London open: Stocks in the red as consumer confidence slides, retail sales beat

London stocks fell in early trade on Friday as investors mulled a slide in consumer confidence but better-than-expected retail sales data.

At 0840 BST, the FTSE 100 was down 0.6% at 8,279.09.

Figures released earlier by the Office for National Statistics showed that retail sales hit their highest level in more than two years in August, ahead of expectations.

Retail sales volumes rose 1% in August, following an upwardly revised 0.7% uptick in July. Volumes were at their highest levels since July 2022. Analysts had been expecting a 0.4% increase.

Elsewhere, a survey showed UK consumer confidence fell sharply in September despite the more stable economic backdrop, as people nervously wait on next month’s Budget.

The latest GfK consumer confidence index came in at -20, a seven-point slide on August’s reading.

All sub-measures fell. The index for expectations for personal finances in the coming 12 months fell nine points to -3, while the measure of predictions for the economic situation tumbled 12 points to -27.

The major purchase index lost 10 points to -23, while the savings index also fell 10 points, to 23.

Prior to September’s survey, consumer confidence had been improving, boosted by inflation returning to near target, a cut in interest rates earlier in the summer and a new government.

However, economic growth appears to have stalled. Recent data showed GDP stagnated for the second consecutive month in July, disappointing analysts who had been expecting in a 0.2% uplift.

Investors were also mulling news that higher-than-expected borrowing in August pushed public sector net debt to 100% of GDP. According to the ONS , public sector borrowing - the difference between spending and tax revenue -reached £13.7bn in August.

That was £3.3bn more than August 2023 and the third-highest August borrowing since monthly records began in January 1993. Once the impact of the pandemic is stripped out, it is the highest August borrowing on record.

It was also £2.5bn higher than the £11.2bn forecast by the Office for Budget Responsibility, the fiscal watchdog.

Since the start of the financial year in April, borrowing has totalled £64bn, £6.2bn higher than the OBR forecast in March.

Central government tax receipts jumped £15bn in August, but National Insurance contributions fell - due to the reduction in the main rates announced earlier in the year - while benefits rose in line with inflation.

Inflation also pushed up running costs for public services.

As a result, public sector net debt (excluding public sector banks) was provisionally estimated by the ONS at £2.768trn, or around 100% of GDP.

That is 4.3 percentage points more than at the end of August 2023, and means debt remains at levels last seen in the early 1960s.

The figures will make for difficult reading for new chancellor Rachel Reeves, who is preparing for her first Budget next month. Prime minister Keir Starmer has already warned it will be "painful" after a £22bn black hole was identified in the public finances.

In equity markets, luxury fashion brand Burberry was under the cosh after Jefferies downgraded the shares to ‘underperform’ from 'hold' and slashed the price target to 490p from 800p.

Elsewhere, Dr Martens tumbled after the company’s biggest shareholder, IngreGrsy, sold around 70m shares in the iconic boot maker in a placing. According to Bloomberg, the shares were placed at 57.85p each, which is discount of around 9.8% to the last closing share price.

On the upside, Volution gained as it agreed to buy Fantech Group in Australasia from Elta Group for up to AUD280m (£144m).

Market Movers

FTSE 100 (UKX) 8,279.09 -0.60%
FTSE 250 (MCX) 21,021.28 -0.67%
techMARK (TASX) 4,813.28 -0.67%

FTSE 100 - Risers

Spirax Group (SPX) 7,380.00p 2.22%
NATWEST GROUP (NWG) 340.90p 1.76%
Smurfit Westrock (DI) (SWR) 3,653.00p 1.73%
Scottish Mortgage Inv Trust (SMT) 819.20p 1.19%
Glencore (GLEN) 384.25p 1.16%
Entain (ENT) 744.60p 1.14%
HSBC Holdings (HSBA) 664.40p 0.93%
Pearson (PSON) 1,029.00p 0.49%
National Grid (NG.) 1,026.50p 0.34%
United Utilities Group (UU.) 1,058.50p 0.28%

FTSE 100 - Fallers

Burberry Group (BRBY) 600.00p -4.21%
SSE (SSE) 1,941.00p -2.78%
Smith (DS) (SMDS) 476.00p -1.77%
Croda International (CRDA) 3,994.00p -1.75%
Flutter Entertainment (DI) (FLTR) 17,100.00p -1.58%
BP (BP.) 411.10p -1.52%
Mondi (MNDI) 1,424.50p -1.52%
BT Group (BT.A) 144.35p -1.50%
Frasers Group (FRAS) 869.50p -1.42%
Rio Tinto (RIO) 4,844.00p -1.37%

FTSE 250 - Risers

Bytes Technology Group (BYIT) 520.00p 9.57%
Moonpig Group (MOON) 218.50p 6.59%
Volution Group (FAN) 586.00p 5.78%
Trainline (TRN) 340.60p 4.35%
Kainos Group (KNOS) 908.00p 3.65%
Pets at Home Group (PETS) 313.60p 3.57%
SThree (STEM) 408.00p 3.16%
Spectris (SXS) 2,760.00p 3.14%
Telecom Plus (TEP) 1,834.00p 3.03%
Savills (SVS) 1,192.00p 2.94%

FTSE 250 - Fallers

Dr. Martens (DOCS) 56.00p -12.64%
Bridgepoint Group (Reg S) (BPT) 363.00p -5.27%
Bakkavor Group (BAKK) 155.00p -3.43%
ICG Enterprise Trust (ICGT) 1,200.00p -3.38%
FirstGroup (FGP) 151.80p -3.00%
Premier Foods (PFD) 178.00p -2.94%
Patria Private Equity Trust (PPET) 535.00p -2.90%
Hays (HAS) 94.05p -2.64%
Johnson Matthey (JMAT) 1,565.00p -2.61%
Bloomsbury Publishing (BMY) 676.00p -2.59%