Better-than-expected UK retail sales failed to give markets a boost on Thursday morning with the FTSE 100 falling heavily as investors remained cautious ahead of a barrage of US economic data due out later on.
UK retail sales volumes climbed 1.1% on the month to an all-time high in July as the heatwave boosted sales of food, alcohol and outdoor items. Volumes rose at an annual rate of 3.0%, the highest since January 2011.
"July's rise in sales volumes to a new record high is a further promising sign that a consumer resurgence is in progress," said Martin Beck, UK Economist at Capital Economics.
"But the pattern of sales suggests the sunny weather played an important role in driving purchases. And while the boost from the good weather will fade, the drag from falling real earnings will persist," Beck said.
Traders are keeping their eyes peeled for a long list of data in the States this afternoon, including: CPI inflation; jobless claims; New York and Philadelphia manufacturing; industrial production; and the NAHB housing market index.
Jobless claims in particular will be closely watched given the Fed's comments linking a recovery in the labour market to the potential scaling back of asset purchases. Analysts are predicting a slight increase in claims to 335,000 during the week ended August 9th, up from 333,000 the week before.
Meanwhile, the ongoing violence in Egypt continues to be a worry for markets after the interim government declared a state of emergency yesterday and Vice-President Mohamed ElBaradei resigned after a wave of bloody protests over recent days. Brent crude was trading at its highest intraday price in over four months today on fears that the unrest could disrupt oil supplies in the Middle East.
Imperial lights up after Q3 update
Imperial Tobacco rose this morning after saying it is sticking to its full-year expectations despite a fall in volumes and sales amid difficult market conditions in Europe.
Housebuilder Persimmon continued to pull back after a strong performance so far this year. Building supplies firm Travis Perkins was also lower.
Antofagasta fell after JPMorgan Cazenove downgraded its rating for the copper mining group from 'overweight' to 'neutral', saying that its valuation is up to speed with events. The bank named Glencore Xstrata as its top pick in the copper sector.
British Airways and Iberia owner IAG fell after revealing it is buying up to 220 Airbus short-haul jets for the two airlines and its newly acquired Spanish budget carrier Vueling.
FTSE 100 - Risers
Imperial Tobacco Group (IMT) 2,230.00p +3.53%
Wood Group (John) (WG.) 917.00p +1.55%
Admiral Group (ADM) 1,282.00p +1.18%
Randgold Resources Ltd. (RRS) 4,979.00p +0.73%
BT Group (BT.A) 327.90p +0.52%
Carnival (CCL) 2,487.00p +0.36%
Eurasian Natural Resources Corp. (ENRC) 230.00p +0.31%
Bunzl (BNZL) 1,359.00p +0.30%
HSBC Holdings (HSBA) 716.90p +0.14%
National Grid (NG.) 750.00p +0.13%
FTSE 100 - Fallers
Persimmon (PSN) 1,121.00p -5.32%
easyJet (EZJ) 1,262.00p -3.66%
TUI Travel (TT.) 371.90p -3.08%
AstraZeneca (AZN) 3,156.00p -2.86%
Travis Perkins (TPK) 1,582.00p -2.83%
Standard Life (SL.) 355.10p -2.63%
Fresnillo (FRES) 1,131.00p -2.58%
BG Group (BG.) 1,176.50p -2.49%
Aggreko (AGK) 1,656.00p -2.47%
Weir Group (WEIR) 2,243.00p -2.14%
FTSE 250 - Risers
Synthomer (SYNT) 232.40p +2.38%
BH Global Ltd. USD Shares (BHGU) 11.8 +1.64%
Dialight (DIA) 1,345.00p +1.51%
Derwent London (DLN) 2,375.00p +1.28%
St. Modwen Properties (SMP) 325.10p +1.12%
Computacenter (CCC) 515.00p +1.08%
LondonMetric Property (LMP) 115.90p +0.78%
Homeserve (HSV) 245.90p +0.74%
Lancashire Holdings Limited (LRE) 755.50p +0.73%
Euromoney Institutional Investor (ERM) 1,112.00p +0.72%
FTSE 250 - Fallers
Ophir Energy (OPHR) 350.00p -10.26%
Thomas Cook Group (TCG) 150.50p -5.05%
AZ Electronic Materials SA (DI) (AZEM) 302.00p -4.82%
Barratt Developments (BDEV) 308.90p -4.75%
Taylor Wimpey (TW.) 103.80p -3.35%
IP Group (IPO) 136.90p -3.25%
Berkeley Group Holdings (The) (BKG) 2,158.00p -3.19%
Carpetright (CPR) 643.00p -3.16%
Bovis Homes Group (BVS) 756.00p -3.14%
Dixons Retail (DXNS) 41.56p -3.12%