Markets slump on poor showing for retailers
EUROPEAN markets were sharply lower on Thursday on the back of a dreadful session for retail stocks.
Sentiment in the sector slid after a profit warning by US retail giant Target on Wednesday led to the worst day for the S&P 500 since June 2020.
The US markets also opened marginally lower on Thursday as traders continued to worry about consumer spending levels.
Michael Hewson, chief market analyst at CMC, said: “It’s been a sea of red for European markets today, with the consumer staples sector leading the fallers on the FTSE 100.
“A lot of today’s pain is being felt by UK retailers after the downgrades this week by US retail giants Target and Walmart, while today US department store Kohl’s followed suit by warning of the effects of higher costs on their margins, and their profits.
“This has seen the likes of Tesco come under the most pressure, along with
Kingfisher, with losses for the likes of Next, Marks & Spencer and JD Sports.”
The FTSE 100 ended the day down 135.35 points, or 1.82%, at 7,302.74 points.
Early weakness in the Asian markets also contributed to weak sentiment in continental Europe. The German Dax decreased by 0.9% by the end of the session, while the French Cac fell 1.26%.
Meanwhile, sterling made progress during a poor session for the US dollar.
The pound increased by 0.1% against the dollar to 1.250, and rose 0.15% against the euro to 1.181.
Royal Mail plunged lower after it cautioned over possible further price hikes and revealed plans to ramp up cost-cutting as it looks to tackle soaring inflation pressures.
The delivery giant said it was facing “significant headwinds” from higher wage demands, surging energy and fuel costs. Shares fell by 42.4p to 300p.
Elsewhere, Homeserve climbed after it agreed a £4.1 billion takeover by a Canadian investment group.
Brookfield Asset Management will pay £12 a share for Homeserve, which is one of the largest home emergency firms in the UK and also has growing international operations.
Shares closed 107p higher at 1,160p as a result.
Restructuring firm Begbies Traynor leapt in value after it told shareholders its figures for the latest financial year will be “comfortably ahead of market expectations”.
Shares in the business lifted by 11.4p to 136.4p after it said revenues for the past year will increase by 30%.
Fever-tree shares moved higher after it cheered a “solid” start to the year as sales through bars and restaurants bounce back from the pandemic.
The company moved 21p higher to 1,544p.
The price of oil rebounded slightly after the US markets, having sank as a result of the significant sell-off. Brent crude increased by 1% to $110.2 per barrel when the London markets closed.