Market report: Oil prices shoot higher and retail sales show panic at the pumps
Susannah Streeter, chief investment strategist, Wealth Club: ”It’s shaping up to be a frustrating Friday, with oil prices on the march higher yet again and companies and consumers left counting the cost of the conflict. In just a week, we’ve had a sharp reversal of hope, with the key Strait of Hormuz firmly shut and President Trump issuing shoot-to-kill orders to the US Navy for any boats laying mines.
Brent crude is up around 20% on the week and is trading around the hot level of $105 a barrel, as any hopes of an immediate easing of the crisis are shattered. President Trump has stressed he’s in no rush to end the war, and with the ceasefire extended for another three weeks, there’s set to be fresh financial pain ahead as key shipments from the region remain blocked. That is set to keep costs elevated for a vast array of commodities, from oil and gas to fertiliser and helium, which are vital for electronics manufacturing.
The FTSE 100 is set for a fresh downbeat start to trading as investors assess the repercussions for the multinationals listed on the index, and companies whose fortunes are tied to the health of the UK economy.
There was panic at the pumps in March, as escalating prices saw motorists race to fill up their tanks to try to save cash and build reserves in case of shortages. A surge in purchases on forecourts was the biggest driver behind the uplift in monthly retail sales. Automotive fuel sales shot up by 6.1%, helping push overall retail sales for the month up by 0.7%, following a fall of 0.6% in February. But strip out fuel sales and total retail sales only grew by 0.2% on the month. Clothing sales did improve thanks to the sunnier weather, but the uplift looks set to be short-lived. It’s set to be tough going ahead for retailers as fuel prices stay elevated and consumers brace for other bill increases, meaning they are likely to tighten their purse strings in the months to come.
Tech has again been the focus on Wall Street, where indices have hit fresh records this week. Investors appear to be clinging to hopes that worst-case scenarios won’t emerge in the Middle East. Strong earnings have lifted sentiment, but there’s also an underlying wave of enthusiasm for AI-focused stocks. Intel provided a lot of cheer after posting a massive revenue beat, showing it is well on the road to recovery. It reported revenue of $13.6 billion – a 7% increase from the same quarter a year earlier.
There’s a shift in AI trends, with demand for digital agents specialised in taking on tasks independently proving lucrative for Intel’s chips, in particular its high-performance central processing units. Intel is demonstrating that it is well positioned to benefit from fresh waves of infrastructure spending, as companies ringfence budgets to ensure they are not left behind by AI developments.”