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Stock markets at record levels, but UK house prices fall - business live Stock markets at record levels, but UK house prices fall - business live
(about 1 hour later)
Sterling has made a subdued start to the week, as traders watch Theresa May reshuffle her cabinet.
The pound dropped 0.2% to $1.354 against the US dollar, but has risen a little against the euro to €1.13.
The cabinet reshuffle could have implications for Brexit; according to the Daily Telegraph, the PM will appoint “a cabinet minister for no-deal”, who will prepare for a Hard Brexit.
Royal Bank of Canada say:
The UK papers are full with reports of a pending cabinet reshuffle of May’s government.
The most interesting development for markets seems the planned creation of a ‘minister for no-deal Brexit’ which should underpin the notion of the UK being in a position to walk away from the negotiations with the EU.
The reshuffle is getting up to speed now, with Northern Ireland secretary James Brokenshire resigning on health grounds, and confusion over whether transport secretary Chris Grayling has been moved to become Conservative Party chairman.
#Reshuffle latest: The Conservative party has tweeted, then deleted, an announcement Chris Grayling is to be named its new party chairman, says @CatNeilan https://t.co/HWNFFM5bet pic.twitter.com/WHlGKVwEed
BBC confirming Grayling appointment but advisers saying its speculation and he hasn't been to no10 yet. The Conservatives had tweeted a congrats, though its now disappeared. What is going on!? pic.twitter.com/8GDc0RE4kS
My colleague Andrew Sparrow has full details in his Politics Live blog:
World stock markets are celebrating their best start to a new year since 2010 this morning.World stock markets are celebrating their best start to a new year since 2010 this morning.
European shares are doing their bit, having hit their highest level since August 2015 this morning, after Asia rallied to near-record levels.European shares are doing their bit, having hit their highest level since August 2015 this morning, after Asia rallied to near-record levels.
Traders are encouraged by this morning’s strong consumer confidence and investor sentiment survey, which suggests the eurozone economy is continuing to flourish.Traders are encouraged by this morning’s strong consumer confidence and investor sentiment survey, which suggests the eurozone economy is continuing to flourish.
Dennis de Jong, managing director at UFX.com, sees no sign of ‘January Blues’ in the markets today:Dennis de Jong, managing director at UFX.com, sees no sign of ‘January Blues’ in the markets today:
“All the key indicators for December show that confidence amongst investors and consumers is firmly on the rise, which only increases the likelihood of the European Central Bank winding down its quantitative easing programme.“All the key indicators for December show that confidence amongst investors and consumers is firmly on the rise, which only increases the likelihood of the European Central Bank winding down its quantitative easing programme.
“After being in the doldrums for so long, the eurozone has rebounded in spectacular fashion, with investors piling into the euro in their droves.“After being in the doldrums for so long, the eurozone has rebounded in spectacular fashion, with investors piling into the euro in their droves.
In another piece of encouraging soft data, the European Commission’s economic confidence index has hit its highest level since 2000.In another piece of encouraging soft data, the European Commission’s economic confidence index has hit its highest level since 2000.
The sentiment index has risen to 116, beating forecasts of 114.8, showing that the pick-up in Europe’s economy has raised morale in the region.The sentiment index has risen to 116, beating forecasts of 114.8, showing that the pick-up in Europe’s economy has raised morale in the region.
Euro-area economic confidence soars to nearly two-decade high https://t.co/IVjrdL1TTj pic.twitter.com/JCyBcgTrHDEuro-area economic confidence soars to nearly two-decade high https://t.co/IVjrdL1TTj pic.twitter.com/JCyBcgTrHD
Euro area starting 2018 with a bang. EC Economic Sentiment Index now highest since 2000.Euro area starting 2018 with a bang. EC Economic Sentiment Index now highest since 2000.
Just in: Investor optimism across the eurozone has risen, in the latest sign of confidence in the global economy.Just in: Investor optimism across the eurozone has risen, in the latest sign of confidence in the global economy.
The monthly survey of investor morale produced by research group Sentix jumped to 32.9, up from December’s 31.1.The monthly survey of investor morale produced by research group Sentix jumped to 32.9, up from December’s 31.1.
When asked about the current economic situation, investors were at their most upbeat since 2007.When asked about the current economic situation, investors were at their most upbeat since 2007.
This optimism underlines why stock markets have been rallying recently, as investors react to signs that economic growth is picking.This optimism underlines why stock markets have been rallying recently, as investors react to signs that economic growth is picking.
Sentix says:Sentix says:
“The economy in all regions of the world is looking stable and positive and is showing moderate improvements....“The economy in all regions of the world is looking stable and positive and is showing moderate improvements....
“The upturn is therefore broad and synchronous. The likelihood of possible overheating is rising.”“The upturn is therefore broad and synchronous. The likelihood of possible overheating is rising.”
EuroZone Jan Sentix Investor Confidence comes in at 32.9 (f'cast 31.2) vs 31.1 in DecEuroZone Jan Sentix Investor Confidence comes in at 32.9 (f'cast 31.2) vs 31.1 in Dec
Jonathan Samuels, CEO of property lender Octane Capital, agrees that UK house prices will be subdued this year.Jonathan Samuels, CEO of property lender Octane Capital, agrees that UK house prices will be subdued this year.
Halifax’s verdict on 2017 is of a flat and uneventful year, restrained by economic uncertainty in the light of Brexit and consumer caution given the high cost of living.”Halifax’s verdict on 2017 is of a flat and uneventful year, restrained by economic uncertainty in the light of Brexit and consumer caution given the high cost of living.”
Few would argue with theHalifax’s conclusion that UK price growth is likely to remain pedestrian at best during 2018.Few would argue with theHalifax’s conclusion that UK price growth is likely to remain pedestrian at best during 2018.
“Low single digit growth is about as exciting as it’s going to get, but in reality this is a positive for the market given the affordability crisis in many areas of the country.“Low single digit growth is about as exciting as it’s going to get, but in reality this is a positive for the market given the affordability crisis in many areas of the country.
Jeremy Leaf, north London estate agent, says UK house-buyers are driving harder bargains - so owners need to be ‘realistic’ when setting prices.Jeremy Leaf, north London estate agent, says UK house-buyers are driving harder bargains - so owners need to be ‘realistic’ when setting prices.
There is no doubt that prices are softening, particularly in London, but Halifax also confirms what we are seeing on the high street - that a lot of hard bargaining is going on and people are generally trying to get on with their moves.There is no doubt that prices are softening, particularly in London, but Halifax also confirms what we are seeing on the high street - that a lot of hard bargaining is going on and people are generally trying to get on with their moves.
‘We don’t expect to see any great change in the next few months but the realistic players will succeed, whereas those wedded to the idea of the housing market we have seen in previous years will simply not sell.’‘We don’t expect to see any great change in the next few months but the realistic players will succeed, whereas those wedded to the idea of the housing market we have seen in previous years will simply not sell.’
Halifax also reports that house price buyers, and sellers, are in short supply:Halifax also reports that house price buyers, and sellers, are in short supply:
New buyer enquiries appeared a little more stable over the month having declined sharply in autumn, this measure, however, has now fallen for the last eight months.New buyer enquiries appeared a little more stable over the month having declined sharply in autumn, this measure, however, has now fallen for the last eight months.
Turning to supply, new instructions to sell continued to deteriorate at the headline level and has now fallen for 22 consecutive months – the worst sequence for close to eight years.Turning to supply, new instructions to sell continued to deteriorate at the headline level and has now fallen for 22 consecutive months – the worst sequence for close to eight years.
UK house prices fell by 0.6% in December, according to the latest survey from Halifax bank.UK house prices fell by 0.6% in December, according to the latest survey from Halifax bank.
It’s the first monthly decline since last June, and the latest signal that Britain’s property market is weakening.It’s the first monthly decline since last June, and the latest signal that Britain’s property market is weakening.
Halifax also reports that prices only rose by 2.7% during 2017, with the quarterly growth rate slowing to 1.3% in October-December.Halifax also reports that prices only rose by 2.7% during 2017, with the quarterly growth rate slowing to 1.3% in October-December.
Russell Galley, Managing Director, Halifax Community Bank, blames economic uncertainty and falling real wages.Russell Galley, Managing Director, Halifax Community Bank, blames economic uncertainty and falling real wages.
“As we’d anticipated, the housing market in 2017 followed a similar pattern to the previous year. House price growth slowed, whilst building activity, completed sales and mortgage approvals for house purchase all remained flat.“As we’d anticipated, the housing market in 2017 followed a similar pattern to the previous year. House price growth slowed, whilst building activity, completed sales and mortgage approvals for house purchase all remained flat.
This has been driven by a squeeze on real wage growth and continuing uncertainty over the economy.This has been driven by a squeeze on real wage growth and continuing uncertainty over the economy.
However, nationally house prices in 2018 are likely to be supported by the ongoing shortage of properties for sale, low levels of housebuilding, high employment and a continuation of low interest rates making mortgage servicing affordable in relative terms.However, nationally house prices in 2018 are likely to be supported by the ongoing shortage of properties for sale, low levels of housebuilding, high employment and a continuation of low interest rates making mortgage servicing affordable in relative terms.
Overall we expect annual price growth to continue in the range of 0-3% at the end 2018.”Overall we expect annual price growth to continue in the range of 0-3% at the end 2018.”
Here’s some rapid reaction from property analyst Pete Wargent...Here’s some rapid reaction from property analyst Pete Wargent...
House Price Index, UKm/m Dec-17: -0.6pc (prev: 0.5pc)3m/y/y Dec-17: 2.7pc (prev: 3.9pc)(The Halifax) pic.twitter.com/F91qAP4xRrHouse Price Index, UKm/m Dec-17: -0.6pc (prev: 0.5pc)3m/y/y Dec-17: 2.7pc (prev: 3.9pc)(The Halifax) pic.twitter.com/F91qAP4xRr
..and economist Shaun Richards..and economist Shaun Richards
Another sign of UK house prices turning south? Halifax " house prices in December fell by 0.6%; the first monthly decline in six months."Another sign of UK house prices turning south? Halifax " house prices in December fell by 0.6%; the first monthly decline in six months."
Britain’s FTSE 100 index has hit a fresh record high today.Britain’s FTSE 100 index has hit a fresh record high today.
The blue-chip gauge of the biggest companies listed in London rose to 7733 points, nine points higher than Friday’s record close.The blue-chip gauge of the biggest companies listed in London rose to 7733 points, nine points higher than Friday’s record close.
But the rally didn’t last long. The Footsie then slipped back, thanks to tech firm Micro Focus which has slumped by 9% after releasing its latest financial resultsBut the rally didn’t last long. The Footsie then slipped back, thanks to tech firm Micro Focus which has slumped by 9% after releasing its latest financial results
Micro Focus, which merged with Hewlett Packard’s enterprise software arm last year, reported a 9.5% drop in earnings per share, despite am 80% jump in revenues thanks to the HP deal.Micro Focus, which merged with Hewlett Packard’s enterprise software arm last year, reported a 9.5% drop in earnings per share, despite am 80% jump in revenues thanks to the HP deal.
Ouch! Shares in Mothercare have tumbled by a quarter after this morning’s profit warning.Ouch! Shares in Mothercare have tumbled by a quarter after this morning’s profit warning.
Shares slumped to just 42p at the open before stabilising around 47p, down from 62p on Friday. It looks like a record low.Shares slumped to just 42p at the open before stabilising around 47p, down from 62p on Friday. It looks like a record low.
Mothercare has shed around 90% of its value since the start of the decade, and is now worth just £80m.Mothercare has shed around 90% of its value since the start of the decade, and is now worth just £80m.
Neil Wilson fo ETX Capital says the company has suffered from its decision not to cut prices in the run-up to Christmas.Neil Wilson fo ETX Capital says the company has suffered from its decision not to cut prices in the run-up to Christmas.
We should look to management’s decision not to discount in the peak trading season as a significant contributing factor. Admirable perhaps but with competitors slashing prices ahead of Christmas amid (justified) fears of a slowdown in consumer spending, it looks as if the ‘conscious decision’ to remain at full price prior to Christmas but to then discount more heavily in the end of season sale was a mistake.We should look to management’s decision not to discount in the peak trading season as a significant contributing factor. Admirable perhaps but with competitors slashing prices ahead of Christmas amid (justified) fears of a slowdown in consumer spending, it looks as if the ‘conscious decision’ to remain at full price prior to Christmas but to then discount more heavily in the end of season sale was a mistake.
Clearly Mothercare et al are up against it and the update does not bode especially well for the retail sector ahead of an important week of releases.Clearly Mothercare et al are up against it and the update does not bode especially well for the retail sector ahead of an important week of releases.
UK mother and baby retailer Mothercare has just become the second high street retailer to hit the City with a profits warning, after a disappointing Christmas.UK mother and baby retailer Mothercare has just become the second high street retailer to hit the City with a profits warning, after a disappointing Christmas.
And it looks like a stonker: Mothercare’s UK like-for-like sales shrank by 7.2% in the last 12 weeks over 2017. It even managed to shrink its online sales, by 6.9%.And it looks like a stonker: Mothercare’s UK like-for-like sales shrank by 7.2% in the last 12 weeks over 2017. It even managed to shrink its online sales, by 6.9%.
Profits are now expected to shrink to between £1m and £5m this financial year; investors had expected more like £10m.Profits are now expected to shrink to between £1m and £5m this financial year; investors had expected more like £10m.
Mothercare blames:Mothercare blames:
...lower footfall and spend, both in stores and online, following the continuation of consumer trends flagged in our half year results....lower footfall and spend, both in stores and online, following the continuation of consumer trends flagged in our half year results.
And worryingly, Mothercare’s CEO Mark Newton-Jones doesn’t expect any improvement in the short-term market conditions for the UK.And worryingly, Mothercare’s CEO Mark Newton-Jones doesn’t expect any improvement in the short-term market conditions for the UK.
Hot on the heels of Debenhams last week, Mothercare warns on profits this morning. Like-for-likes down an eye-watering 7.2% in 12 weeks to December 30Hot on the heels of Debenhams last week, Mothercare warns on profits this morning. Like-for-likes down an eye-watering 7.2% in 12 weeks to December 30
Oof Mothercare. "We are not anticipating any improvement in the short-term market conditions for the UK"https://t.co/3kyZDGlkQD pic.twitter.com/cCHJlfMRpLOof Mothercare. "We are not anticipating any improvement in the short-term market conditions for the UK"https://t.co/3kyZDGlkQD pic.twitter.com/cCHJlfMRpL
This follows the profits warning from high-street chain Debenhams last week.This follows the profits warning from high-street chain Debenhams last week.
Boom! European stocks have opened at their highest level in two and a half years.Boom! European stocks have opened at their highest level in two and a half years.
The Stoxx 600, which tracks the biggest companies in the region, has gained 0.3% in early trading, reaching levels last seen in August 2015.The Stoxx 600, which tracks the biggest companies in the region, has gained 0.3% in early trading, reaching levels last seen in August 2015.
Here’s Reuters take on the stock market rally:Here’s Reuters take on the stock market rally:
Asian shares crept toward all-time peaks on Monday after Wall Street boasted its best start to a year in over a decade, with brisk economic growth and benign inflation proving a potent cocktail for risk appetites.Asian shares crept toward all-time peaks on Monday after Wall Street boasted its best start to a year in over a decade, with brisk economic growth and benign inflation proving a potent cocktail for risk appetites.
MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.2 percent having climbed 3.1 percent last week, its strongest performance in six months.MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.2 percent having climbed 3.1 percent last week, its strongest performance in six months.
At 588.55, the index is within spitting distance of its record top of 591.50 hit in November 2007.At 588.55, the index is within spitting distance of its record top of 591.50 hit in November 2007.
The Philippines is already at a record, while Australian stocks eked out another decade top. Japan’s Nikkei was closed for a holiday but last week touched its highest since 1992.The Philippines is already at a record, while Australian stocks eked out another decade top. Japan’s Nikkei was closed for a holiday but last week touched its highest since 1992.
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Global stock markets remain buoyant this morning, as the bull market shows no signs of running out of steam.Global stock markets remain buoyant this morning, as the bull market shows no signs of running out of steam.
Investors remain optimistic about the prospects for growth and corporate earnings this year, putting aside concerns such as Brexit and the Trump presidency.Investors remain optimistic about the prospects for growth and corporate earnings this year, putting aside concerns such as Brexit and the Trump presidency.
China’s stock market has risen to its highest levels since the second half of November, amid an optimistic session in Asia.China’s stock market has risen to its highest levels since the second half of November, amid an optimistic session in Asia.
Asian bourses tackle markets with cautious optimism ahead of earning season, which starts in earnest on Friday with Wells Fargo & JP Morgan - ASX +0.11, Shanghai +0.35%, Hang Seng -0.04%, Nikkei (closed holiday)Asian bourses tackle markets with cautious optimism ahead of earning season, which starts in earnest on Friday with Wells Fargo & JP Morgan - ASX +0.11, Shanghai +0.35%, Hang Seng -0.04%, Nikkei (closed holiday)
Europe is expected to follow suit today too, with Germany’s DAX also tipped to rally.Europe is expected to follow suit today too, with Germany’s DAX also tipped to rally.
European Opening Calls:#FTSE 7717 -0.09%#DAX 13386 +0.50%#CAC 5488 +0.31%#MIB 22847 +0.37%#IBEX 10462 +0.49%European Opening Calls:#FTSE 7717 -0.09%#DAX 13386 +0.50%#CAC 5488 +0.31%#MIB 22847 +0.37%#IBEX 10462 +0.49%
Jasper Lawler, head of research at London Capital Group, says:Jasper Lawler, head of research at London Capital Group, says:
Shares in Europe look set for a strong open on Monday. The FTSE 100 could buck the trend by opening lower after a record-breaking first week of trading in 2018.Shares in Europe look set for a strong open on Monday. The FTSE 100 could buck the trend by opening lower after a record-breaking first week of trading in 2018.
Optimism stemming from strength of European and global economy should help the German DAX index open at 7-week highs.Optimism stemming from strength of European and global economy should help the German DAX index open at 7-week highs.
The opening strength tracks small gain in Asia, where markets were unperturbed by reports from China that the PBOC think “there is room for an increase in interest rates in the short term”.The opening strength tracks small gain in Asia, where markets were unperturbed by reports from China that the PBOC think “there is room for an increase in interest rates in the short term”.
Last Friday’s underwhelming US jobs report hasn’t punctured the rally. So traders - some of whom have driven the euro up in recent weeks - will be looking at new eurozone investor confidence and retail sales figures today.Last Friday’s underwhelming US jobs report hasn’t punctured the rally. So traders - some of whom have driven the euro up in recent weeks - will be looking at new eurozone investor confidence and retail sales figures today.
In the UK, the Halifax bank will report new house price figures - at a time when prices seem to be slowing.In the UK, the Halifax bank will report new house price figures - at a time when prices seem to be slowing.
The agenda:The agenda:
8.30am GMT: Halifax UK house price index for December8.30am GMT: Halifax UK house price index for December
9.30am GMT: The Sentix survey of investor confidence in the eurozone9.30am GMT: The Sentix survey of investor confidence in the eurozone
10am GMT: Eurozone retail sales figures for November10am GMT: Eurozone retail sales figures for November