Stocks to rise slightly; house prices slump
(Alliance News) – Stocks in London are set to open edge into the green on Monday, following a bruising week which erased the FTSE 100’s gains in the year-to-date.
IG says futures indicate the FTSE 100 to open up 2.7 points at 7,265.13 on Monday. The index of London large-caps fell 47.78 points, 0.7%, at 7,262.43 on Friday, ending the week down 3.5%. The index is now down 3.9% in 2023 so far.
In early UK news, house prices declined at the fastest pace for the month of August since 2018, while year-on-year, they declined for the first time since prior to the pandemic, according to numbers from Rightmove. The property portal’s latest findings showed house prices fell 1.9% on-month to GBP364,895 in August.
It is the chunkiest August price fall since 2018.
Prices had declined by 0.2% in July from June. On an annual basis, prices fell 0.1% in August, the first year-on-year decline in house prices since 2019.
Further afield, China’s central bank cut a key interest rate in an attempt to counter the post-Covid growth slowdown in the world’s second-largest economy. The one-year loan prime rate, which serves as a benchmark for corporate loans, was reduced to 3.45% from 3.55%, the People’s Bank of China said in a statement, while the five-year LPR, which is used to price mortgages, was held at 4.2%.
Closely followed by the markets, the two rates are now at historic lows, after previous reductions in June. The decision is intended to encourage commercial banks to grant more loans and at more advantageous rates
“Unsurprisingly markets were less than impressed by this move, expecting authorities to be much more forceful. This lack of urgency has weighed on Asia markets and is unlikely to spark demand in an economy where loan demand appears to be low anyway,” said CMC Markets’ Michael Hewson.
In China on Monday, the Shanghai Composite was down 0.5%, while the Hang Seng index in Hong Kong was down 1.5%. Meanwhile, the Nikkei 225 index in Tokyo was up 0.6%. The S&P/ASX 200 in Sydney was down 0.3%.
In the US on Friday, Wall Street ended mixed, with the Dow Jones Industrial Average up 0.1%, the S&P 500 flat and the Nasdaq Composite down 0.2%.
A focal point for the week will be the Jackson Hole Symposium, where Federal Reserve Chair Jerome Powell is expected to speak on Friday.
“The chances are that he will keep his hawkish stance despite falling inflation. The minutes from the latest [ Federal Open Market Committee] meeting highlighted significant upside risks’ on inflation. This being said, the fear of decidedly hawkish Fed is already priced in, and if there is no more hawkish surprise from this week’s Jackson Hole meeting, tensions among investors could ease by next week, and give markets some breathing room,” said Swissquote Bank senior analyst Ipek Ozkardeskaya.
The dollar was mixed against major currencies in early exchanges in Europe.
Sterling was quoted at USD1.2736 early Monday, unchanged from the London equities close on Friday. The euro traded at USD1.0881, higher than USD1.0876. Against the yen, the dollar was quoted at JPY145.37, edging up versus JPY145.20.
Gold was quoted at USD1,889.47 an ounce early Monday, lower than USD1,892.45 on Friday. Brent oil was trading at USD85.36 a barrel, higher than USD84.21.
Monday’s economic calendar has a German producer price reading at 0700 BST.
The local corporate calendar has half-year results from miner Thungela Resources.
By Elizabeth Winter, Alliance News senior markets reporter
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