LIVE MARKETS-UK consumer confidence falls off a cliff

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

UK CONSUMER CONFIDENCE FALLS OFF A CLIFF

British consumer confidence is waning as mounting financial pressures and worries about the labour market affect the outlook, and stock market analysts are taking note.

Investment group Shore Capital says their "cautiously optimistic" consumer outlook for 2025 has turned to something "more neutral to mild pessimism".

"We are ... less optimistic about the prospects for UK household expenditure through 2025 into 2026 in the absence of policy adjustments and/or better macroeconomic news flow," Shore Capital research analysts say.

Earlier on Monday, S&P Global said consumer sentiment in Britain fell to its lowest level in a year in January.

"The January data sets a gloomy stage for 2025, with falling household confidence adding downside risks to an economy which is already flatlining," writes Maryam Baluch, Economist at S&P Global Market Intelligence.

So what does it mean for consumer stocks?

"Within the UK consumer equity arena, with an expectation of higher but broadly manageable food inflation, we are actually quite warm to UK grocers, and much of their domestic supply chain," writes Shore Capital.

For the food & beverage and discretionary consumer goods markets, the outlook is less certain, according to Shore, and they prefer businesses with high quality international earnings such as AB Foods, JD Sports, Next, SSP and Whitbread.

For domestic discretionary consumer goods companies, the outlook is more subdued.

"We believe that households will continue to prioritise experiences, especially affordable treats, travel & leisure, including entertainment, over goods," Shore says.

"Replacement cycles seem to be extending whilst high interest rates impede demand for big-ticket home goods, as do low housing transactions," they add, "hence our deepening caution on bigger ticket non-food retail."

(Samuel Indyk)

FOR MONDAY'S OTHER LIVE MARKETS POSTS

WHAT TO EXPECT FROM EUROPE'S Q4 EARNINGS CLICK HERE

STOXX INCHES HIGHER; RENEWABLES NAMES CAP GAINS CLICK HERE

EUROPE BEFORE THE BELL: FUTURES TEPID AHEAD OF TRUMP'S RETURN CLICK HERE

MR MARKET MEETS TRUMP 2.0 CLICK HERE