Our head of investment rounds up the morning's big news.
European markets have opened mixed to end the week, with defensive sectors like healthcare and utilities outperforming. The FTSE 100 is in the red dipping below the key 7,900 handle with miners at the bottom of the basket like Anglo American (LSE:AAL), Rio Tinto Registered Shares (LSE:RIO), Antofagasta (LSE:ANTO) and Endeavour Mining (LSE:EDV).
Oil prices are under pressure following a slew of disappointing US economic data points amid a growing risk of a recession stateside. US weekly jobless claims increased to 245,000 last week while existing home sales fell 2.4% in March.
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UK RETAIL SALES
UK March retail sales volumes fell by 3.1% year-on-year, in line with analysts’ expectations. Month-on-month the figure fell by 0.9%, below consensus estimates for -0.5% and swinging from a gain of 1.1% in February. The reading is now 0.7% below pre-Covid levels.
Excluding fuel the annual and monthly figure both came in below forecasts at -3.2% and -1% respectively. Looking at the broader picture, sales volumes rose by 0.6% in the first quarter, the first three-month rise since August 2021.
Poor weather in the UK weighed on retail sales in March following an increase in the previous month, particularly on non-food items. It was the sixth wettest March on record since 1836, with retailers such as garden centres and jewellery stores impacted negatively. Food store sales volumes also declined in March, partly because of the recent food shortages. Food store sales are still down 3% versus pre-pandemic levels from February 2020 because of food price inflation and the cost-of-living crisis.
One bright spot came from motor fuel sales, which rose by 0.2% in March versus a fall of 1.2% in February but remains 8.5% below pre-Covid levels.
The pound sold off slightly after the data but cable (GBPUSD) is still up 2.7% this year. However, the greenback is on track for its first weekly gain in a month.
UK GFK CONSUMER CONFIDENCE
UK GFK consumer confidence rises to -30 in April versus -36 in March, sharply beating consensus expectations for a reading of -35. Expectations for the British economy rose to a 15-month high while prospects for personal finances hit the highest level since February 2022.
Sentiment has been in the doldrums among British consumers over the last year amid the war in Ukraine, the cost-of-living crisis, the mini budget, rising interest rates and falling real wages. However, there are incipient signs that confidence could be starting to improve. With the UK on track now to avoid a technical recession and with mortgage rates cooling and inflation starting to slowly ease, consumers are becoming more hopeful about the outlook for the UK economy.
Credit Suisse Group AG (SIX:CSGN) bondholders holding $4.5 billion of AT1 bonds are suing the Swiss regulators after their holdings were wiped out. According to the Financial Times, their legal representation argues that Finma acted unconstitutionally by marking down all $17 billion AT 1 bonds to zero. The FT reports that lawyers have told bondholders this is likely to be a multiyear process in the Swiss courts.
Credit Suisse coco bondholders have been outraged since their holdings were unconventionally ranked lower in the pecking order than shareholders amid the rescue deal for the embattled lender.
There has been much opposition to the UBS Group AG (SIX:UBSG) tie-up from angered Credit Suisse stakeholders, employees and Swiss citizens more broadly because of the rushed, forced nature of the deal that punished many Credit Suisse shareholders and bondholders. CS’s chairman Axel Lehmann told angry shareholders at its AGM this month he was ‘truly sorry’ for the sequence of events.
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