The FTSE 100’s so-called ‘Santa Rally’ was more a quick clip around the block with a little last minute high street fashion shopping thrown in. The blue-chip index finished -0.15% lower at 7,592.66 with Next shares surging almost +4% on improved Christmas cheer. There was a modest gain too for Dettol and Harpic maker Reckitt Benckiser, up +1.7%.
Across the Channel European sentiment was thrown somewhat by Catalonia’s comeback vote for secession with a mighty 82% turn-out. A wobble for Spanish investors: Catalonia is a net contributor to Spain’s tax base; unemployment at around 13% is much below the national 17% average. Catalonia is also Spain’s largest tourism area, crucial to her economy.
The US dollar spot price climbed +0.23% earlier to 93.49 with the euro down -0.35% to 1.1836. Sterling was subdued, down -0.11% mid-afternoon at 1.3371. A bit more pessimism seeped out of the UK’s Office for National Statistics earlier also. Real disposable income for most people inched up just +0.2% in the last quarter, well behind November’s +3.1% inflation rate.
Sainsbury’s boss Mike Coupe told the BBC that UK stagnating wages were not seeing a “massive” change in shopping behaviour. Sainsbury’s own share price is down -4.5% at 238.00p over the last 12 months; clearly the message is getting through at one level.
- UK FTSE 100 7,592 -0.15%
- DAX 13,072.49 -0.28%
- CAC 40 5,371.42 -0.27%
- Dow 24,759.96 -0.09%
- S&P 500 2,682.62 -0.07%
- Nasdaq 6,954.86 -0.15%
- Nikkei 225 22,902.76 +0.16%
- Gold 1,274.90 +0.34%
- Oil WTI 58.11 -0.44%
Retailers bank on 'busiest day of the year'
Consumer UK spending was busy powering UK bricks-and mortar retail sales in force today – the busiest shopping day of the year. Some stores are totally reliant on the intense November-December shopping period for any meaningful profit. Across UK retail, margins are under unremitting pressure from online sales. Yet physical space remains expensive.
Add to this the massive knock-on effect of the pound’s chronic loss in value. New numbers from the GfK consumer confidence index claims British consumer confidence is at its lowest point since December 2013. From electrical to flooring – Carpetright issued a stark profits warnings in mid-December – the outlook for physical retailers is bleak.
In early December star fund manager Neil Woodford, a major investor in retail stocks amongst others, told the FT he couldn’t remember when he last felt so unsettled.
“It is the most uncomfortable position I have been in during my career,” he said. “But I believe I’m absolutely right [in his choices]. I don’t know when I’m going to be proved right, but I’m utterly convinced that I am right, as I have been right before.”
A Christmas bonus for US consumers?
President Trump slips into the Christmas holidays head held high after his crucial tax reform bill. He signed the bill off earlier today. "I promised the American people a big, beautiful tax cut for Christmas. With final passage of this legislation, that is exactly what they are getting,” he said recently.
However November US jobs numbers reveals that “hard-working Americans still aren’t getting the bigger paychecks they deserve," House of Representatives Minority Leader Nancy Pelosi recently declared. "Even with full control of the House, Senate and White House, Republicans have still failed to deliver on their promise of higher wages for working families."
But the value of average full-time inflation-adjusted wages and salaries has risen. When Barack Obama left office this stood at a weekly $348. It’s now around $354 according to the Bureau of Labor Statistics. Close to a 2% gain over inflation over almost three quarters.
So Trump is delivering, just, on this score. The problem is that wage inflation is very unevenly spread and full unemployment for many is rare; indeed, entrenched unemployment in some areas is worsening. For many, there's no Trump Christmas bonus.