Archive forJanuary, 2016

UK economy grows 0.5% in fourth quarter

As per data from the Office for National Statistics, the UK economy grew 0.5% q-o-q in Q4 2015 from 0.4% in the previous quarter. On a y-o-y basis, the economy expanded at 1.9% in Q4 2015, compared with 2.1% in the previous quarter, recording the smallest rise since early 2013. Conversely, annual growth in 2015 stood at 2.2%, down from 2.9% in 2014.

UK house price growth slows in January 2016

According to data released by Nationwide, house prices in the UK rose 0.3% m-o-m in January 2016 vis-à-vis 0.8% in December 2015 With a high possibility of interest rates remaining flat at 0.5% and wages heading north, the agency expects demand to surge. However, Nationwide warned that a lag in construction activity may lead to rise in house prices.

World Bank cuts oil forecast for 2016

As per the latest report, the World Bank has cut the 2016 oil price forecast to US$37 per barrel from US$51 per barrel in October 2015 report. The agency cited Iran’s return to the market and greater resilience in US production as the prime reasons for lowering the forecast. The Bank also lowered the price forecast for 37 of the 46 commodities it monitors.

Chinese shares fall sharply

Chinese markets fell sharply overnight amid traders concerns over oil prices, and despite an injection of liquidity into the mainland market by the central bank. The Shanghai Composite index closed down 6.42% at 2,749.79. In Hong Kong the Hang Seng lost 2.4% to stand at 18,879.44. Elsewhere, Asian markets followed US shares downwards as further declines in the oil price continued to unnerve investors.

UK government borrowing decreases in December 2015

The UK government’s borrowing stood at £7.5bn in December 2015, £4.3bn lower than December 2014. The total borrowing for the financial year to date stood at £74.2bn, £11bn lower than at this point in 2014. The borrowing has already surpassed the £68.9bn forecast for fiscal year 2015-16 by the Office for Budget Responsibility (OBR).

ECB maintains interest rates at 0.05%

The ECB’s Governing Council kept its main interest rate at a record low level of 0.05%, in line with market expectations. The deposit and marginal lending rates were maintained at -0.3% and 0.3%, respectively. The ECB’s Chief Mario Draghi stated the bank would review and reconsider its monetary policy at the next meeting in March.

UK house price balance edges up in December 2015

As per the Royal Institution of Chartered Surveyors, the monthly house price balance in the UK rose to +50 in December 2015 from +49 in November, in line with market expectations. In addition, overall demand for new properties increased to the highest in three months.

IMF downgrades global growth forecast

IMF slashed its global forecast for 2016 and 2017 to 3.4% and 3.6%, respectively, down by 0.2 percentage points from the previous estimates. The agency cited slowing Chinese economy, weak commodity prices and risks in some large emerging economies as the main reasons underlying the downgrade.

Volatility in the Markets, Have They Overshot?: Michael Franklin on Bloomberg Markets, 15th January 2016

Beaufort Chief Investment Strategist Michael Franklin discusses the volatility in the markets and his outlook for commodities. He speaks on “Bloomberg Markets.” (Source: Bloomberg) – 15/01/2016

Chinese economy grows at slowest pace in 25 years

The Chinese economy grew at 6.9% in 2015, compared with 7.3% in 2014, the slowest in 25 years. Manufacturing growth decelerated to 6% in 2015 from 7.3% in 2014. However, the services sector expanded 8.3% in 2015 from 7.8% in 2014. In Q4 2015, economy rose at 6.8% y-o-y, down from 6.9% in Q3 2015, in line with market estimates.

House prices in UK increase in January 2016

As per the property tracking website Rightmove, the UK’s house price index rose 0.5% m-o-m in January 2016 compared with a 1.1% fall in December 2015, its first increase in three months. On a y-o-y basis, house prices improved at a slower rate of 6.5% in January after a 7.4% gain in December.

Bank of England maintains bank rate

The Monetary Policy Committee of the Bank of England (BoE) retained its benchmark interest rate at 0.5%, with an 8-1 vote in favour of maintaining rates. The reading has not been changed since March 2009, and matched market expectations.

Eurozone industrial production falls in November

As per data released by Eurostat, the Eurozone’s industrial production declined 0.7% m-o-m in November, after a 0.8% increase in October, the largest monthly drop since August 2014. The decrease in output was led by the energy sector, which fell 4.3% during the month. On y-o-y basis, the industrial output grew 1.1%, which was slower than the 2% growth recorded in October.

China’s exports improve in December

In December 2015, China’s exports (denominated in the yuan) rose 2.3% y-o-y, the first increase since June 2015, beating expectations of a 4.1% fall. On the other hand, China’s imports declined 4% in December 2015, beating forecasts of a 7.9% fall. China registered a 1.8% y-o-y fall in exports for 2015 and a 13.2% y-o-y decline in imports.

Retail sales in UK increase marginally in December

As per the British Retail Consortium, like-for-like retail sales in the UK rose 0.1% y-o-y in December 2015, after declining 0.4% in November. Meanwhile, retail sales increased 0.9% y-o-y for the three months to December 2015. The markets were expecting higher sales during the period owing to the Christmas season.

UK trade balance narrows in November

As per data from the Office for National Statistics (ONS), the UK’s trade deficit narrowed to £3.170bn in November from £3.507bn in October. The deficit contracted, as lower oil prices reduced the cost of imports, offsetting the higher goods trade deficit with other countries in the European Union.

Eurozone economic sentiment improves in December

As per data from the European Commission, economic sentiment in the Eurozone improved to 106.8 in December from 106.1 in November, the highest since early 2011. The upside was led by the industrial segment, where the economic sentiment index component rose to -2.0 from -3.2. The services sector’s confidence index also improved to 13.1 from 12.8.

Eurozone growth at four month high in December

According to Markit, the final reading of the Purchasing Managers’ composite index (PMI), which combines the manufacturing and services sectors’ surveys, stood at 54.3 in December from an earlier estimate of 54.0. The improvement was driven by the services industry with a PMI reading of 54.2 in December.

Shop prices in UK fall again in December

According to the British Retail Consortium, shop prices in the UK declined 2.0% y-o-y in December compared with a 2.1% fall in November, marking the 32nd consecutive month of decline. The decrease in prices was mainly due to the non-food prices, which dropped 3.0% y-o-y in December.

Manufacturing growth in UK slows in December

As per Markit, the UK Purchasing Managers’ Index (PMI) fell to 51.9 in December from 52.5 in November, the lowest in the last three months. The manufacturing sector failed to contribute to the country’s growth in the first three quarters of 2015, with the services sector driving the UK’s economic recovery.

UK’s private sector gathers pace in December

As per the Confederation of British Industry (CBI), the balance of firms increased to +20% in December from +13% in November, above the long-run average of +5%. The improvement was led by growth in the retail and wholesale sector.