UK retail sales drop and Bank of Japan raises rates
UK retail sales fell 0.2% in November while the Bank of Japan hiked rates to 0.75%, the highest since 1995.
UK retail sales disappoint
UK retail sales fell 0.1% in November including fuel, and 0.2% excluding it, marking a second consecutive monthly decline. The drop came despite Black Friday promotions, suggesting deeper weakness in consumer demand.
Supermarket volumes declined for a fourth straight month. Department stores saw some uplift from extended sales periods, but non-store retail was dragged lower by weaker demand for gold jewellery.
The data reinforces concerns about household spending power. For those looking to trade UK retail shares, the persistent weakness points to a challenging environment ahead. Consumer confidence remains negative at -17, despite a marginal improvement in December.
UK assets showed little reaction. The FTSE 100 dipped 0.1%, gilts weakened slightly, and sterling traded flat below $1.34.
Public finances offer little relief
November public sector net borrowing came in at £11.7 billion, below October but above forecasts. Year-to-date borrowing is up 8.2% year-on-year (YoY), leaving limited room for fiscal stimulus.
This matters for traders because it reduces the likelihood of government intervention to support growth. With fiscal policy constrained and interest rates elevated, the economy faces headwinds that could pressure risk assets.
WH Smith shares drop on FCA probe
WH Smith shares fell as much as 6% after confirming the FCA has opened an investigation linked to an earlier accounting error. The company also delayed its results, adding to uncertainty.
Regulatory investigations typically create extended periods of underperformance as uncertainty lingers. Those with positions need to reassess whether the risk-reward profile justifies holding through this period.
Bank of Japan continues hiking
The Bank of Japan (BoJ) raised rates to 0.75%, the highest since 1995. The move reinforces that inflation has become more embedded after decades of deflation.
The contrast with other major central banks is striking. While the Federal Reserve (Fed) and Bank of England (BoE) debate rate cuts, Japan is still hiking. This divergence creates opportunities in forex markets, particularly for those trading the yen through contract for difference (CFD) trading.
Higher rates could trigger repatriation of Japanese capital from foreign assets, with implications for global bond markets. For traders, understanding these cross-border flows becomes increasingly important.
Markets drift into year-end
European equities showed little direction, with the STOXX 600 edging lower. Banking stocks gained but technology and consumer names fell.
With major central bank decisions behind us, markets are settling into year-end mode. Liquidity thins in late December, which can amplify moves on light volume. Those trading through spread betting or other leveraged products should be particularly alert to this seasonal pattern.
The cautious bias reflects mixed economic data, uncertain policy paths, and limited risk appetite as institutional investors close their books for the year.
Important to know
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Connect with us
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Professional clients trading spread bets and CFDs can lose more than they deposit.
Options and futures are complex instruments which come with a high risk of losing money rapidly due to leverage. They’re not suitable for most investors. Before you invest, you should consider whether you understand how options and futures work, the risks of trading these instruments and whether you can afford to lose more than your original investment.
Trading stocks and shares ‘on margin’ within a US options and futures account – meaning that you only finance part of the cost of acquiring a position in a security – carries additional risks over buying securities on a fully funded basis and may result in losses exceeding your original investment. Trading on margin will also result in additional costs to you as the investor and any securities purchased using margin may be held as collateral by the lender, restricting both your rights as shareholder, and your ability to use the securities until the margin trade is closed. You should familiarise yourself with these risks before trading on margin.
The value of shares, ETFs and other ETPs bought through a share dealing account, a US options and futures account, a stocks and shares ISA or a SIPP can fall as well as rise, which could mean getting back less than you originally put in. Past performance is no guarantee of future results. Some ETPs carry additional risks depending on how they’re structured, investors should ensure they familiarise themselves with the differences before investing.
Share dealing and IG Smart Portfolio accounts provided by IG Trading and Investments Ltd, CFD accounts and US options and futures accounts are provided by IG Markets Ltd, spread betting provided by IG Index Ltd.
IG is a trading name of IG Trading and Investments Ltd (a company registered in England and Wales under number 11628764), IG Markets Ltd (a company registered in England and Wales under number 04008957) and IG Index Ltd (a company registered in England and Wales under number 01190902). Registered address at Cannon Bridge House, 25 Dowgate Hill, London EC4R 2YA. IG Markets Ltd (Register number 195355), IG Trading and Investments Ltd (Register Number 944492) and IG Index Ltd (Register number 114059) are authorised and regulated by the Financial Conduct Authority.
The information on this site isn’t directed at residents of the United States, Belgium or any particular country outside the UK and isn’t intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
