Interactive Investor

Must read: Alibaba, oil prices, dollar, UK retail sales 

Our head of investment rounds up the morning's big news.

17th November 2023 08:48

by Victoria Scholar from interactive investor

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    GLOBAL MARKETS

    European markets have started the final session of the week on a positive note, with the FTSE 100 gaining around 0.5% so far. However, London Stock Exchange Group (LSE:LSEG) is dragging on the index following its strategy update. European stocks are on track to log a weekly gain, with all eyes on the latest eurozone inflation figures due later today. 

    Overnight, shares in Alibaba Group Holding Ltd ADR (NYSE:BABA) fell sharply, with $20 billion wiped from its market cap after it abandoned plans to spin off its cloud business. The Hang Seng shed over 2% during the session, but the Japanese Nikkei managed to cling onto gains, resulting in a weekly gain of over 2%. 

    Oil prices are poised for their fourth weekly drop after plunging around 5% to a four-month low on Thursday, driven by concerns about the weak global demand outlook. There was a sharp increase in US crude inventories which appeared to prompted yesterday’s sell-off. 

    The US dollar is set to end the week lower after cooling inflation figures stateside prompted hopes that the Federal Reserve may have reached the peak of its tightening cycle.

    UK RETAIL SALES 

    UK retail sales fell by 0.3% month-on-month in October, sharply missing analysts’ expectations for an increase of 0.3%. Year-on-year the figure dropped by 2.7%, also below forecasts for a drop of 1.5%. Retail sales volumes fell to their lowest level since February 2021 during the pandemic when there were major restrictions to non-essential retail. 

    Automotive fuel sales volumes dropped by 2%, reaching the lowest level since March 2021 and food store sales volumes declined by 0.3%. Non-food store sales volumes also fell by 0.2%. 

    Retail sales continue to show a divergence between volumes and value because of higher prices. Consumers are having to spend more pounds to obtain fewer goods. 

    The cost of living continues to bite, with wet weather in the second half of the month certainly not helping drive shoppers to the high streets either. Consumers appear to be holding off from unnecessary spending, staying in savings mode, preparing for the expensive festive season ahead.

    Looking ahead, according to analysis from GlobalData, shoppers are expected to buy fewer and cheaper items this Christmas, another headwind for retailers during the most important spending period of the year. Retailers will be pinning their hopes on a successful Black Friday / Cyber Monday spending spree with big discounts likely to be on offer at a time when consumers are particularly price sensitive.

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