Consumer Confidence Hits Record Low and Retail Sales Show Downtrend
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  • UK consumer confidence falls to 50-year low amid concerns about cost of living and wider economic outlook
  • Evidence that shoppers are intent on looking for bargains amid the cost-of-living crisis
  • FTSE 100 unfazed by falling confidence and broader risks to close the week
  • Brent crude is expected to end the week lower, reflecting concerns about a global economic slowdown and possible increased supply from producers.

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Q2 2022 hedge fund papers, conference call and more

Sophie Lund-Yates, Principal Equity Analyst at Hargreaves Lansdown:

Macro hedge funds earn huge profits in a volatile macro environment

Yarra Square Investing Greenhaven Road CapitalWith the S&P 500 down by a double-digit percentage in the first half, most equity hedge fund managers struggled to keep their heads above water. The performance of the equity hedge fund sector is in stark contrast to macro hedge funds, which are enjoying one of the best outperformance since the financial crisis. Read more

“UK consumer confidence has fallen to its lowest level since comparable records began as the rising cost of living casts serious doubt over people’s personal finances, while wider concerns of an economic slowdown are also a source of anxiety. In the monthly survey by GfK, the August consumer confidence index score fell to minus 44, from minus 41 last month. This move is hardly surprising given that prices are rising by double digits while we are seeing the biggest drop in real wages in more than 20 years. The overall reading of this for the broader economy is that we now know for sure that nerves are getting worse, not better. This has far-reaching implications for corporate margins as we are likely to see increased discounting as well as a steady trend of people looking for bargains.

That’s exactly what the latest ONS Retail figures have shown, with online discounters helping to boost retail sales in July compared to June. However, sales fell on a three-month basis and compared to 2021, three-month volumes fell by 4.9%. The data implies a sharp 10.4% increase in prices over the year, which is simply unaffordable for many customers. Non-food store sales volumes fell 0.7% in July, while food sales barely budged. This means a deliberate shift away from non-essential spending, and even when buying everyday items, what is loaded onto the conveyor belt is highly controlled. This is a trend that is unlikely to change while inflation continues. Bringing inflation back in line is a big ask, with underlying causes of rising commodity prices and supply constraints difficult for central banks to tackle with interest rates alone.

The FTSE is unfazed by the dark mood music, largely because this has already been priced in, with the FTSE100 struggling to find its year-on-year high. News of further consumer unrest has been seen trickling down the pipeline for some time.

Brent crude is hovering around $96 a barrel, on track to end the week lower as concerns about a global economic slowdown and potential supply rise from major producers overriding signs of stronger demand for fuel. Recession fears are growing, not least because the US Federal Reserve seems fixated on further raising interest rates, which while aimed at taming inflation, raise further questions about the economy’s ability to grow itself. “

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