On Tuesday, the Confederation of British Industry published a survey showing that confidence among British retailers has fallen compared with a year ago, alongside a slowdown in retail sales. The indicator measuring how retail sales have changed over the past year slipped to -32 in November from -27 in October. Both consumers and businesses appear to be acting more cautiously, with uncertainty around the forthcoming budget weighing heavily on spending and planning decisions. That uncertainty is expected to ease today, however, as the Chancellor delivers her Autumn Statement and provides greater clarity on the fiscal outlook.
Over the weekend, the U.S. and Ukraine released a joint statement noting progress in peace talks aimed at ending the Russia-Ukraine war. Although no agreement has been reached on security guarantees for Ukraine, the discussions were described as ‘highly constructive’. The announcement was welcomed as a sign that steps toward ending the conflict – and its human tragedy – may be drawing closer. However, the immediate market reaction saw defence stocks finish the trading session lower.
Key U.S. economic data that had been delayed by the recent government shutdown is now beginning to emerge. Producer prices rose by 0.3% month-on-month in September, reversing a 0.1% decline in August. Economists have highlighted the trade services category within this data as evidence that some businesses are absorbing the cost of higher tariffs, with related services dipping 0.2% in September following a 1.7% fall in August (but not all retailers are taking this approach). Retail sales figures for the U.S. in September have also now been released, showing a modest 0.2% increase from August. This suggests that while shoppers remain cautious, they are still spending – albeit more selectively – as the holiday season approaches. The latest data present a mixed picture, with several key October releases still to come. As a result, markets remain uncertain about how the Federal Reserve will position itself at its December meeting.
Economic data has been scarce this week, meaning investors have had little on their minds but the Autumn budget scheduled for later today. Speculation is abounding and so for the time being we are not going to add to it any further… be sure to look out for notifications on our budget panel discussion later today where we’ll take you through just what exactly the Chancellor is planning and what it might mean for markets and, moreover, you. Still to come this week we have Eurozone consumer sentiment and Japan’s retail sales.
Nicola Tune, Portfolio Specialist
