Strong retail sales leave markets uncertain
|Heading into the close, the FTSE 100 is down ten points, while the Dow is 50 points in the red.
- Equity markets edge lower
- US consumers keep spending
- Pound down again as Boris remains in the lead
It is a relatively soft end to the week for equity markets, although losses have been relatively contained. If there is weakness in the global economy it isn’t yet showing up in retail sales, which rose in May, while April’s disappointing figure was revised up. After a spectacular reading in March, there is little sign that US consumers are slowing their spending, which will give the Fed some comfort, but sends a difficult message for a stock market already fixated on a rate cut in the near-term. Price action this week can best be described as a ‘holding action’ by the bulls, who have managed to prevent any major downside, with stock markets instead consolidating after their breathless rush
higher in the first week of June. There will be few reasons to keep rallying ahead of the Fed decision next week, but overall the positive atmosphere remains in effect.
Sterling has dropped further today, as Boris Johnson remains firmly ahead of the pack in the Tory leadership contest. Matt Hancock’s departure does not necessarily strengthen BoJo’s lead, but a clear ‘anyone but Boris’ candidate has yet to emerge, leaving the former foreign secretary firmly ahead. Rory Stewart’s social media campaign is winning plaudits, but it is yet to translate into MP votes, and even if he emerges victorious, it is doubtful whether he can command the loyalty of pro-Brexit voters.
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