European stock markets opened in the green, with The FTSE 100 (^FTSE) gaining 0.3%, as storm Eunice heads for Britain and prompts danger to life warning.
The Met Office issued a second rare red weather warning on Friday to cover London, the south east and the east of England.
A red warning — meaning there is a danger to life from flying debris — is also in place for parts of south west England and south Wales. All trains in Wales are suspended and hundreds of schools will be closed, while the military is on stand-by.
The FTSE 100 (^FTSE) rose 0.3% after new data showed UK retail sales grew faster than anticipated in January. Figures from the Office for National Statistics (ONS) suggest that inflation has not massively impacted consumer spending yet, with the volume of goods sold online and in-store rising 1.9% and providing a much-needed rebound from the Omicron induced 4% knock in December.
But, experts expect consumers to tighten their purse strings in the coming months as inflation is set to peak at 7%, and households face higher energy bills and tax rises in April.
“Retailers will be acutely aware that the cost of living squeeze could see consumers scrutinising their spending more over the coming weeks and months, impacting trade,” said Paul Martin, UK head of retail at KPMG.
“As is the case for consumers, retailers also face inflationary pressures. Businesses have challenging decisions to make about how to absorb those, or how to pass them on without losing custom.”
The growth came despite UK consumer price inflation edging up to a new 30-year high of 5.5% earlier this week.
Elsewhere in Europe, France’s CAC (^FCHI) was 0.3% higher after the opening bell and the DAX (^GDAXI) rose over 0.1% in Germany.
Read more: UK consumer prices hit new 30-year high as inflation rises to 5.5%
Major benchmarks in the US sank on Thursday after the country warned that Russia was on the brink of invading Ukraine within “several days”.
However, investor fears over a Ukraine standoff could be alleviated after the Kremlin and the US agreed to talks next week. US secretary of state Anthony Blinken accepted an invitation from Russia’s foreign minister Sergey Lavrov to meet next week, provided there is no further Russian intrusions into Ukraine.
The tech-heavy Nasdaq (^IXIC) closed down 2.9% with broad based losses. Tesla (TSLA) shares plummeted 5.1%. The company accused US stock market regulator, the Securities and Exchange Commission (SEC) of “unrelenting harassment” against founder and CEO Elon Musk over his compliance with a 2018 agreement on his use of social media.
Morgan Stanley (MS) dropped 4.9%, Facebook-owner Meta (FB) slid 4.1%, Google-parent Alphabet (GOOGL) fell 3.7% and Microsoft (MSFT) declined 2.9%.
Wall Street’s blue-chip S&P 500 (^GSPC) fell 94.75 points, or 2.1%, to 4380.26, while the Dow Jones (^DJI) suffered its steepest one-day loss of 2022, dropping over 600 points, or 1.8%, to 34312.03.
“It is becoming increasingly clear that the US appears to think a Russian invasion is only a matter of time, and whether it comes this week, or in a few days, US officials want it to be clear that if, and when it does happen, Russia won’t be able to hide behind a “false flag” event to justify it,” Michael Hewson, chief market analyst at CMC Markets said.
Oil prices and yields on government bonds also fell. The 10-year US treasury yield (^TNX) retreated to 1.97% on Thursday from 2.04% on Wednesday. Brent (BZ=F) was down 0.8% to $92.23 (£67.67) per barrel, and Crude oil (CL=F) slid over 0.9% to $90.92pb.
Overseas, the pan continental Stoxx Europe 600 (^STOXX) declined 0.7%.
Asian markets also declined following the steep drop on Wall Street and geopolitical tensions but hopes of talks between the nations have softened the blow as the prospects of a war diminish.
The Shanghai Composite (000001.SS) was up 0.7%. The Hang Seng (^HSI) fell 1.9% while the Nikkei (^N225) declined over 0.4% in Japan.
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