Europe Aims Higher, UK House Prices Rise

UK house prices jump +2% mom. Attention turn to BoE's Andrew Bailey and ADP employment data.

Charts (4)

Unexpectedly strong US manufacturing boosted Wall Street overnight, lifting the S&P and the Nasdaq to fresh record highs. The momentum is carrying over into Europe as AstraZeneca begins its final phase of covid-19 vaccine trials and as UK house prices rise.  Downbeat German retail sales having little effect on the Dax. Although the Euro remains under pressure.

German retail sales unexpectedly fell again in July. Sales slipped -0.9% mom in July adding to a -1.6% decline the previous month. The data comes after German and Eurozone inflation also unexpectedly turned negative last month. Recent data is raising questions over the stability of the economic recovery in not only the Eurozone’s largest economy but also across the bloc as a whole. Whilst the Dax is seemingly unfazed, the Euro is coming under pressure, slipping away from the $1.20 target, struggling to keep its head above $1.19.

House prices keep on rising
Housebuilders are on the rise following more good news on house prices. Nationwide house price data showed an impressive 2% jump in house prices in August mon, following from a +1.8% gain in July. Expectations had been for a milder 0.5% rise. House prices are benefitting from the stamp duty holiday, low mortgage rates, pent up demand and people reassessing their housing needs after lock down. However, concerns are also growing that this could be a false dawn. Unemployment expected to rise to 7.5% over the coming months as the government withdraws its support from the furlough programme. Fewer people employed will undoubtedly have an impact on the housing market. This will also come as the UK leaves the EU with no trade deal in place (so far) and then in March the Help to buy scheme which has underpinned a strong rise in housebuilders in also set to expire. 

Bailey’s comments key
Looking ahead, Bank of England Governor Andrew Bailey will take the hot seat in front of the Treasury select committee where is will discuss the economic impact of coronavirus. His comments will be key.

ADP in focus
Stateside US ADP employment data will be in focus and could drag on GBP, which has eased back from an 8-month high. Expectations are for 950,000 new job hires in the private sector versus just 167,000 in the previous month. A strong number will add to optimism surrounding the economic recovery following upbeat US manufacturing sector data. However, any disappointment could not only drag on sentiment but also pull the USD to multi year lows.

FTSE Chart


More from FTSE 100

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.