Friday 14 August 2020 5:02 pm

Markets live: US stocks slip as retail sales miss target while FTSE 100 slumps

Wall Street opened lower after disappointing US retail data while the FTSE 100 languished in the red as the UK’s decision to add France to its quarantine list weighed down travel stocks.

The Dow Jones and S&P 500 slipped in early trading on Wall Street, but recovered to tick up 0.11 per cent and 0.01 per cent respectively.

But Nasdaq fell into the red and was down 0.33 per cent at 11,006 points.

Meanwhile, London’s blue-chip index closed 1.55 per cent lower at 6,090 points.

Read more: France and the Netherlands placed on UK quarantine list

Travel stocks tumble

Travel stocks dragged the FTSE lower this morning following the government’s announcement that all travellers returning to the UK from France, Malta and the Netherlands must quarantine for 14 days.

IAG and Ryanair were both trading down more than four per cent, while Tui and Easyjet were down five and six per cent respectively.

Neil Wilson, chief market analyst at Markets.com, warned the move would “force a large swathe of cancellations right at the peak of the summer holiday season for one of the largest markets for UK tourists”.

The announcement also had a knock-on effect on related stocks such as airport stalwart WHSmith, which fell almost five per cent.

“Apart from the immediate damage this will do at the height of the school holidays and peak summer season, the quarantine decision also underlines the inherent risk you take in booking a holiday abroad right now, which will do nothing for consumer confidence,” Wilson added.

StockFall (%)
IAG-4.82
Whitbread-3.28
Intercontinental Hotels Group-1.85
Easyjet-6.55
Ryanair-4.54
Tui-8.44
WHSmith-2.23

But Michael Hewson, chief market analyst at CMC Markets, said the new rules had prompted a “disappointing end to the week” for stocks.

“Add in to that the even more juvenile retaliation by the French government, and the recipe for disaster is complete, as the travel sector has to absorb yet another headache, as the holiday season in Europe starts to unravel even further, against a backdrop of isolated infection flare ups across the entire region,” he said.

“If European governments were hoping to salvage something tangible from the 2020 summer holiday season these recent setbacks are unlikely to help, and with the days getting shorter, the window for buying time for the finances of countries like Spain, Italy and Greece is starting to close.” 

Stocks elsewhere in Europe also felt the impact of the new quarantine rules.

France’s Cac 40 dropped 1.85 per cent to 4,949 points, while German Dax slipped 1.02 per cent to 12,861.

Read more: Easyjet shares sink on France quarantine despite £203m aircraft sale

Retail data weighs on Wall Street

US futures pulled back today as traders turned their attention to disappointing economic data.

US retail sales for July undershot expectations with growth of 1.2 per cent, according to the US Census Bureau. Growth had been forecast at 2.1 per cent.

It came after sales bounced back strongly in May and June, rising 7.5 per cent in the latter month.

But Neil Wilson, chief market analyst at Markets.com, said growth had been expected to fall as the figures were skewed by unusually high pent-up demand during lockdown.

“Going forward, the destruction in the labour market will force consumers to tighten purse strings – unless there is free money ad infinitum.”

The lacklustre figures appear to have put a halt to a recent bullish run on Wall Street.

The S&P had been edging towards record highs, but pulled back slightly in early trading to 3,365 points.

Chinese data disappoints

Markets have also been rattled by a shock fall in Chinese retail sales in July, suggesting the country is still feeling the impact of the coronavirus outbreak.

Industrial production rose 4.8 per cent last month, though this was also behind expectations.

“Though an improvement on June’s -1.8 per cent, July’s -1.1 per cent reading marked the second month in a row that retail sales in the country had failed to climb back into positive territory as expected,” said Connor Campbell, financial analyst at Spreadex.

“Combine that with an industrial production reading that remained unchanged at 4.8 per cent, missing the forecast 5.1 per cent, and there are signs of a stalling recovery in the superpower.”

Asian stocks stumbled in this morning’s session on the back of the weak data.

Wall Street last night closed lower after better-than-expected jobless claims data failed to offset jitters over the lack of progress on a US stimulus package.

It was also a lacklustre day for the FTSE 100, which took its cue from faltering US confidence and felt the impact of a slate of stocks going ex-dividend.

Share:
Tags: