The retail sector is set to be on the worst hit from the general election result, as many fear the hung parliament will hit consumer spending.
This morning‘s news sent the sterling plummeting, with Sainsbury‘s, Next and Marks & Spencer‘s share prices hot on its heels.
With inflation already squeezing consumer spending since the Brexit vote, further damage to the pound is expected to exacerbate the problem, with non-essential retail sectors like fashion expected to be worst hit.
Conversely, luxury fashion retailers Burberry and Ted Baker saw their share prices rise by two per cent each this morning as investors recognised the international companies’ ability to cash in on the weaker pound with oversees consumers making the most of favorable exchange rates.
“The implication is clear, consumer‘s disposable incomes are expected to be stretched, and big ticket items, like property upgrades, as well as little luxuries, like regular meals out, are expected to be among the first to go,” Hargreaves Lansdown equity analyst Nicholas Hyett said.
“Sinking share prices at the likes of Next, Restaurant Group, easyJet and Dixons Carphone are all a reflection of the fact that lower sterling and political uncertainty mean the pounds in Britons‘ pockets seem set to be lighter going forwards.
“There‘s good news for UK investors who are invested in more international businesses though. The combination of international earnings and a wealthier customer base is supporting retailers such as Burberry and Ted Baker.”