BUSINESS LIVE: Retail sales and  consumer confidence weaken; Telegraph launches formal

The FTSE 100 is trading 0.7 per cent lower at the open as industrial metal miners slip and a rise in long-term bond yields keep investors away from risky assets.

The surge in 10-year US benchmark yield overnight to briefly touch 5 per cent has raised borrowing costs around the world.

Adding to the declines, industrial metal miners have shed 1.6 per cent as copper prices fell on a strengthening dollar.

British retail sales fell more than expected in September as shoppers delayed buying autumn clothing due to unseasonably warm weather, along with broader cost of living pressures.

Sterling weakened against the US dollar after the data.

IHG expects to close out 2023 with ‘very strong’ financials as the Holiday Inn-owner reported a rise in quarterly revenue per room on strong travel demand. Still, shares are down 2.8 per cent.

Helena Davies, partner at law firm Brabners:

‘Retailers will be relieved to enter the Golden Quarter after September added to a mixed Summer of sales.

‘However, fragile consumer confidence has the potential to limit how successful the crucial trading period will be. Falling prices in areas such as food and drink is encouraging to see. But two years of cost-of-living pressures will force many into tightening discretionary spending on gifting and festivities.

‘Retailers may also think twice about further discounting, following this week’s consumer price index, which pointed to a £415million rise in business rates for the sector next year unless the Chancellor intervenes.’

America is only beginning the battle to bring down inflation, the US Federal Reserve head warned as bond markets were hit by renewed volatility.

Fed chairman Jerome Powell said yesterday that signs of an overheating economy could mean interest rates may have to rise again.

Elon Musk saw around £7.5billion wiped off his fortune as a slump in profits at the electric car maker sent shares tumbling.

In New York, the stock fell as much as 9 per cent, shaving £57billion off the company’s value, reducing the value of Musk’s stake – though his holding is still worth £75billion and he remains the world’s richest person.

Aled Patchett, head of retail and consumer goods at Lloyds Bank:

‘The falling/ flat sales suggest that, despite the inflation rate easing on essentials like food, consumers remain cautious with their monthly household budgets. However, our latest UK Sector Tracker shows that in September, prices charged by food and drink manufacturers fell at the fastest rate in more than three years. This could help foster greater spending habits and lead to further cost drops being passed through to consumers.”

‘Retailers are acutely aware that consumers continue to prioritise their spending, including reining back from branded and big-ticket purchases. Despite these factors, a slowing rate of food price inflation could influence shoppers’ decision making.

‘Companies eager to boost sales in the final months of the year will be hoping a combination of falling inflation and a flurry of discounts are enough to fuel consumer spending.’

Telegraph Media Group and the Spectator magazine have launched a formal sale process, in a deal that could fetch £600million.

In June, restructuring group AlixPartners said Bank of Scotland had appointed receivers for the shares of the publisher’s owners, who failed to repay loans from the bank.

The receivers said they would look for ways to recover the debts for the bank, which is a member of the Lloyds Banking Group.

In August, London-listed publisher National World had confirmed its interest in the Telegraph group, which owns the newspapers, and the company that runs The Spectator.

National World is sounding out potential investors to help finance a bid for the group, Reuters reported.

Silvia Rindone, EY UK&I retail lead:

‘A combination of supressed and unpredictable demand and higher interest prices are starting to affect the retailers that didn’t use the pandemic period to realign their businesses. Those that continued not to invest in stores, propositions or customers are finding that shoppers are choosing to go elsewhere.

‘Looking further ahead, the EY ITEM Club Autumn Forecast predicts a mixed picture for consumer spending, which is expected to benefit from several supports over the coming months.

‘Falling energy bills and easing food prices and inflation means overall inflation should decline to a predicted average of 7.4% this year, before falling to 2.9% in 2024.

‘As we enter the final ‘golden’ quarter of the year, pricing and inventory will be key priorities for retailers and brands.

‘Last year, many consumers delayed spending as late as possible to help manage their finances leading to heavy discounting much earlier than normal. Retailers will need to consider what impact this may have on cash flow at a critical time of the year.’

Retail sales slumped 0.9 per cent in September as evidence mounts that UK consumer strength is weakening, fresh data from the Office for National Statistics shows.

Separate figures from the GfK consumer confidence index on Friday show British consumer confidence has tumbled, reflecting households’ renewed concerns about the outlook for their personal finances and the broader economy.