- FTSE 100 falls t amid ongoing economic concerns.
- UK Consumer confidence rises but remains fragile.
- JD Wetherspoon margins suffer despite resilient sales.
- Heathrow fire another potential blow to growth.
- US futures point to a lacklustre open.
- Brent crude above $72 per barrel after OPEC+ surprises with planned cuts.
- British government borrowing higher than expected.
Derren Nathan, head of equity research, Hargreaves Lansdown:
“The FTSE 100’s down 0.5% this morning erasing much of the gain seen earlier in the week. There was little support in today’s read out from the GfK UK consumer confidence index. The small improvement to minus 19 was a little better than forecast but it remains well below the long-run average and was compiled before consumers had the chance to digest the latest negative data on GDP growth.
If pub takings are to be taken as another barometer of consumer health, investors can take some comfort that JD Wetherspoon’s like for like sales growth has accelerated slightly so far in the second half, after reporting like-for-like growth of 4.8% in today’s interim results. But news that operating profit still fell 4.3% shows just how much of a challenge rising labour costs are for the group. And with national insurance and minimum wage increases around the corner the industry is bracing for another hit to margins.
A fierce fire at Heathrow, Europe’s busiest airport will see the travel hub closed for at least today. Shares in British Airways owner International Consolidated Airways Group are down around 4% today. At a time where economic growth is already under pressure, unexpected disruptions to the flow of goods and people will be particularly unwelcome news for the UK government.
US futures are pointing down again after this week’s mini rally petered out yesterday. While a small rise in US jobless claims hasn’t caused much of a surprise, the data showed that claimants were taking longer to find new employment than the same period last year. Not all the layoffs sanctioned by Elon Musk’s DoGE will have showed up in the numbers yet. Investors are likely to remain highly sensitive to US jobs numbers in the months ahead.
Brent crude prices are back at over $72 per barrel, with traders enjoying the best weekly run since early January as new plans by OPEC+ to cut production and US sanctions on Iran quelled fears about over supply. The alliance of crude producers plans reductions of 189,000-435,000 barrels per day until June 2026. Continued unrest in Gaza and Yemen are also keeping some upward pressure on prices.”
Susannah Streeter, head of money and markets, Hargreaves Lansdown:
“UK Chancellor, Rachel Reeves, was already in a super-tight spot in terms of the public finances and she’s now facing a further squeeze. UK government borrowing jumped above expectations in February, with spending on benefits and investment rising more sharply than forecast. ONS figures show public sector net borrowing came in at £10.7 billion in February, which is £4.2 billion higher than had been forecast by the Office for Budget Responsibility (OBR).
It cements expectations that Rachel Reeves will go further in tightening the public purse by cutting expenditure in the years to come. Official growth forecasts are expected to be slashed, which means that the tax take is also likely to shrink going forward. But given that stability is right at the cornerstone of the government’s agenda, this Chancellor’s not for turning, and won’t break her fiscal rules. The UK is not blessed with lower debt to GDP levels like Germany, which has enabled the country into lifting its borrowing brake. The government will be in a bind as it deals with incoming trade disruption, with limited room for manoeuvre.”
