European stocks tick higher as UK retail sales drop

·2-min read
The UK holiday season was a bit of a washout for sales in July, said one analyst. Photo: Getty Images
The UK holiday season was a bit of a washout for sales in July, said one analyst. Photo: Getty Images

European stocks opened lower on Friday but closed slightly higher, as retail sales data coming out of the UK showed that the road to economic recovery will not be an easy one.

Retail sales volumes unexpectedly fell 2.5% between June and July, although they were up 5.2% in the three months to July and are 5.8% above their pre-pandemic February 2020 levels. This was despite an ease of lockdown restrictions.

The FTSE (^FTSE) closed 0.4% higher. Germany's DAX (^GDAXI) was up 0.2% and the CAC (^FCHI) rose 0.3%.

"The holiday season was a bit of a washout for sales in July. The miserable weather kept a lid on everything from BBQs at home to road-trips and shopping for a holiday wardrobe," said Sarah Coles, personal finance analyst at Hargreaves Lansdown.

In Asia, stocks continued to retreat as worries mount about rising COVID cases due to the spread of the Delta variant, and as China left its benchmark interest rate unchanged for the sixteenth consecutive month. 

It kept the one-year loan prime rate (LPR) at 3.85% and five-year LPR at 4.65%.

Read more: Morrisons agrees to £7bn takeover deal by US equity group CD&R

Expectations remain that the Chinese government will boost stimulus to counter a slowdown in factory output and retail sales growth.

The Hang Seng (^HSI) was down 2.1% at the close, the SSE Composite (000001.SS) fell 1.1% and the Nikkei (^N225) declined 1%.

Oil prices also continue to tick lower after the US dollar strengthened on global economic recovery worries and the Federal Reserve indicated it plans to pull back stimulus measures.

US stocks are still on course to log weekly losses even as they ticked higher on Friday. The S&P 500 (^GSPC) was up 0.6% and the Dow (^DJI) gained 0.5% as markets came to a close in London. The Nasdaq (^IXIC) was up 0.9%.

"Over the last week, economic data from the US, Europe, and China has suggested that the rate at which major economies have been recovering in recent months is slowing," said Naeem Aslam, chief market analyst at Ava Trade.

"In this context, despite stock market highs, investors are struggling to gain momentum to achieve higher gains."

Watch: What are SPACs?

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting