Must read: Treasury yields, UK retail sales, grocery prices

GLOBAL MARKETS

European markets have opened sharply higher with the DAX and the CAC up over 1% each. The FTSE 100 is also in the green, with most stocks trading higher except for the oil giants Shell (LSE:SHEL) and BP (LSE:BP.) which are under pressure on the back of falling oil prices. After a more than 4% surge in oil prices on Monday, the market is giving back some of yesterday’s rally.

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In UK politics, opposition party leader Sir Keir Starmer gets set to deliver his address to the Labour party conference in Liverpool today. 

After the Columbus Day holiday, US Treasury yields are falling today, with investors buying up bonds amid the flight to safety trade and on some dovish comments from Dallas Fed president Lorie Logan. 

Stocks made a comeback on Monday, with the Dow finishing almost 200 points higher, despite the geopolitical uncertainty in the Middle East. Investors await key Fed speakers today as well as the Fed’s meeting minutes on Wednesday and US inflation figures on Thursday.

UK BRC RETAIL SALES 

The BRC, KPMG retail sales monitor rose by 2.7% in September, falling sharply from 4.1% in August. Food sales rose by 7.4% over the three months to September but non-food sales fell by 1.2%. 

A warmer than normal September decreased demand for cooler clothes like coats, boots, and knitwear that are typically bought in the lead up to autumn. Plus the cost-of-living crisis, with rising rents, mortgages, energy and food bills, has meant that individuals and households are holding off from purchasing more expensive, big ticket items like white goods and electricals. 

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All eyes will be on the seasonally crucial run-up to the festive season, with retailers desperate for a boost from shopping events like Black Friday and Cyber Monday as well as the typically busy December period.

KANTAR GROCERY MARKET SHARE

UK grocery inflation hits 11% in the four weeks to 1 October, down from 12.2% in the previous month, according to Kantar. It reached the lowest level since July 2022, but remains stuck in double digits and significantly higher than the latest ONS’ headline inflation rate for August which hit 6.7%. 

The German discounters Aldi and Lidl reported strong sales growth of 14.9% and 15.2% respectively while Tesco and Sainsbury’s both enjoyed sales growth above 9%. 

Facing an uphill battle against a declining propensity to spend among consumers, the supermarkets have been desperately cutting their prices this year to attract customers through their doors. This has helped to reduce the overall level of supermarket price inflation with some staple foods now falling in price. 

The cheaper German discounters have benefitted from shoppers’ increased price sensitivity. Many consumers are desperately seeking out bargains and are trading down to cheaper ranges away from more expensive, branded items. 

Nonetheless, some food prices are still rising according to Kantar such as eggs and frozen potato products.