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The FTSE 100 fell 0.6% on Friday, ending two weeks of gains. Weaker commodity prices and a drop in domestic retail sales drove this decline. Mining stocks were particularly affected, with precious metal miners falling by 0.8% and industrial metal miners decreasing by 1.7%. Fresnillo, a notable precious metal miner, saw a 1.4% decline as gold prices dropped. 

The mining sector’s struggles were largely due to falling copper, gold, and other metals prices. These price declines were influenced by reduced demand from China and expectations of a US interest rate cut. Copper prices, in particular, hit a three-month low. 

The retail sector also faced challenges, with personal goods stocks declining by 5.3% and retail stocks falling by 0.3%. Despite the broader market decline, there was a bright spot in the aerospace and defense sector, which gained 0.7%. The increase followed discussions between British defense firms and Ukrainian President Volodymyr Zelenskiy about increasing military support. 

(FTSE 100 Index Monthly Chart) 

UK retail sales declined 1.2% month-over-month in June 2024, following May’s 2.9% rise and surpassing forecasts of a 0.4% fall. The drop was attributed to election uncertainty, poor weather, and low footfall. Non-food stores decreased by 2.1%, food stores by 1.1%, and online spending by 2.7%. 

Over the three months to June, retail sales contracted 0.1%. Year-on-year figures showed a 0.2% decline, contrasting with May’s revised 1.7% rise and missing the expected 0.2% gain. 

The unexpected retail slump impacted monetary policy outlooks. The probability of an August interest rate cut by the Bank of England rose to 43%, up from 39% a day earlier. The weak retail performance indicates a softening consumer sector, potentially influencing upcoming economic and monetary decisions in the UK. 

(UK Retail Sales MoM%，Office for National Statistics) 

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