FTSE heads lower as second wave fears overshadow retail sales

Fiona Cincotta CityIndex

Following on from a weak performance on Wall Street overnight and a mildly stronger effort in Asia, European bourses are heading southwards on the open. Indices are in the red as markets take stock of a week which has seen coronavirus cases rise steeply in Europe and central banks sit on their hands for another month.

The FTSE is lagging behind its European peers as fears of a second lockdown overshadow upbeat retail sales. As the number of new daily covid cases continues to rise, the health secretary has refused to rule out a second national lockdown. His comments come as the government's test and trace system is "barely functional" and as almost 11 million people are facing enhanced lockdown measures. Airlines, travel stock and retailers are under pressure.

UK retail sales are on the rise for the 4th straight month, rising +0.8% MoM in August, down from July's 3.6% surge but ahead of 0.7% expected. Britain's newfound love for DIY continued in August with spending on DIY and household goods reporting strong growth, offsetting lacklustre clothes sales, which highlight the ongoing struggles that our High Street retailers face.

Oil surges across the week

Oil prices have seen their fair share of volatility this week. A combination of inventory draws, Hurricane Sally stopping and starting production, demand concerns have played with the price. WTI is on track for gains of over 10% and Brent exceeding 9%. The latest drive higher in prices comes after OPEC cracks down on non -member states. OPEC urged members to conform with production cuts in its online meeting.

US consumer confidence

Looking ahead the economic calendar is fairly quiet, with US consumer confidence expected to show an increase to 75 in September, up from 74.1. This would be some welcomed good news after the slew of disappointing numbers stateside yesterday. With Congress seemingly still considerable distance from agreeing an additional rescue package, any signs of consumer confidence slipping could negatively impact of sentiment.

Author

Fiona Cincotta

CityIndex

EUR/USD keeps the rangebound trade near 1.1850

EUR/USD is still under pressure, drifting back towards the 1.1850 area as Monday’s session draws to a close. The modest decline in spot comes as the US Dollar picks up a bit of support, while thin liquidity and muted volatility, thanks to the US market holiday, are exaggerating price swings and keeping trading conditions choppy.

GBP/USD flirts with daily lows near 1.3630

GBP/USD has quickly given back Friday’s solid gains, turning lower at the start of the week and drifting back towards the 1.3630 area. The focus now shifts squarely to Tuesday’s UK labour market report, which is likely to keep the quid firmly in the spotlight and could set the tone for Cable’s next move.

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US CPI is cooling but what about inflation?

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XRP steadies in narrow range as fund inflows, futures interest rise

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