FTSE rises as Euro 2020 gives UK retail sales a boost

·Contributor
·3 min read
A 4.2% rise in food sales, thanks to the Euro 2020, helped offset a decline in clothes and household goods shopping, according to ONS. Photo: Ashley Western/PA via Getty
A 4.2% rise in food sales, thanks to the Euro 2020, helped offset a decline in clothes and household goods shopping, according to ONS. Photo: Ashley Western/PA via Getty

London’s benchmark index pushed higher on Friday, climbing back above 7,000 points as UK retail sales edged 0.5% higher in June compared with May. This was slightly better than the 0.4% gain predicted by economists.

According to data from the Office for National Statistics (ONS), a 4.2% rise in food sales, thanks to the Euro 2020, helped offset a decline in clothes and household goods shopping.

Non-food store sales slipped 1.7% compared to the previous month because of declines at furniture stores and clothing shops, while fuel sales rose 2.3% as more people travelled. 

However, petrol and diesel sales still remain 2.1% below their pre-coronavirus pandemic February 2020 levels, the data showed.

The FTSE 100 (^FTSE) rose closed 0.9% higher, while the French CAC (^FCHI) advanced 1.3% as the county's private sector growth remained strong in July. The DAX (^GDAXI) in Germany was 1% higher. 

“The Euros kicked off a spell of celebratory spending as national teams progressed through the tournament, fans splashed the cash on food and alcohol. Beers, pizza and BBQ treats flew off the shelves, boosting spending in food stores by 4.2%. That marked a turnaround compared with May when the re-opening of indoor dining led to a decline in retail food sales,” Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown said.

She added: “Data indicates that fortunes are looking up a little for the high street as more customers return, partly as football fever has subsided.”

Watch: Euro 2020 delivers boost for retail sales but clothes stores slip back

It came as the UK’s private sector growth was at a four-month low, hit by shortages of staff and materials, and optimism for the future was at its lowest since October 2020.

July’s purchasing managers' index (PMI) data by IHS Markit and Chartered Institute of Procurement & Supply "dipped noticeably in July, offering another hint that the recovery is effectively on pause as COVID-19 cases rise," a note by ING said.

At 57.7 in July, the Flash UK Composite Output Index was down from 62.2 in June and the lowest since the easing of lockdown restrictions began during March.

PMI above 50 represents an expansion when compared with the previous month. A reading under 50 represents a contraction.

Read more: UK recovery 'on pause' as Delta variant rips through

Across the pond, the S&P 500 (^GSPC) rose 0.9% and the tech-heavy Nasdaq (^IXIC) gained 0.8%. The Dow Jones (^DJI) edged 0.8% higher at the time of the European close.

On Thursday, tech stocks led the way on Wall Street, with the Nasdaq closing at a new record high and S&P 500 just falling short.

Asian markets wobbled on Friday as traders struggled to maintain a global rally into a third day despite a string of healthy corporate earnings. The Delta variant continued to cast a shadow across markets.

The Hang Seng (^HSI) fell 1.3% and the Shanghai Composite (000001.SS) dipped 0.7%. The Nikkei in Japan was closed for a holiday on Friday as the Olympic Games, which was delayed from last year, opens in Tokyo.

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