UK’s Retail Sales Fall, Tougher Regulation On Tech Stars, While Ukraine Threats Weigh On Sentimen

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“The pain of higher prices is already hurting with UK retail sales retreating in February. With the cost of living squeeze intensifying, shoppers have kept a firmer grip on their purses. The bad weather didn’t help, with heavy rain and gales keeping crowds away from the high street. The easing of restrictions did provide some bounce for fashion retailers, as new outfits were purchased for long awaited nights out, but it brought a drop in sales for food retailers, as consumers swapped gourmet meals in for restaurant meals out. With the only way up for prices, with retailers lining up to prepare customers for hikes, it’s likely this drop in sales is the first sign of fresh falls to come.

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Ukraine Threats Weigh On Sentiment

In Europe, anxieties about the increasingly entrenched conflict in Ukraine are again set to hold back gains during trading today, with the FTSE 100 opening lower. Threats from President Biden of a NATO response if more lethal weapons are used by Russia has raised worries about potential escalation, which is weighing on sentiment.  High commodity prices, sent soaring by the repercussions of the conflict, have been flagged by companies as a drag on growth this year. This is adding to the lack of sustained progress for the FTSE 100 which, having largely recovered from the initial shock of war, is still down marginally since the start of the year.

As European competition authorities unveil plans to get tougher on American technology giants, investors are holding their breath to see if US regulators move closer to stopping some of China’s tech stars from being listed in New York. It seems the regulatory straight jacket is increasingly being fastened around the world, on some of the biggest names in tech.

The European Union is flexing its anti-trust muscles with lawmakers’ approval of the Digital Markets Act designed to restrain the market power of the MAAA’s (Meta, Alphabet, Amazon and Apple). Investors have largely brushed off worries about its effect, with the expectation that the Act could spark a flurry of innovation within the tech motherships.

But China’s e-commerce giant Alibaba (NYSE:BABA), founded by another Ma – the charismatic entrepreneur Jack Ma - saw its shares slide 6% in Hong Kong. This comes amid anxiety that the tech behemoth could be scooped up in a tough listing review, and spat out of the New York Stock Exchange. It’s among the Chinese tech firms which are steeling themselves for more audit transparency from the Securities and Exchange commission. The clamp down is part of the Holding Foreign Companies Accountable act, which allows the SEC to delist firms if their audits can’t be reviewed for multiple years in a row.

Five other Chinese companies have already been identified as not complying with the act, and the prospect of the spotlight now being trained on even bigger players has unsettled investors. That’s unnerved markets in Asia at the end of the trading week with the Hang Seng in Hong Kong scuttling almost 3% lower, and the Shanghai Composite Index also down by just over 1%.”

Article Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown

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