UK consumer confidence rises as markets await Fed Chair speech

by | Aug 25, 2023

  • UK consumer confidence rose five points to minus 25 this month, ahead of analysts’ expectations 
  • The FTSE 100 is expected to hold onto recent gains today, but US futures are flat ahead of a speech from Fed Chair Jerome Powell 
  • Last-ditch efforts to save Wilko as HMV tycoon discusses an offer to save 4,000 jobs 
  • Brent crude set to end the week lower at around $83 a barrel

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown: 

“UK consumers are feeling brighter, suggests a survey from research company GfK. Confidence has risen from minus 30 to minus 25 in the last month, as outlooks for personal finances and the UK economy improved. While the sun may have been shining on moods when this survey was taken, there has now been a slew of data that suggests the UK is slipping into recession. Things like easing inflation and record pay growth are potentially masking the reality for households, but the real test will arrive in the coming year as more people roll off fixed mortgages and are forced onto a much higher rate. At that point, a higher squeeze on incomes and savings stashes will come into force and confidence could wane once more. This all adds up to an uncertain picture for the UK’s businesses and economy. 

The FTSE 100 has had a strong week and gains are expected to be retained as we head into the long weekend. The lack of big-hitting news means there’s little to rock the boat, but there is a sense of bated breath ahead of Fed Chair Jerome Powell’s speech later today. Comments from Fed president Susan Collins have already laid the ground for the fact rate increases may be needed to stifle inflation, with more work to be done to get it in line with targets within a reasonable timeframe. US futures were broadly flat, suggesting investors are biding their time before assessing the upcoming Fed commentary. 

The Canadian tycoon we have to thank for HMV is in talks to rescue around half of stricken Wilko shops, which would save up to around 4,000 jobs. While a deal is far from guaranteed, and is even unlikely by some estimations, it does offer a glimmer of hope to high street users and Wilko staff facing huge uncertainty. The Wilko model of ‘pile it high and sell it cheap’ saw its wheels come off as volumes weren’t what they needed to be following the enormous pressure heaped on the chain following the pandemic, and its online proposition was slow to shine compared to others. 

Lingering fears around recessions and further rate hikes have seen Brent crude slip to around $83 a barrel this week. This is off recent lows but still a drop overall. The tone of Jerome Powell’s address is likely to move the dial, with overly hawkish tones likely to send shivers through the price.”

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