US consumer spending fears alarm UK investors
SIGNS US consumers have reined in spending on “big ticket” items amid price pressures and a slowing economy triggered another exodus from shares today. Tesco and B&Q owner Kingfisher were among stocks 4% lower in London as the FTSE 100 index tumbled 2% in response to a bleak session on Wall Street last night.
The S&P 500 is now facing its seventh consecutive weekly decline after this week’s poor updates from retail giants Target and Walmart sent the US benchmark 4% lower in its worst daily performance since June 2020.
Target’s shares were 25% lower as consumer caution on big ticket purchases of furniture and electronics was compounded by its warning that higher fuel prices and supply chain costs were also eating into margins.
Hargreaves Lansdown senior analyst Susannah Streeter said: “With consumer spending power expected to be
eroded further through interest rate rises, the worry is that Target’s pain is a precursor for yet more struggles to come for retailers.”
The consumer confidence concerns left the FTSE 100 index 149.52 points lower at 7288.57.
Bunzl, whose outsourcing services are used by multiple retailers, slumped 5% or 159p to 2760p and investment firm
3i, which owns Benelux-based discount retailer Action, weakened 8% or 106p to 1218p.
Scottish Mortgage Investment Trust, the Tesla and Amazon backer whose results today showed a 13.1% decline in net asset value (NAV), was 5% or 37.2p lower at 751.2p. It urged investors to take a longer-term view of its performance, however, after pointing out that NAV is up 200% over five years.
The FTSE 250 index fell more than 2% or 373.91 points to 19,575.53, with recruitment firm Page down 7% and electronics business Currys off 6%.
Cyber security firm Darktrace fell another 3.9p to 319.3p, despite a statement dismissing any connection between the company and the Autonomy civil action in the US.
It also emerged today that Darktrace chief executive Poppy Gustafsson spent £100,000 on the company’s shares at a price of 336.5p, having seen the stock fall 15% yesterday.