- UK Retail sales unexpectedly fall 1% in December as consumers cut back on spending
- Consumer confidence drops despite expectations of a slight rise
- Netflix head Reed Hastings to step down after 25 years
- Heavy Wall Street losses as recession fears intensify
- Improving demand outlook in China pushes Brent crude above $86 a barrel
Drop In UK’s Retail Sales
Retail sales in the UK dropped 1% month-on-month during December, which was much worse than the expectations for a 0.5% rise. Customers are cutting back more than forecast, especially in non-food stores as they grapple with very real affordability concerns.
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Things like cosmetics, sports equipment and toys were all on the chopping block as consumers were forced to make difficult decisions about where to funnel their diminishing incomes over the festive break. This data contrasts with comments which suggests the UK recession might not be as bad as feared, if this is anything to go by, that good news isn’t being felt by retailers.
The lifting of Covid restrictions has been a welcome boost to the hospitality industry, but this has resulted in a stark reduction in retail sales volumes between 2021 and 2022 as customers had to spread their cash over a greater range of activities.
Given the weaker reading from the retail sector, it’s not surprising to see the GfK Consumer Confidence indicator in the United Kingdom fell to -45 in January 2023 from -42 in December. This was also a weaker reading than expected, with a slight improvement being predicted.
Consumers are bone-weary with inflation sapping any benefits from pay rises, while those on the same pay are even worse off. It’s certainly telling that the bulk of the confidence decline comes from personal finance concerns.
Netflix CEO To Step Down
After a huge beat in subscriber numbers in the final quarter, Netflix Inc (NASDAQ:NFLX) chief and co-founder, Reed Hastings will step down after 25 years. That comes as Netflix faced enormous challenges and legitimate threats to market share in recent trading periods after the pandemic pulled forward growth from down the line.
The market reacted positively to the news as it assesses the benefits of having a new pair of eyes on things at the top. As Netflix transitions into its next chapter, investors will want to know exactly how the media giant intends to grow its prominence with users over the long-term, while the upwards march of other platforms and social media continue to vie for our attention.
In the last regular trading session, Wall Street nursed heavy losses with the Dow and S&P 500 both stomaching their third straight losses, down 0.76%, and the Nasdaq lost 0.96%. Industrials, consumer discretionary and financials led the declines, as corporate earnings and some economic data suggested tough times ahead – offsetting sparks of optimism triggered by hopes of slower interest rate hikes.
Brent crude is now over $86 a barrel as the reopening of China’s economy improved the demand outlook. This is the second week in a row oil has gained, with the price also being supported by supply concerns because of tighter Russian sanctions. The International Energy Agency has said global consumption is set to reach a record daily average this year, which will have a ripple effect through the oil price.
Article by Sophie Lund-Yates, Lead Equity Analyst at Hargreaves Lansdown
