Market report

Blue chips below 7,000 | diners hit retail sales


5pm: Blue chips below 7,000

The FTSE 100 fell below 7,000 for the first time since July, closing down 83.467 points (1.19%) at 6,944.02.

Michael Hewson, chief market analyst at CMC Markets UK, said a bond market sell-off may be to blame.

The index was weighed down by a slump in mining stocks, while UK retail sales fell unexpectedly in August, adding to concerns about economic recovery.

Anglo American was down 227.5p at 2,591p; BHP 94.4p lower at 1,873.8p; Weir down 82p at 1,703p; Ocado 69p off at 1,700p and Rio Tinto down 190.5p at 4,829.5p.

Airlines and hotel groups enjoyed strong growth ahead of the UK Government simplifying travel restriction classifications.

British Airways owner IAG led the charge with shares closing up nearly 5% or 7.04p at 149.5p and Intercontinental Hotels up 90p at 4,650p. Rolls-Royce, which is heavily dependent on a busy aircraft market, was up 1.94p at 111p.

FTSE 100 today

High street fashion giant Next announced a joint venture with US chain Gap to sell its clothes in concessions in some UK stores, following the latter’s closure of its British and Irish sites.

Next will also take over the running of Gap’s UK website to sell clothes direct to consumers. Shares in Next closed up 120p at 8,122p.

7.30am: Surprise fall in retail sales

Seafood Restaurant

Retail sales volumes fell 0.9% in August on the previous year and were unchanged year on year as more consumers chose to dine out.

The slump came as as surprise to analysts who had forecast a 0.5% rise from July and year-on-year growth of 2.7%.

Sales volumes at food stores fell by 1.2% suggesting consumers increased their spending at restaurants and bars as restrictions eased, said Jonathan Athow, deputy national statistician for economic statistics at the Office for National Statistics.

Non-food stores reported a fall of 1%, driven by lower sales in department stores (-3.7%) and other stores, such as sports equipment and computer stores (-1.2%).

Petrol station sales volumes rose by 1.5% as more people used their cars, however, they remained 1.2% below their February 2020 levels.

The share of online sales increased to 27.7% in August from 27.1% in July, substantially higher than the 19.7% share seen in February 2020 before the pandemic.

7am: Virgin Wines and Moonpig partnership

Virgin Wines, one of the UK’s largest direct-to-consumer online wine retailers, has entered into a first of its kind partnership for the Group with Moonpig Group to launch a range of products with the online greeting card and gifting platform.

Virgin Wines will launch a new range of wines, some of which are available exclusively via the Moonpig website.

6am: Meal delivery sales rise

Managed restaurant and pub groups’ delivery and takeaway sales were close to treble their pre-pandemic levels in August, the latest edition of the CGA & Slerp Hospitality at Home Tracker reveals.

It shows sales were 176% higher than in August 2019, and 70% higher than in August 2020, when restaurants and pubs were trading under COVID restrictions.

While year-on-year growth has slowed since the first quarter of 2021, when the sector was completely closed for eating-in, deliveries and takeaways accounted for 27% of managed operators’ total sales in August.
The Tracker shows 2021-on-2020 growth in delivery sales was more than five times the size of takeaways. It also indicates that drinks accounted for 10% of all order sales in August—a sign of its growing importance in the delivery and takeaway sector.

Global markets

Retail sales in August were expected to give an idea of the mood of the UK consumer.

Similar US data yesterday showed a rise of  0.7% in August against a predicted fall by the same margin.

In the UK, there were hints of a slowdown in shopping following an initial bounce when lockdown restrictions eased.

July saw a 2.5% drop as restaurants pulled some customers back, while the pingdemic, shortages and the school holidays will have a major bearing on August’s numbers.

Wall Street saw modest falls for the Dow Jones and S&P 500, while Nasdaq was flat.

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