LONDON (ShareCast) - (Sharecast News) - London's stock markets closed lower on Friday, weighed down by a mix of declining consumer confidence and recent central bank rate decisions.
The FTSE 100 index fell 1.19% to finish at 8,229.99 points, while the more domestically-focussed FTSE 250 dropped 1.56% to 20,831.84 points.

In currency markets, sterling was last up 0.28% on the dollar to trade at $1.3321, while it added 0.19% against the euro, changing hands at €1.1924.

"Several equity indices such as the Dow, S&P 500 and German DAX 40 hit new record highs this week following the Fed's first rate cut in four years," said Axel Rudolph at IG.

"Nonetheless, end of week profit taking took its toll on US and European stock indices on Friday.

"In the UK an unexpected rise in retail sales didn't prevent the FTSE 100 from dropping by over a percentage point."

Rudolph added that gold prices were still surging, adding another percent to the week's gains and reaching new record highs around the $2,615 per troy ounce mark.

"The oil price slid slightly, however, following its 6% gains from its September multi-year lows.

"Next week's economic calendar is on the light side, beginning on Monday with UK and US manufacturing and services PMIs and culminating with Friday's Fed-preferred PCE inflation gauge."

UK consumer confidence takes a hit, but retail sales top forecasts

In economic news, UK consumer confidence took a significant hit in September, according to the GfK consumer confidence index, which fell to -20 from August's -13.

The decline reflected widespread pessimism across all sub-measures, including a steep drop in expectations for personal finances and the broader economic outlook.

Despite recent stability in inflation and an earlier interest rate cut, the mood had darkened as people awaited next month's Budget, which was expected to address a £22bn shortfall in public finances.

Adding to concerns, recent data showed that the UK economy stalled in July, with GDP unchanged for the second consecutive month.

"Despite stable inflation and the prospect of further cuts in the base interest rate, this is not encouraging news for the UK's new government," said Neil Bellamy, consumer insights director at GfK.

"Strong consumer confidence matters because it underpins economic growth and is a significant driver of shoppers' willingness to spend.

"Following the withdrawal of the winter fuel payments, and clear warnings of further difficult decisions to come on tax, spending and welfare, consumers are nervously awaiting the Budget decisions on 30 October."

Contrasting that gloom, retail sales in August exceeded expectations, climbing 1% after a revised 0.7% rise in July.

That marked the highest level of sales since July 2022.

The Office for National Statistics highlighted that supermarkets and clothing retailers were buoyed by warmer weather and end-of-season promotions.

On an annual basis, sales jumped 2.5%, the largest increase since February 2022.

While food store sales surged, non-food sales showed more modest gains, suggesting that consumer spending remained robust in some areas despite broader economic challenges.

"Any optimism about blockbuster retail sales will have been tempered by the very weak consumer confidence data which accompanied it," noted Russ Mould, investment director at AJ Bell.

"This suggests the government's downbeat message about the economy might become a self-fulfilling prophecy and that last month might be as good as it gets for retail.

"It will certainly be prompting nervousness among British shopkeepers in the run-up to Christmas."

UK public finances, however, presented a less positive picture.

August saw public sector borrowing reach £13.7bn, significantly higher than forecast and pushing net debt to 100% of GDP.

That marked the highest August borrowing on record, excluding the pandemic years.

Despite a rise in tax receipts, the costs of public services and benefits increased due to inflation, compounding the strain on government finances.

In Europe, Germany reported a 0.8% year-on-year decline in industrial producer prices for August, driven primarily by lower energy costs.

However, prices for capital, consumer, and intermediate goods rose slightly compared to July, indicating some resilience in the industrial sector.

Earlier in the global day, the Bank of Japan kept its benchmark interest rate unchanged at 0.25%, as expected, expressing optimism about economic recovery.

The central bank noted that private consumption is on a "moderate increasing trend", a positive revision from its previous assessment of "resilient" growth.

That suggested a cautious but growing confidence in Japan's economic outlook.

Burberry and Dr Martens slide, Volution rises on acquisition

On London's equity markets, Burberry Group fell 3.51% following news of its impending demotion from the FTSE 100.

The luxury fashion brand faced additional pressure after Jefferies downgraded its stock rating to 'underperform' from 'hold' and significantly reduced the price target from 800p to 490p.

Dr Martens saw its share price plummet 19.42% after an unnamed investor offloaded around 70 million shares in a placing.

The shares were sold at 57.85p each, representing a 9.8% discount to the previous closing price.

Bridgepoint Group also faced a significant decline, with its shares dropping 6.75%.

That came after a group of 103 current and former employees, along with related entities, sold 14.7 million shares in a placing.

The shares were priced at 340p each, an 11% discount to the last closing price, and were placed through JPMorgan and Morgan Stanley.

On the upside, Volution Group gained 2.44% after announcing an agreement to acquire Fantech Group in Australasia from Elta Group for up to AUD 280m (£144m).

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,229.99 -1.19%
FTSE 250 (MCX) 20,831.84 -1.56%
techMARK (TASX) 4,791.79 -1.11%

FTSE 100 - Risers

National Grid (NG.) 1,036.00p 1.27%
NATWEST GROUP (NWG) 337.70p 0.81%
Scottish Mortgage Inv Trust (SMT) 815.80p 0.77%
HSBC Holdings (HSBA) 660.50p 0.33%
Rolls-Royce Holdings (RR.) 526.20p 0.23%
Pearson (PSON) 1,026.00p 0.20%
Phoenix Group Holdings (PHNX) 549.50p 0.18%
Marks & Spencer Group (MKS) 369.50p 0.08%
Darktrace (DARK) 582.00p 0.07%
RELX FINANCE BV 3.375% GTD NTS 20/03/33 (BW73) 99.72p 0.00%

FTSE 100 - Fallers

Frasers Group (FRAS) 842.50p -4.48%
Next (NXT) 10,020.00p -3.98%
Melrose Industries (MRO) 466.10p -3.80%
Antofagasta (ANTO) 1,787.50p -3.79%
Croda International (CRDA) 3,911.00p -3.79%
Prudential (PRU) 627.00p -3.63%
Burberry Group (BRBY) 604.40p -3.51%
Smith (DS) (SMDS) 468.40p -3.34%
DCC (CDI) (DCC) 5,150.00p -3.29%
Mondi (MNDI) 1,399.00p -3.28%

FTSE 250 - Risers

Volution Group (FAN) 608.00p 9.75%
Bytes Technology Group (BYIT) 513.00p 8.09%
NCC Group (NCC) 177.40p 3.50%
Telecom Plus (TEP) 1,838.00p 3.26%
Essentra (ESNT) 148.80p 2.62%
SThree (STEM) 405.50p 2.53%
Trainline (TRN) 334.60p 2.51%
Target Healthcare Reit Ltd (THRL) 90.90p 2.48%
Elementis (ELM) 164.00p 2.13%
Senior (SNR) 154.00p 1.85%

FTSE 250 - Fallers

Dr. Martens (DOCS) 51.65p -19.42%
Close Brothers Group (CBG) 431.00p -13.45%
Bridgepoint Group (Reg S) (BPT) 339.60p -11.38%
Johnson Matthey (JMAT) 1,470.00p -8.53%
FirstGroup (FGP) 145.70p -6.90%
Coats Group (COA) 98.60p -5.37%
Inchcape (INCH) 793.00p -4.69%
Investec (INVP) 565.00p -4.56%
SSP Group (SSPG) 161.20p -4.50%
Energean (ENOG) 850.50p -4.44%

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