Archive forApril, 2016

House prices in UK register slowdown in April

According to the Nationwide Building Society, house prices in the UK increased 4.9% y-o-y vis-à-vis 5.7% in March. During the month, prices increased 0.2% m-o-m. The slowdown was primarily ascribed to a surge in property sales in March to offset the additional stamp duty on buy-to-let properties.

Forward diary: 2nd – 6th May 2016

Company and economic announcements planned for the week commencing 2nd May 2016

UK GDP growth for Q1 2016 weakens amid ‘Brexit’ concerns

According to preliminary estimates from the Office for National Statistics, the UK’s GDP growth in Q1 2016 slowed to 0.4% q-o-q compared with 0.6% in Q4 2015. The primary reason for the slowdown was ascribed to the increasing risk of Britain’s exit from the Eurozone. The economy expanded 2.1% y-o-y.

UK banks approve fewer mortgages in April: BBA

According to figures released by the British Bankers’ Association, banks in the country approved just 45,096 mortgages for house purchases in March, compared with 45,646 mortgages in February. This number is the lowest since December, but recorded an increase of 14% y-o-y. The number of mortgages has been impacted particularly by the imposition of higher tax on buy-to-let properties.

UK factory output edges up in three months to April: CBI

As per the Confederation of British Industry, the quarterly gauge of factory output swung to +1 in the three month to April compared with -2 at the beginning of the year. Although orders have continued to fall, the pace has remained similar to that over the three months to January. The agency expects lower exchange rates to support manufacturers and exporters whose businesses were impacted by slowdown in global trade.

Greece debt relief negotiations expected to enter next stage

At the meeting in Amsterdam on Friday, Eurozone finance ministers suggested they were willing to start talks on easing the high debt burden on Greece. The finance ministers agreed on a series of contingent plans from Greece, equivalent to 2% of its GDP, which is likely to be activated if the country fails to meet its debt and deficit targets.

Draghi warns of negative inflation in Eurozone

ECB Chief Mario Draghi cautioned that inflation in the Eurozone may turn negative again during the year even as the ECB upholds key interest rates. However, he expects the inflation to begin rising before the year end and expand further in 2017. The Eurozone inflation stood at zero last month, which was well below the ECB’s target of around 2%.

Forward diary: 25th – 29th April 2016

Company and economic announcements planned for the week commencing 25th April 2016

UK households financial outlook worsens

According to the Markit Household Finance Index for April, the UK households outlook for their financial well-being over the next 12 months, deteriorated for the first time in three months. The reading for UK households outlook for financial well-being index over the next 12 months dropped to 49.6 in April compared to 51.4 in March. A reading above 50 indicates an improvement in sentiment. On the price front, inflation pressures increased in April.

Eurozone Banks tighten home mortgage norms

According to European Central Bank survey, Eurozone banks tightened standards for granting home mortgages, after the implementation of the EU mortgage credit directive, requiring banks to extensively assess borrowers. Banks in Netherland and Germany tightened restrictions, while those in Italy and Spain eased them. Overall, banks are expected to follow stricter credit standards in the second quarter of 2016.

Osborne cautions against economic damage due to Brexit

British Chancellor George Osborne warned voters of the economic ramifications in the country following Britain’s exit from the EU. The minister quoted figures from the Treasury to indicate the economic loss that the country would eventually suffer due to lower trade, business and investment with the EU, the world’s biggest trading bloc. He further added that breaking away may cost each household up to £4,300 a year by 2030.

Talks collapse as oil producers fail to reach agreement

The long-awaited meeting between oil producers to freeze production at existing levels to curb glut ended indecisive. OPEC members such as Saudi Arabia, Qatar, Venezuela and Russia participated to discuss plans to limit production and protect their profits. The talks stumbled after Iran refused to comply with the production cut.

Bank of England maintains bank rate

The Monetary Policy Committee of the Bank of England (BoE) voted 9-0 to retain the bank’s benchmark interest rate at 0.5%, amid weak inflation and moderate growth. The bank warned that the EU referendum could negatively impact growth in the first half of the year.

Forward diary: 18th – 22nd April 2016

Company and economic announcements planned for the week commencing 18th April 2016

UK house price balance eases in March

As per the Royal Institution of Chartered Surveyors, monthly house price balance in the UK fell to +42 in March from +50 in February, below market expectations of +50. The agency stated that anxiety ahead of the referendum on European Union membership is negatively impacting home buyers.

Beaufort wins Best Market Newsletter award

At The City of London Wealth Management Awards ceremony at The Guildhall last night Beaufort Securities picked up the award for Best Market Newsletter.

China’s export data improves in March

As per the data released by China’s General Administration of Customs, the country’s dollar-denominated exports for March rose 11.5% y-o-y to US$160.8bn after a 25.4% decline in February, expanding for the first time in nine months. Imports fell 13.8% y-o-y to US$131bn, following a similar dip in February. The trade surplus for March narrowed to US$29.86bn from February’s US$32.5bn.

Like-for-like sales in UK fall in March

According to the British Retail Consortium, like-for-like sales in the UK declined 0.7% y-o-y in March after increasing 0.1% in February. The drop was the highest since August 2015. The agency stated that the decrease in sales was due to increased online shopping and closure of shops due to Easter.

Industrial output in UK falls in February

As per the Office for National Statistics, the UK’s industrial output contracted 0.5% y-o-y in February, registering the highest fall since August 2013, after gaining 0.1% in January. Furthermore, manufacturing output dropped 1.8% y-o-y in February after a 0.3% decline in January. The fall in output was due to weak demand for commodities and slowdown in the global economy.

What Will Drive the Price of Oil Going Forward? Mike Franklin on Bloomberg’s “Countdown”, 8th April 2016

Mike Franklin, chief investment strategist at Beaufort, discusses factors driving the price of oil and the outlook for Japan. He speaks with Manus Cranny on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

Yellen Frightened to Make Sharp Move: Mike Franklin on Bloomberg’s “Countdown”, 8th April 2016

Mike Franklin, chief investment strategist at Beaufort, discusses the outlook for Federal Reserve monetary policy and what it may mean for markets. He speaks with Manus Cranny on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

WTO cuts global trade growth forecast for 2016

The World Trade Organization (WTO) downgraded its global trade growth forecast for 2016 to 2.8% from 3.9%, in line with the growth estimates for 2015 and 2014. The decline in estimates is ascribed to uncertainties surrounding the global economy. However, the agency expects global trade to rise 3.6% in 2017, led by increased demand for imported goods in Asia.

Forward diary: 11th – 15th April 2016

Company and economic announcements planned for the week commencing 11th April 2016

New car sales in UK reach 17-year high in March

As per data from the Society of Motor Manufacturers and Traders, new car sales in the UK rose 5.3% y-o-y to 518,707 in March, the highest volume since 1999. This increase can be ascribed to growth in the UK’s car industry, driven by cheaper finance and stronger exports. For the first three months of 2016, sales rose 5.1% to 771,780 units.

UK shop prices fall for 36th consecutive month

According to the British Retail Consortium, shop prices in the UK fell 1.7% y-o-y in March compared with 2.0% y-o-y in February, marking the 36th straight month of decline. The drop in prices follows the intense competition and price war amongst the retailers. Food prices decreased 0.4% in March, while non-food deflation rose to 2.6%.

UK construction growth remains steady in March

As per data released by Markit, the construction PMI in the UK stood at 54.2 in March, similar to the 10-month low in February. In the construction sector, rapid expansion in commercial work and civil engineering activity was offset by slowdown in residential building. New orders have risen at the weakest pace since the pre-election slowdown in April 2015.

House prices in UK increase in March

As per Nationwide, house prices in the UK rose 5.7% y-o-y in March compared with 4.8% in February, marking the highest y-o-y gain since February 2015. On an m-o-m basis, prices increased 0.8% in March against 0.4% in February. The surge in house prices was due to the introduction of surcharge tax on buy-to-rent properties. The agency expects prices to rise in the near term, driven by lower unemployment, wage growth, low interest rates and shortage of homes for sale.

Forward diary: 4th – 8th April 2016

Company and economic announcements planned for the week commencing 4th April 2016

UK GDP for Q4 2015 higher than estimates

As per data from the Office for National Statistics, the UK’s GDP increased 0.6% q-o-q in Q4 2015 from earlier estimates of 0.5%, marking the 12th consecutive quarter of growth since early 2013. The improvement was led by huge growth in the services sector. For the full year 2015, GDP grew at 2.3% from earlier estimates of 2.2%.