- Equity markets tick cautiously higher
- Fresh data paints a bleak picture for UK public finances
- Gold set for a flat week as it loses some shine
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“Global equity markets are heading into Friday on a cautiously brighter footing, with FTSE 100 futures pointing to a positive open and US futures looking broadly flat after Wall Street enjoyed a late flurry last night. Hopes that a deal between the US and Iran might be edging closer have helped steady nerves, but the details remain murky. President Trump has said the US will ultimately recover Iran’s enriched uranium stockpile, while fresh reports suggest Tehran may be unwilling to send that material abroad, a major sticking point in any agreement. Oil prices have also moved higher again as investors weigh the risk that talks drag on or fall apart. The honest answer is that nobody really knows where these negotiations are heading, but for now, markets are doing what they often do when a potential geopolitical off-ramp appears – tentatively moving as if the good news could be around the corner.
The UK consumer is still looking fragile, even if confidence has ticked up from very low levels. GfK’s Consumer Confidence Index improved from -25 to -23 in May, better than expected, but the details were less comforting, with savings intentions dropping sharply and big-ticket purchase plans weakening again as households continue to feel the pressure from higher living costs. That caution was echoed in April’s retail sales, where volumes fell 1.3%, more than reversing March’s gain, with food the only major category to grow and fuel sales hit particularly hard as higher prices encouraged motorists to cut back on journeys and delay filling up. Add in a larger-than-expected borrowing figure, and the picture is one of weak growth, stretched household budgets and public finances that leave little room for easy fixes.
Gold has slipped out of the spotlight since topping $5,000, with prices settling into a more benign range around $4,500-$4,800 in recent weeks. Conflicting signals around US-Iran peace talks are keeping investors cautious, particularly with Iran’s uranium stockpile still a major sticking point and oil prices sensitive to any shift in tone. That uncertainty would normally support demand for perceived safe havens, but sticky inflation risks and the prospect of interest rates staying higher for longer are keeping the gold trade relatively subdued for now.”
