22nd May 2026
FTSE 100 set to gain ground amid gentle optimism about a Middle East peace deal.
As expected retail sales volumes fell in April, dropping by 1.3% following a rise of 0.6% in March 2026.
Retail sales were revised down in both March and February, indicating a weaker environment across the sector.
Fuel volumes fell in April as some retailers suggested that motorists were conserving fuel. This followed strong March growth, with retailers reporting that motorists stocked up as prices rose.
UK consumer confidence rises very slightly in May from a low base, but sentiment remains subdued.
Brent crude prices rise again, after Iran’s stance on uranium stockpiles injects more uncertainty into Middle East peace talks.
Susannah Streeter, chief investment strategist, Wealth Club said, “Hopes for a resolution to the Middle East crisis continue to ebb and flow, but there remains cautious optimism at the end of the week, with the FTSE set to step into positive territory.
There’s been a re-evaluation of where interest rates could end up, with expectations for fewer hikes gaining ground, which has helped lift sentiment. Plus, talk of big stock market launches for SpaceX and rumours of an OpenAI listing have fanned the flames of tech enthusiasm once again.
"Even so, the energy crunch is still taking a toll on shoppers, and patterns of erratic behaviour are emerging. Overall retail sales fell by 1.3% as worries about the repercussions of the Middle East crisis collided with stormy conditions early in the month.
It was a very challenging time for department stores which experienced a 10.1% sales slump. The month was also frustrating for clothing and shoe retailers, with sales down 4.6% on the month. Style upgrades clearly took a back seat as the weather and the geopolitical climate stayed so uncertain.
Pumps on forecourts were quieter, which is likely to be a combination of people reducing journeys, but also using fuel stocked up during a bout of panic buying in March. The snapshot of sales for the sector was also downgraded in both March and February indicating a weaker environment for retailers even before bill hikes hit. It doesn’t look like the difficult situation will improve any time soon.
Confidence remains fragile going into May, and appetite to spend on big-ticket items has weakened. However, there are some signs the mood is a little less downbeat heading into late spring. As fears of fuel shortages have dissipated, there’s some sense that we are out of the immediate danger zone of rationing.
So, there’s been a tentative improvement in the closely watched GfK index, though it remains deep in negative territory, rising to -23 in May from -25 in April.
Many households, though, have been forced to dip into cash stashes to deal with rising prices, with the savings gauge plunging. Emergency pots will only last so long, and once more bills start to rise, there could be a fresh tightening of spending ahead.
Unfortunately, there’s not much significant movement so far in terms of energy costs. Oil prices are pushing higher again, with Brent crude edging above $105 a barrel as tensions around Iran’s nuclear negotiations continue to simmer. Comments from Iran’s Supreme Leader insisting enriched uranium stockpiles remain in the country have complicated hopes for a breakthrough deal, while proposals linked to tolls in the Strait of Hormuz are adding another layer of geopolitical uncertainty. Even so, crude remains lower over the week amid lingering optimism that diplomacy could prompt a breakthrough.
So, the FTSE 100 looks set to end the week on the front foot, with modest gains set to ripple through the index following a strong session in Asia. Japan’s Nikkei surged on renewed AI enthusiasm, with SoftBank soaring after reports that OpenAI and SB Energy, two of its key investments, are moving closer to US listings. The rally has added to optimism surrounding technology stocks, helping lift sentiment across Asian markets. A mood of cautious optimism is expected to end the week, but sentiment can turn very quickly, so stocks are set to remain volatile."