UK Retail Sales Awaited as Sterling Shows Resilience

UK retail sales data is the main focus today as the British pound recovers from a mid-week drop, down 0.4% for the week. European markets are expected to open softer, while Nvidia supplier TSMC led gains in Hong Kong and Taiwan after posting strong earnings. Meanwhile, China's latest economic data shows slowing growth but also hints of optimism with rising retail sales and new stimulus measures.

Equities

The FTSE 100 closed at its highest level in nearly five months on Thursday, rising by 0.7%. This gain was supported by news from Rentokil, whose shares jumped 8.8% after announcing a major overhaul of its North American operations, including changes in senior management. Precious metal miners such as Hochschild Mining and Centamin also saw significant increases, up 9.4% and 4.6%, respectively, as gold prices hit a record high amid expectations of further rate cuts from the Federal Reserve.

In contrast, Mondi fell by 7.5% after reporting a weaker core profit compared to the previous quarter. Other UK companies like Smiths Group and Persimmon both declined by 1.8%, while Howden Joinery dropped 0.5%, with all three trading ex-dividend.

Across the Atlantic, the Dow Jones Industrial Average advanced 0.37%, closing at a new record of 43,239.05 points. Strong retail sales data and upbeat forecasts from chipmaker Taiwan Semiconductor Manufacturing Co (TSMC) supported the index. TSMC’s shares surged 9.8% after forecasting higher fourth-quarter revenue, and Nvidia added 0.9% on optimism related to artificial intelligence demand. In the financial sector, Travelers Companies and Blackstone both posted strong third-quarter earnings, with shares rising by 9% and 6.3%, respectively.

Meanwhile, the S&P 500 and Nasdaq Composite saw little change, with the former edging down by 0.02% to 5,841.47 and the latter rising slightly by 0.04% to 18,373.61. Notably, health insurer Elevance Health plunged 10.6% after slashing its full-year profit forecast, marking its worst performance since March 2020. The broader semiconductor index also gained 1%, driven by optimism following TSMC’s forecast.

In the bond market, US Treasury yields increased after strong economic data, with the benchmark 10-year note yield rising to 4.091%. Gold prices reached a record high, supported by expectations of more interest rate cuts and uncertainty surrounding the upcoming US election.

Forex & Commodities

The US dollar strengthened to an 11-week high on Thursday after data showed US retail sales rose by 0.4% in September, beating expectations. This reinforced forecasts for moderate rate cuts by the Federal Reserve.

The dollar index increased by 0.3% to 103.81, while the dollar gained 0.4% against the Japanese yen, reaching 150.24 yen. Meanwhile, the euro fell by 0.3% to $1.0826, following the European Central Bank’s decision to cut rates for the third time this year. Investors are now speculating on a possible fourth cut in December.

Gold prices surged past $2,700 per ounce, driven by demand for safe-haven assets amid election uncertainty in the US and tensions in the Middle East. Spot gold rose 0.6% to $2,709.28, marking a 2% gain for the week.

In the oil market, crude prices steadied after five days of declines. Brent crude was up 0.4% at $74.71 per barrel, while US West Texas Intermediate increased by 0.4% to $70.96 per barrel. Despite Thursday's gains, both Brent and WTI are on track for a 6% weekly loss, as concerns about future demand weighed on the market following forecast revisions from OPEC and the International Energy Agency.