FTSE 100 falls as mixed economic data weighs on sentiment

UK retail sales helped the FTSE 100 off to a strong start but the gains didn’t hold and the index dipped as trade progressed.

On Friday, investors digested a mixed set of UK economic data, including worrying government borrowing stats, stronger-than-expected retail sales, and poor service sector figures, and sold UK-listed as a result.

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The FTSE 100 was down 0.5% at the time of writing with analysts focusing their concern on public borrowing figures.

“The last time net debt represented the same proportion of GDP revealed today was when the Beatles had yet to enjoy a number one single, TV was in black and white and the country was still paying off debts accumulated during the Second World War. It shows the difficult task facing whoever occupies Number 10 after next month’s election,” said AJ Bell investment director Russ Mould.

After the Bank of England held rates at 5.25% yesterday and hinted at a possible August rate cut, we are now set for a summer of ‘will they, won’t they’ debate about interest rates. This holding pattern in the narrative was reflected in equity markets on Friday as the FTSE 100 dipped slightly into the weekend amid mixed macro developments.

“It’s a quiet end to the week on the corporate news side of things, meaning there isn’t too much else for the FTSE to hang its hat on,” said Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown.

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Although FTSE 100 constituents earn the lion’s share of their revenue overseas, news the UK consumer is in rude health wasn’t lost on UK retail stocks such as Ocado, JD Sports, and Burberry who were among the few gainers on Friday.

Ocado was 1.5% higher after it rebounded from heavy selling yesterday but didn’t erase anywhere near the extent of the losses.

“Ocado recovered some ground after being squashed like a tomato yesterday on news its Canadian partner had exited their exclusive deal and halted expansion plans,” Russ Mould said.

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