Market snapshot: consumers in focus, and Buffett’s latest buy

Mixed messages from the US consumer, the largest engine of growth for the economy, sent markets drifting after a recent strong run.

Nor did the much-vaunted meeting between Presidents Donald Trump and Vladimir Putin move the dial. Expectations had been low for a meaningful breakthrough, especially in the absence of any Ukraine presence, and attention now turns to a follow-up meeting between the US President, European leaders and Volodymyr Zelensky in the White House.

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Before sailing off into the sunset, Warren Buffett made another strong impression. This time the beneficiary was UnitedHealth Group Inc (NYSE:UNH), whose shares rose by 12% after it was revealed that Berkshire Hathaway Inc Class B (NYSE:BRK.B) had taken a stake in the insurer valued at $1.57 billion (£1.15 billion). The legendary investor has clearly bought on the dip and even after Friday’s sharp rally the shares remain down by 46% so far this year.

Elsewhere, the consumer sentiment index was lower on continuing concerns around inflation. However, retail sales for July rose by 0.5%, which was in line with expectations, although the apparently contradictory news might be explained by consumers bringing forward purchases ahead of a potentially tougher time ahead. The week will bring some further colour as the likes of Walmart Inc (NYSE:WMT) and The Home Depot Inc (NYSE:HD) report their latest numbers, both bellwethers for the retail sector.

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In addition, investors will be listening closely for any new clues on the possibility of interest rate cuts from chair Jerome Powell of the Federal Reserve at the Jackson Hole symposium later in the week. The likelihood of specific confirmation of any easing may be off the table, but in the meantime a September cut of 0.25% is one which 85% of the consensus expects.

A largely successful earnings season, which is now drawing to a close, has underpinned the higher valuations which have resulted from market strength. In the year to date, the Dow Jones has added 5.6% and the benchmark S&P 500 9.7%, while the Nasdaq’s 12% rise has largely been driven by a resurgence of interest in the AI trade and mostly comforting updates from those of the “Magnificent Seven” which have reported thus far.

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Inflation and retail sales releases will also be in focus in the UK this week, with either carrying the threat of upsetting what has been positive investor sentiment of late, despite the obvious cracks in the economy which have been appearing. The most obvious barometer of the local economy is the FTSE 250, which is ahead by 5.8% so far this year after a shaky start, with underlying investment appetite for UK plc perhaps being more of a driver.

The jewel in the crown remains the FTSE 100, which made further marginal gains as the defence companies which have been at the vanguard of the index’s progress found new buyers, alongside some strength in the likes of Fresnillo (LSE:FRES) and Endeavour Mining (LSE:EDV) given some further strength in the gold price. The index has now risen by 12% in the year to date, having bumped against the ceiling of fresh record highs several times along the way.