Domestic data provides modest boost
United Kingdom (UK) retail sales rose 0.4% month-on-month (MoM) in December, comfortably beating expectations. Non-store retailers drove the advance, while demand for precious metals strengthened amid higher gold and silver prices.
The data offered some reassurance about consumer resilience heading into year-end. However, the bigger picture remains mixed, with household budgets still under pressure from elevated living costs despite recent inflation improvements.
Consumer confidence edged up to -16 in January, reaching its highest level since August 2024. The Growth from Knowledge (GfK) Consumer Confidence Index suggested improved sentiment around household finances, though the reading remains firmly in negative territory.
Sterling hovered just below $1.35, briefly firming on the retail sales data before settling slightly weaker against the US dollar. The British pound’s muted response highlighted ongoing caution about UK economic prospects, even when data surprises positively.
UK stocks steady as volatile week draws to close
London equities showed little movement as markets approached the end of a turbulent week. The FTSE 100 traded in a narrow range, with investors digesting recent global swings and domestic developments.
The lack of direction reflected a market caught between competing forces. Improved domestic data provided some support, but broader uncertainties about global trade policy and economic growth kept buyers cautious.
SSP and Babcock extend positive trading momentum
SSP reported encouraging first quarter (Q1) momentum, with group like-for-like sales up 5%. Strength came across all regions, led by the UK and Ireland, while full-year guidance remained unchanged.
The travel catering group’s performance reflected confidence in current trading patterns and progress. The steady outlook suggested management sees the positive trends continuing through the remainder of the financial year.
Babcock announced strong third quarter (Q3) delivery, extending the momentum seen in the first half. Organic revenue growth and margin progression supported confidence in meeting full-year expectations, including an 8% margin target.
Bank of Japan holds rates as inflation forecasts rise
Asian stocks edged higher after the Bank of Japan (BoJ) kept rates on hold, matching market expectations. The MSCI Asia ex-Japan index gained 0.5%, while the Nikkei 225 rose 0.3% as investors digested the central bank’s decision.
The BoJ raised four of six inflation forecasts, maintaining a hawkish tilt that reinforced market pricing for possible rate hikes later in 2026. Governor Ueda was scheduled to explain the decision in detail later in the day.
The Japanese yen weakened slightly to around 158.6 per dollar following the announcement. Japanese bond volatility went unaddressed in the statement, leaving some investors cautious despite generally stable market conditions.
The central bank’s stance keeps alive the prospect of further policy normalisation, though the timing remains uncertain. Markets will scrutinise Ueda’s comments for clues about when the BoJ might next move on rates.
Wall Street rebound supports Asian markets
United States (US) equities extended their recovery after President Trump stepped back from tariff threats linked to Greenland. The S&P 500 gained 0.5% and the Nasdaq 100 climbed 0.9%, helping underpin risk appetite across Asian trading hours.
The positive momentum from Wall Street provided support for regional markets, though gains remained relatively modest. Traders appeared content to consolidate recent advances rather than chase prices higher without fresh catalysts.
Dollar weakness pushes precious metals to record highs
The dollar hovered near its weakest levels of 2026 as Federal Reserve (Fed) futures priced a 96% chance of rates staying on hold. The greenback’s softness provided support for dollar-denominated commodities and alternative assets.
Gold, silver and platinum all pushed to fresh record highs as investors sought alternatives to fiat currencies. The precious metals rally reflected both dollar weakness and ongoing demand for safe haven assets amid geopolitical uncertainties.
Brent crude oil rose 0.9% to $64.61 as geopolitical risks eased slightly. The oil market found some support from the improved risk sentiment, though concerns about demand growth continue to cap gains.
Bitcoin climbed 0.7% to just under $90,000, extending gains alongside broader risk assets.