UK markets were positive this week, with the FTSE 100 Index gaining 0.5% to trade at 7,500 points at the time of writing. Official figures published on Wednesday showed UK mortgage approvals rose more than expected in October, pointing to stabilisation in the property market after a prolonged period of low house sales.
Net mortgage approvals for house purchases rose to 47,400 in October, from 43,700 in September, Bank of England data showed. The number was well above economists’ expectations of 45,000 and the highest since July, but about 28% below its level in October 2019, before the pandemic.
UK house prices unexpectedly grew 0.2% between October and November, according to data from mortgage provider Nationwide. The increase follows a 0.9% expansion in the previous month and a marginal rise in September. Whereas economists polled by Reuters had forecast a 0.4% fall. The data provides further evidence of stabilisation in the property market as high mortgage rates ease.
A healthy housing market affects the wider economy via house-related spending and household confidence. The British Retail Consortium said on Tuesday that annual shop price inflation slowed to 4.3% from 5.2% in October, the sixth consecutive monthly decline and the lowest rate since June last year. The data raised hopes that slowing inflation and strong wage growth will support sales during the festive period.
Inflation in the Eurozone has fallen far more than expected to 2.4% in November, the slowest annual pace since July 2021, providing some relief to consumers and fuelling hopes that interest rates could soon be cut. Falling energy prices and lower growth in food and services prices were the main factors behind the slowdown in the harmonised index of consumer prices, according to data published on Thursday by Eurostat, the EU’s statistical arm. Economists polled by Reuters had expected a more modest slowdown to 2.7%.
Commodity markets
In the commodity markets, Brent crude futures traded around $81 per barrel on Friday and are set to end the week little changed after OPEC+ producers agreed to voluntary output cuts for the first quarter next year that fell short of market expectations.
Saudi Arabia, Russia and other members of OPEC+, who pump more than 40% of the world’s oil, agreed to voluntary output cuts of about 2.2 million barrels per day (bpd), for the first quarter of 2024.However, at least 1.3 million bpd of those cuts were an extension of voluntary curbs that Saudi Arabia and Russia already had in place.
OPEC+’s output of some 43 million bpd already reflects cuts of about 5 million bpd aimed at supporting prices and stabilising the market. The cuts are expected to be unwound gradually after the first quarter, market conditions permitting. OPEC+ is focused on lower output with prices down from near $98 in late September and concerns brewing over weaker economic growth in 2024, and expectations of a supply surplus.
Gold prices traded around $2,045 an ounce on Friday and are set to mark a third straight weekly gain, after data showing cooling inflation boosted bets that the Federal Reserve is done with its tightening cycle and may start cutting interest rates next year.
Equity markets
US equity futures were relatively unchanged on Friday after the major averages ended November with solid gains. The Dow Jones Industrial Average gained 8.8% in November, its best month in more than a year, while the S&P 500 and the Nasdaq Composite rallied 8.9% and 10.7% respectively.
Investors piled into risky assets in the growing belief that the Federal Reserve and other big central banks are close to winning their battle with inflation. The gains came alongside mounting bets that interest rates in the US and the Eurozone have peaked and are set to be cut in the first half of next year.
October saw a deceleration in all personal consumption expenditure inflation measures, coupled with moderation in personal spending, and continuing jobless claims reaching a two-year high. This fuelled expectations that the Federal Reserve is done with its tightening cycle, potentially signalling rate cuts in spring 2024.
The combination of the US not heading into a recession, but not recovering so fast that the Federal Reserve has to increase interest rates, provides a much more accommodating environment for risk assets. The renewed risk appetite in equity markets has been mirrored in corporate debt markets, with almost $17 billion flowing into corporate bond funds in November, the sharpest monthly inflow since July 2020.
The Bloomberg US Aggregate Bond Index, a widely tracked measure of total returns on US fixed income, has risen 4.3% so far in November, putting it on course for its best monthly showing since 1985. Bond prices surged and yields dropped last month, following the continuing theme that the Federal Reserve has finished raising interest rates.
Scam awareness during the holiday period
We want to ensure that you remain aware of potential scams, especially during busy the holiday period.
Scammers often take advantage of the festive period to exploit unsuspecting individuals not only by getting people to pay for items that are counterfeit or non-existent but to gather sensitive information under the guise of signing up for deal alerts, investment opportunities or prize funds.
Here are a few tips:
Stay Informed
Be cautious of unsolicited communications by emails, phone calls, or social media, especially if they demand urgent action.
Avoid gift cards as payment method
Criminals may encourage you to use gift cards as payment methods – it’s harder for fraud teams to trace.
Verify Contacts
If you receive any communication claiming to be from our firm, verify by contacting us directly using our official contact information. Do not use the contact details provided in suspicious messages.
Secure Online Practices
Ensure your online accounts have strong, unique passwords. Be wary of “phishing” attempts where scammers mimic legitimate websites to steal log-in details.
Protect Personal Information
Avoid sharing sensitive information, such as account details or passwords, through email or over the phone. Legitimate businesses will not request such information in this manner.
Double-Check Investments
If presented with new investment opportunities, thoroughly research and verify the legitimacy of the offering before making any decisions. Always be sceptical of ‘guaranteed’ returns or deals that are too good to be true.
If you ever have concerns or questions contact a member of our team.
The information provided in this communication is not advice or a personal recommendation, and you should not make any investment decisions on the basis of it. If you are unsure of whether an investment is right for you, please seek advice. If you choose to invest, your capital may be at risk and the value of an investment may fall as well as rise in value, so you could get back less than you originally invested.