Must read: retail sales, consumer confidence, Just Eat, Taylor Wimpey

After the worst day for the blue-chip index in months, our head of investment surveys markets and the morning's big news.

After the worst day for the FTSE 100 in over two months, after the Bank of England raised interest rates by 50 basis points, European markets have opened mixed with the UK index opening around the flatline.

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UK RETAIL SALES

UK November retail sales fell by 0.4% month-on-month, below expectations for growth of 0.3%. Meanwhile, year-on-year retail sales fell by 5.9% below forecasts for a decline of 5.6%. It comes after there was a jump in the previous month thanks to the additional bank holiday day for the Queen’s funeral. There was a notable drop in sales of second-hand goods, auto-fuel offset to some extent by higher sales in food stores, department stores, and household goods.

The consumer is facing headwinds from falling real wage growth and inflation which has prompted the cost-of-living crisis by contributing to the squeeze on household budgets. Individuals are having to spend a larger proportion of their incomes on essentials like food and gas bills, which means there is less left over to spend on non-essential items with consumers cutting back on clothes and fuel spending. It looks like it could be a more modest Christmas for many families this year while retailers desperate await that much needed seasonal festive boost to spending.

• UK interest rates rise to 3.5%
• Cash is not king: what falling inflation will mean for investors in 2023

UK CONSUMER CONFIDENCE

UK GfK consumer confidence rose to -42, its third consecutive monthly improvement, but remains close to September’s all-time low of -49 and sharply below the average reading of -10. The outlook for the personal finance situation over the next 12 months remained at a record low in the report. GfK said there was a ‘tough road ahead.’ With inflation stuck in double digits, falling real wages, and the UK economy heading towards a recession, the consumer is facing a perfect storm that has resulted in the longest period of rock-bottom confidence for nearly half a century.

JUST EAT TAKEAWAY/ CO-OP

Just Eat Takeaway.com NV (LSE:JET).com and Co-op are launching a nationwide UK grocery delivery partnership. It will initially be rolled out across 50 stores next year with the service expected to expand to over 1,000 Co-op stories by Spring 2023. Shoppers will be able to order items for speedy delivery in as little as under half an hour via the Just Eat app or website.

Many food delivery business have touted groceries as the next major growth frontier. However, this is an extremely competitive space with Q-commerce businesses, other food delivery players such as Uber Eats and Deliveroo (LSE:ROO), as well as the supermarkets, all fighting for a slice of this pie. We’ve started to see consolidation in Q-commerce sector to combat the competitive forces with the recent tie-up between Getir and Gorillas. The economics are tricky, with a battle to the bottom on price and speed of delivery. Plus the cost-of-living crisis has prompted consumers to cut back on non-essential services such as food delivery and streaming services. 

Shares in Just Eat Takeaway.com have had a tough time this year, weighed down by the market volatility, intense competition in food delivery, the slowdown facing the consumer and inflation which is increasing costs and making it more difficult to be profitable.

TAYLOR WIMPEY

Taylor Wimpey (LSE:TW.) has named Robert Noel as its new chair from April 2023, replacing Irene Dorner who is stepping down from the role for personal family reasons. Noel was chief executive of Land Securities from 2012 to 2020 and is currently a senior independent director at Taylor Wimpey.

Shares in Taylor Wimpey have fallen more than 40% so far this year, outperforming rival Persimmon but sharply underperforming the FTSE 100. Cost inflation, rising mortgage rates. and the fiscal fiasco around the mini-budget have been key headwinds for the housebuilder this year, with the property market starting to cool as the UK economy slows. Next year will be challenging for the sector as real-estate prices ease and the consumer continues to struggle with pressures on the cost-of-living and falling real wages.