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(Alliance News) - Stock prices in London opened in the red on Friday, with weak UK retail sales data adding to investors' worries.
The FTSE 100 index opened down 62.84 points, 0.9%, at 7,247.37. The FTSE 250 was down 167.38 points, 0.9% at 18,188.69, and the AIM All-Share was down 3.90 points, 0.5%, at 736.22.
The Cboe UK 100 was down 0.8% at 723.03, the Cboe UK 250 was down 0.9% at 15,976.07, and the Cboe Small Companies was slightly higher at 13,599.67.
In European equities, the CAC 40 in Paris was down 0.5%, while the DAX 40 in Frankfurt was down 0.4%.
"Markets continued on a languid path as the list of concerns showed little signs of abating," said interactive investor's Richard Hunter.
Over the week, investors have contended with heightened concerns over China's economy, following disappointing data, and signs of liquidity trouble at some of its major firms. Further, a strong set of economic data from the US alongside hawkish minutes from the Federal Reserve has stoked fears that interest rates may have further to climb. The threat of credit downgrades for US banks from Fitch is also looming over markets, not long after the ratings agency had cut its assessment of US debt.
On Friday morning, investors were faced with a worse-than-expected slump in UK retail sales.
The Office for National Statistics said retail sales fell 3.2% annually in July, compared to a downwardly-revised 1.6% fall in June. The market had been expecting a 2.1% fall for July, according to FXStreet-cited consensus.
From the previous month, sales fell 1.2% in July, compared to a downwardly-revised 0.6% rise in June. July's reading was worse than market consensus, which had forecast a 0.5% decline.
"Retailers are hopeful that the coming months will provide a boost to spending, as England fans celebrate the Women’s Football World Cup Final this weekend, families start their back-to-school shopping and university students ready themselves for the new academic year," commented Helen Dickinson, chief executive of the British Retail Consortium.
The gloomy retail figures dragged FTSE 100 retailers lower, with Frasers losing 1.4%, and JD Sports down 1.3%. It was a similar story in the midcaps, with Dunelm down 1.5%, and Pets at Home down 1.3%.
Meanwhile, US equities had struggled on Thursday as bond yields soared amid lingering concerns over inflation and rising interest rates. Adding fuel to the fire, the latest US jobs print showed no sign of loosening in the labour market, as weekly jobless claims edged lower.
Wall Street ended in the red, with the Dow Jones Industrial Average down 0.8%, the S&P 500 down 0.8% and the Nasdaq Composite down 1.2%.
"There are still signs of strength in the [US] economy, with the corporate reporting season having widely beaten expectations and with the consumer still in rude health and in the mood to spend. However, this very strength has altered the narrative for investors who had been hoping to factor in some interest rate cuts in the new year," said interactive investor's Richard Hunter.
Investors were still digesting Thursday's hawkish minutes from the Federal Reserve's July meeting. Fed officials continue to see "significant" upside risks to inflation and suggested further interest rate increases may be necessary, the minutes revealed.
Sterling was quoted at USD1.2718 early Friday, lower than USD1.2746 at the London equities close on Thursday. The euro traded at USD1.0869, a touch lower than USD1.0872.
In Asia on Friday, the Nikkei 225 index in Tokyo closed down 0.6%.
Japan's consumer price inflation eased to 3.1% year on year in July, in line with market expectations, government data showed. The figure for the world's third-largest economy, which excludes volatile fresh food prices, followed a 3.3% reading in June. Stripping out fresh food and energy, Japan's prices rose 4.3%, data published by the internal affairs ministry showed.
Friday's core consumer price index figure matched market expectations of 3.1% recorded in a Bloomberg survey. Prices for processed food, telecommunication costs and hotel rates rose while electricity bills declined.
Against the yen, the dollar was quoted at JPY145.33, down versus JPY146.06.
In China, the Shanghai Composite fell 0.9%, while the Hang Seng index in Hong Kong was down 1.9% in late dealings.
In a further sign of trouble in China's property sector, embattled Chinese developer Evergrande Group filed for bankruptcy protection in the US on Thursday, court documents showed, a measure that protects its US assets while it attempts to restructure.
The company's woes have come to symbolize the growing crisis in China's sprawling property sector, which accounts for a huge portion of the world's number two economy, that many fear could spill over globally.
The S&P/ASX 200 in Sydney closed marginally higher.
In addition to the economic and fiscal woes facing global economies, they are grappling with heightened geopolitical tensions in recent months.
US President Joe Biden on Friday will announce new security cooperation at a first-of-a-kind three-way summit with the leaders of Japan and South Korea, hoping to send a message of strength to China, which has already made clear its displeasure.
Biden, South Korean President Yoon Suk Yeo Yoon and Japanese Prime Minister Fumio Kishida will agree to a new three-way crisis hotline and regular military drills and will agree to hold trilateral summits each year, US officials said, hoping to institutionalize the progress.
Meanwhile, Russian and Chinese warships are conducting joint maritime patrols in the Pacific Ocean involving rescue training and drills for countering air strikes, according Moscow's defence ministry. Additionally, China said Xi Jinping will pay a state visit to South Africa next week, while confirming the president will attend the Brics summit in Johannesburg.
Africa has emerged as a renewed diplomatic battleground, with the West, Russia and China vying for influence amid heightened competition for minerals and international divisions fostered by the war in Ukraine.
Gold was quoted at USD1,892.95 an ounce early Friday, little changed from USD1,893.44 on Thursday. Brent oil was trading at USD84.30 a barrel, lower than USD84.68.
Still to come in Friday's economic calendar, there's a eurozone inflation reading at 1000 BST.
By Elizabeth Winter, Alliance News senior markets reporter
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