rate should be raised immediately by 0.5 percentage points following the May meeting. It is no surprise to markets that the US government will take even tougher action, but investors are concerned that it will go even further.
The market seems to have settled for a faster rate hike. However, if Powell agrees to 50 basis points, it opens up the possibility of others calling for even faster tightening.
Given this background, investors are attempting to avoid taking risks – US indices are down by 1.5-1.6%, oil prices are decreasing by 1%, and the US dollar is strengthening against other world currencies.
FTSE price technical analysis:
The FTSE100 price broke below the 20-day SMA. The index is heading towards the 50-day SMA around the 7440 area. The index may find some support around the level and attempt to surge back above the 7500. However, failing to do so will attract more sellers, and the FTSE100 may slip below the 7400 level.
