The FTSE 100 was set to finish the week on the back foot after Uk retail sales disappointed markets and hit consumer facing stocks. The prospect of next week’s Tory leadership contest also subdued the bulls on Friday.
JD Sport and Frasers Group sank while the housebuilders looked to retest their recent lows. UK retail sales fell 1.4% in September suggesting the UK economy was facing ever greater pressures from the cost of living crisis.
The charts of housebuilder share prices in particular do not make for pleasant reading. Persimmon is down 57% year to date, Barratt Developments off 53% and Taylor Wimpey 50%.
Autotrader was the FTSE 100’s biggest casualty, down 6% to 487p after analysts at Credit Suisse cut their price target to 418p, rating them underweight.
Although there were losses on Friday, the selling was seemingly contained with the FTSE 100 finding support around 6,900.
Given the week we’ve had in UK politics, the FTSE 100 has been remarkably range bound, rarely deviating from a 100 point range between 6,900-7,000.
This is largely down to weakness in the pound that again fell against the dollar on Friday after government borrowing figures rose and investors fretted about next week’s leadership contest.
“Given the unprecedented events involving British politics in recent weeks, investors are hoping for less volatility and more stability in both the government and on the markets,” said Russ Mould, investment director at AJ Bell.
However, Mould warned we were not yet out of the woods and Truss’s departure could prove to simply be another twist the never ending saga in Westminster.
“Even though there is some sense of peace in the markets now, this could all change next week when we have a clearer idea of who is in the running for Number 10 and how each candidate might reshape the country’s policies to avoid economic shocks,” said Mould
GBP/USD was trading down 0.9% at 1.1137 after hitting lows of 1.1060 earlier in the session.