Doom and gloom
The London market weakened further last week, feeling the brunt of Wall Street succumbing weakness on worries over rising interest rates and corporate profitability.
And that wasn’t all, says Quentin Smith, from Old Mutual Asset Managers in the UK – there was also disappointing domestic economic data.
Factory gate prices increased for the third consecutive month in September, as prices of gasoline and diesel recorded their biggest rise in more than five years. Producer prices increased 0.7% in September after rising 0.3% in August, ahead of expectations.
High commodity prices are allowing companies to raise prices, which is feeding through to consumer inflation, reducing expectations of further rate cuts.
Retail sales fell for a sixth consecutive month in September, according to the British Retail Consortium said, compounding concerns that the slowdown in consumer spending may be worsening.
The trade deficit widened to a record level in August as imports of oil exceeded exports for the first time in almost a year.
Jobless claims rose for an eighth consecutive month in September, extending the longest period of increases in almost 13 years, as economic growth slows.
Wage growth was 4% in the three months to the end of August compared with the same period last year, unchanged from the prior period.
Over the week all major indices lost around 1.5%. The insurance sector was the only positive area. Sector performance exhibited no clear theme, although utilities were universally weak, while retailers outperformed on more upbeat sector news..
SABMiller (-2.0% to 1023p), the world's third largest brewer, reported a 5% rise in first half beer sales as higher incomes in Eastern Europe and South Africa spurred demand for premium beer.
The brewer is pursuing sales growth in Eastern Europe, Russia, Asia and Latin America as beer consumption declines in the US and Western Europe. In July SABMiller agreed the $5.6bn purchase of Colombia brewer Grupo Empresarial Bavaria to become the second largest brewer in Latin America.
