Moves by three major central banks in a week to continue pushing up interest rates has put a halt to any thought of a Santa rally for the markets.
The Nasdaq sank 3.2% on Thursday while European stocks continued their decline on Friday morning, including a 0.5% drop in the FTSE 100.
Russ Mould, investment director at AJ Bell, said: “The fall in US and UK retail sales just goes to show how the higher cost of living is hurting people and businesses. People appear to be more cautious on Christmas spending and they’re going out less which is hurting the hospitality industry.
“When Christmas wish-lists include a warm house rather than a PlayStation or Apple Watch, you know the country is experiencing a deep freeze in both weather and the economy.
“The idea that interest rates will keep going up has shifted investors’ attention back to the banking sector, with NatWest among the top FTSE risers. It is one of the few industries whose earnings should benefit from the higher cost of borrowing.”