UK house sales slide after stamp duty holiday cut; FTSE 250 at new high – as it happened

Graeme Wearden

from on 2021-08-24 16:47 (#5NPPC)

Rolling coverage of the latest economic and financial news

FTSE 250 index ends at new high
Nasdaq hits fresh record on economic optimism
UK retail stock levels at record low amid supply problems
UK house sales fell over 60% in July after busiest ever June
Housebuyers rush to complete deals before stamp duty tax cut trimmed

Earlier:

Oil surged 5% on Monday on rising demand hopes and weaker dollar
Markets cheered as FDA gave full approval to Pfizer's Covid vaccine
Might weaker data delay Fed tapering?

5.47pm BST

That's all for today. Here are our main stories so far:

5.19pm BST

Danni Hewson, an AJ Bell financial analyst, has summed up the day:

It looked like the Sainsbury's selloff might prevent the FTSE 100 from joining today's market party, but in the end the Wall Street glow cut through aided by a slight rise in the price of gold and speculation about the next travel update due later this week. The travel sector and miners delivered some decent gains today. In the first camp, hotels group Whitbread, TUI, Easyjet and Carnival all made it on to the top risers list as investors lap up social media beach posts or indulge in their own holiday dreams. The summer has managed to deliver in a small way and expectation that more Americans might just grab a jab after yesterday's regulator approval of the Pfizer-BioNTech vaccine will generate talk that perhaps the US-UK travel bridge might be somewhere on the horizon.

Retailers have also performed fairly well today despite more data detailing shipping issues that seem to be storing up trouble for the back end of the year. It might seem wrong to talk about Christmas before schools have even gone back but after the last 18 months of disruption and despair this holiday season will be even more important to retailers and anything that impinges on that is a worry. And while retail is on the mind, the game of supermarket sweep has seen another obstacle fall into the aisle with a warning from Morrisons' pension regulators that both bids in contention are a cause for concern.

5.08pm BST

The more UK-focused FTSE 250 has hit a fresh record high today, with travel stocks giving it a boost.

The FTSE 250 index of mid-size companies jumped 0.6% today, or 145 points, to end at 23,886 points, slightly above yesterday's intraday record. That means it's gained more than 16% so far this year, lifted by hopes of an economic recovery and a flurry of takeover bids.

4.48pm BST

Crypto assets are having a weak session, with bitcoin falling back from Monday's three-month highs over the $50k mark:

Crypto update:#Bitcoin 48443.40 -2.17%#Ether 3225.64 -3.43%#BitcoinCash 648.13 -4.03%#EOS 5.2641 -5.2%#Litecoin 178.52 -4.16%#Stellar 0.3637 -3.37%#Crypto 10 Index 20828 -4.47%#BTC $ETH #BCH #XLM #LTC https://t.co/0cbLaG5E8c

4.46pm BST

In the City, the FTSE 100 index has shrugged off its early afternoon dip, ending the day almost 17 points higher at 7126, up 0.25%.

The hotel group Whitbread topped the risers, up 4.5%, and the engineering firm Rolls-Royce gained almost 4%. Housebuilders and mining companies also rallied.

4.16pm BST

The Covid-19 pandemic has driven unemployment in South Africa to the highest level recorded around the world.

The jobless rate rose to 34.4% in the second quarter of this year, from 32.6% in the three months to March, Statistics South Africa said today, after lockdowns to fight the virus forced many firms to close.

The unemployment data is likely to deteriorate in the third quarter because the government tightened Covid-19 curbs in the face of a third wave of infections, hindering efforts to revive an economy that shrank 7% last year.

Rising joblessness rate could heap pressure on authorities to extend relief measures that would complicate efforts to stabilize public finances.

South Africa's finance industry recorded the largest decrease in employment with a plunge of 278,000 jobs in the second quarter, pushing the nation's jobless rate to 34.4% - the highest unemployment rate in the world. pic.twitter.com/XraVJFbWVu

Unemployment has hit a record high of 34.4%, or 7.8 million jobless people.

This is the highest official unemployment rate recorded since the quarterly labour force survey started in 2008, according to Stats SA. | @Fin24 https://t.co/2yWFkL6kRe

4.00pm BST

US house prices have been on quite a tear in the last year or so, with record low rates, pressure for larger houses in lockdown, limited supply and enforced pandemic savings all driving the market:

Record highs for new home prices... pic.twitter.com/EUW2gUBt1D

3.26pm BST

The US housing market picked up a little last month, with sales rising for the first time in three months and prices hitting fresh record highs.

Sales of new singlefamily houses rose 1% in July to an annual rate of 708,000, according to the US Census Bureau.

New home sales in July increase 1% compared to last month, but down 27 percent YoY. Note the upward revision in June. Median new home sales prices hit a new record at $390,500. pic.twitter.com/o8oimw8mhr

Sales of new homes were 27.2% lower YoY. Even with the cost of lumber coming down in June, builders maintained higher prices, pushing the median new home price to a record of $390,500, an 18.4% jump from a year ago. https://t.co/P7GYcDqjz7

3.15pm BST

Returns over last 10 years...
Semiconductors $SOXX: +1,010%
Nasdaq 100 $QQQ: +691%
S&P 500 $SPY: +368%
Energy Sector $XLE: +3%
Gold $GLD: -5%

Charting via @ycharts pic.twitter.com/tEWHIhrK8q

3.02pm BST

The US technology-focused Nasdaq has hit a fresh record high at the start of trading in New York.

The Nasdaq Composite jumped by 57 points, or 0.4%, to hit the 15,000 point mark for the first time ever.

U.S. stocks open higher https://t.co/fdn2DcH5vP pic.twitter.com/ZooDiO1NQu

The NASDAQ just broke 15,000 for the first time in history!#BidenEconomy pic.twitter.com/OQwNKixdtZ

S&P 500 and Nasdaq Composite hit highest intraday levels on record early Tuesday https://t.co/HgwHMNk84o

2.52pm BST

The world's biggest shipping company is investing $1.4bn (1bn) to speed up its switch to carbon neutral operations, ordering eight container vessels that can be fuelled by traditional bunker fuel and methanol.

The Danish shipping business Maersk said the investment in new vessels would help to ship goods from companies including H&M Group and Unilever, while saving more than 1m tonnes of carbon emissions a year by replacing older fossil fuel-driven ships.

The time to act is now, if we are to solve shipping's climate challenge.

This order proves that carbon neutral solutions are available today across container vessel segments and that Maersk stands committed to the growing number of our customers who look to decarbonise their supply chains.

And so it begins ... Maersk is taking the biggest step yet to decarbonise the shipping industry by ordering eight new vessels capable of carrying 16,000 containers on the China-> EU route that can run both on traditional bunker fuel and green" methanol.https://t.co/GEgEuJeh5a pic.twitter.com/Sn6NASmYhc

Huge change from IMO's declaration only a few months ago that as an industry global shipping wouldn't even try to meet a 2% reduction in emissions.

2.37pm BST

The pension trustees at UK supermarket chain Morrison's have weighed in over the takeover battle raging over its future.

The schemes' trustees have warned that the current offers on the table from private equity groups Fortress and CD&R would both materially weaken the existing sponsor covenant supporting the Schemes", unless additional protection is agreed.

BREAKING: The trustees of Morrisons and Safeway retirement plans have said a bid for the supermarket chain - along the lines of the current offers - would, "materially weaken" the existing sponsor covenant supporting the pension schemes.

An offer for Morrisons structured along the lines of the current offers would, if successful, materially weaken the existing sponsor covenant supporting the pension schemes, unless appropriate additional support for the schemes is provided.

We hope agreement can be reached as soon as possible on an additional security package that provides protection for members' benefits."

Morrisons pensions trustees have come out with a punchy statement on looming 7bn private equity takeover saying deal on current basis would weaken covenants and it's in talks with CD&R (and had been with Fortress) about additional security pic.twitter.com/WBMGtQOlmS

2.21pm BST

Goldman Sachs have updated their predictions on when the US Federal Reserve will announce the cutting back (or tapering) of its $120bn-per-month bond-buying stimulus programme:

GOLDMAN SACHS: "We see a 45% chance the formal [FOMC taper] announcement will come in November, a 35% chance it will come in December, and 20% chance it will be delayed until 2022. We put high odds on a delay beyond Nov. because of the downside risk posed by the Delta variant."

Goldman Sachs economists have raised the odds that the U.S. Federal Reserve will announce the start of tapering its bonds purchases in November, predicting the central bank will likely opt to dial back purchases by $15bn at each meeting.

In a note, the investment bank said it had raised the odds that a formal taper announcement will come in November to 45% from a previous forecast of 25%, and lowered the December chance to 35% from 55%.

2.17pm BST

After an upbeat start, European stock markets have dipped into the red.

The FTSE 100 index is now down 29 points, or 0.4%, at 7079 points.

The week got off to a strong start on Monday but momentum is already waning, with European stocks a little flat and US futures only marginally higher.

Investors were keen to buy dips at the start of the week and capitalise on last weeks sell-off, as China successfully contained the virus outbreak and the FDA gave full approval to the Pfizer-BioNTech vaccine. Chinese growth fears had weighed on risk appetite in recent weeks but it seems the draconian approach is paying off once more.

1.47pm BST

German engineering firm Bosch fears that the semiconductor supply chains in the car industry no longer work as they should.

German technology and engineering group Bosch, which is the world's largest car-parts supplier, believes semiconductor supply chains in the automotive industry are no longer fit for purpose as the global chip shortage rages on.

Harald Kroeger, a member of the Bosch management board, told CNBC's Annette Weisbach in an exclusive interview Monday that supply chains have buckled in the last year as demand for chips in everything from cars to PlayStation 5s and electric toothbrushes has surged worldwide.

Bosch says the semiconductor supply chains in the car industry no longer work https://t.co/RYxZnLG79d

As a team, we need to sit together and ask, for the future operating system is there a better way to have longer lead times.

I think what we need is more stock on some parts [of the supply chain] because some of those semiconductors need six months to be produced. You cannot run on a system [where] every two weeks you get an order. That doesn't work."

1.06pm BST

Spending to fight the pandemic has driven up Germany's budget deficit in the first half of this year, to its second highest level since reunification three decades ago.

Figures released this morning by Destatis show that the German government ran up a budget deficit of 80.9bn in the first six months of 2021. That's equal to 4.7% of GDP, and the highest reading since 1995.

The measures taken to contain the corona pandemic continue to place a heavy burden on government finance. They resulted in the second highest deficit in the first half of any year since German reunification in 1991", said Stefan Hauf, Head of Division National Income, Sector Accounts, Employment" at the Federal Statistical Office.

Hauf continued to explain that a higher deficit was only recorded in the first half of 1995 when the debt of the Treuhand agency was integrated into the general government budget.

General government financial #deficit of 80.9 billion euros in the first six months of 2021 https://t.co/vOe41bhEZL

German GDP grew 1.6% in Q2, upwardly revised from +1.5% published in flash release. Growth doped by debt. Deficit in H1 of 80.9bn biggest since 1995 when debt of Treuhand agency was integrated into b.udget. Govt spending rose by 1.8%, strongest quarterly increase since Q1 2019 pic.twitter.com/WigZp7r3JW

12.32pm BST

Back in the markets, Brent crude has now risen over $70 per barrel for the first time in almost a week.

That's a rise of almost 2% today, following Monday's 5% jump on hopes of higher demand for oil.

Oils update:
Oil - WTI (OCT) 6678 +1.75%
Oil - WTI (DEC) 6611 +1.79%
Oil - Brent (OCT) 7002 +1.83%
Oil - Brent (NOV) 6958 +1.78%#Gasoline 20401 +1.25%#London Gas Oil 578 +1.46%#Oil #Brent #WTI #OOTT

12.00pm BST

Stocks at UK retailers have fallen to a new record low, as supply chain problems continue to grip the economy and drive up prices in the shops.

The CBI's latest distributive trades survey shows that retailers and distributers' stock levels hit the lowest level on record this month.

A ramping-up in retail sales growth in the year to August shows just how much consumer demand continues to spur economic recovery. While sales growth is set to remain strong, a more definitive shift in household spending towards consumer services is anticipated later in the year - leading to greater normalisation of growth in the retail sector.

Furthermore, there are signs of operational challenges still biting, with stock levels reaching another record low and import penetration falling. Disruption is being exacerbated by continued labour shortages, with many retailers reliant on younger employees currently awaiting their jab.

Retail sales grew at the fastest pace since December 2014 in the year to August, with a slower, yet still quick, pace of growth expected next month. Sales were seen as good for the time of year to the greatest extent since September 2015 in the month of August. #DTS pic.twitter.com/R46myO0IkR

Orders placed upon suppliers in the year to August grew at a survey-record high pace (question first asked in July 1983). Orders growth is expected to ease next month but remain fast by historical standards. #CBI pic.twitter.com/mvZLZ1sJKh

However, stock levels in relation to expected sales reached a new record low across both retail and the distribution sector as a whole. This marks the fifth consecutive month in which a survey-record low for distribution has been set. #DTS pic.twitter.com/OZoyhLHrZS

Average selling prices in the retail sector grew at the fastest pace since November 2017 in the year to August and are expected to grow at a similar pace next month. #DTS pic.twitter.com/zUldVLFeqW

Investment intentions for the next 12 months compared to the previous 12 in the retail sector ticked up to their strongest since February 1994 #DTS pic.twitter.com/kRmPgGphT0

11.38am BST

Iain McKenzie, CEO of The Guild of Property Professionals, says July saw a big, but inevitable, fall in property sales after the stamp duty tax break was dialed back.

What goes up, must come down is certainly the story being told in this data.

Take the figures with a pinch of salt as we saw monumental growth in the volume of properties sold prior to July, in light of the rush to beat the deadline for the full stamp duty discount. It was always inevitable that July would show a dramatic downturn, although a 62.8% [seasonally adjusted] decrease in transactions is a big fall.

The stamp duty holiday focused the minds of many buyers who were already keen to move and improve their living conditions by acquiring more space both inside and out. Cheap mortgages have also played a significant part in the uptick in transactions and will continue to do so going forwards, even as the stamp duty holiday tapers off.

Unlike in the stock market or cryptocurrencies, people don't tend to sell at a lower price than they paid unless they really need to. Interest rates (and therefore mortgage repayments) remain very low, especially for homeowners, so it's unlikely that we see a widespread sell-off any time soon.

Transactions are likely to slow down, because many homeowners won't need to sell. This means an ongoing shortage of housing stock, which in turn means prices are expected to continue to grow.'

11.00am BST

Property sales in the UK more than halved last month, after a surge to complete sales before the stamp duty holiday was scaled back.

Tax office HMRC estimates that there were 82,110 residential transactions in July. That's a fall of 61.5% compared with June, when the number of homes changing hands in the UK hit a record of 213,120 sales.

Significant forestalling activity by taxpayers was captured within June 2021 UK residential transactions statistics. Since then, an expected but noticeable decrease has been observed within provisional July 2021 UK residential transactions statistics.

Forestalling is when advanced action is taken to prevent an anticipated event. For these statistics, forestalling refers to taxpayers completing property transactions earlier to take advantage of government housing market policies.

Instant Info - HMRC Residential Transactions pic.twitter.com/NPhjMnTbYK

Given the number of sales that were brought forward, this is a high number and suggests that the dip in the number of sales following the removal of many of the tax savings will be short-lived.

At Yopa we expect another very strong month in September, before the new deadline for the remainder of the stamp duty holiday, followed by another short-lived dip. The housing market remains very active, and we are seeing little sign of any slowing down, even though it is now too late for a new buyer to beat that September deadline.

It is no surprise that July saw a significant slump in transactions compared to June's spectacular highs. A record number of buyers had been eager to complete their sale before the stamp duty deadline.

Transactions may creep up again in August and we can expect another flurry of activity in September as buyers try to complete sales before the final stamp duty savings are removed. This wave is unlikely to match June's in scale but the effect of the cliff-edge will still be in attendance.

10.26am BST

Oil is still higher, as vaccine optimism and easing anxiety about the US slowing its stimulus package continues to boost sentiment.

Brent crude jumped by a dollar per barrel this morning to $69.76 (although it's slipped back a little), adding to the $3.50 gained yesterday.

On Friday, Dallas Federal Reserve (Fed) President Robert Kaplan said that the rising Covid cases and the economic tensions that come along with it brings him to adjust his view about the idea of pulling away the Fed stimulus. He now thinks it may not be the right time. And, that's exactly what the market was hoping to hear from a member who, so far, was backing a sooner-than-otherwise Fed tapering.

Kaplan's dovish comments, combined with soft July PMI data [yesterday] boosted the Fed doves ahead of Jerome Powell's Jackson Hole speech and sent US indices to fresh records.

10.02am BST

Supply chain problems have hit McDonald's, with the restaurant chain's deliveries of milkshakes and bottled drinks reportedly running dry in the UK.

McDonald's has become the latest restaurant chain to be hit by supply chain shortages, with no milkshakes or bottled drinks currently available in any of its British outlets.

The fast-food chain, which operates around 1,250 restaurants in England, Scotland and Wales, has had to stop supplying the drinks this week but said it was working hard to return these items to the menu as soon as possible".

McDonald's has run out of milkshakes and bottled drinks across England, Scotland and Wales as supply chains continue to experience disruptionhttps://t.co/kRmDJtYpvP pic.twitter.com/WkIR7pED6T

9.36am BST

Shares in Deliveroo have pushed higher this morning, up 1.2%, after launching a trial to deliver pharmacy products from Boots as it looks to expand beyond restaurant orders.

While a significant products and services gap still needs to be closed within the UK on demand market when compared to the advancements made in other countries, this is a promising sign of change.

Aside from Deliveroo providing localised offerings from independent retailers, there is little on a larger scale that falls outside of the takeaway' category - so the Boots partnership could potentially open the flood gates for others.

9.15am BST

Germany's economy grew faster than first estimated in the last quarter, as consumers spent some of their pandemic savings as Covid-19 restrictions were relaxed.

German GDP grew by 1.6% in April-June, statistics body Destatis reports, up from an initial estimate of 1.5%. That follows a 2% contraction in Q1, when the country was in lockdown.

Gross domestic product: detailed gross domestic product results for the 2nd quarter of 2021 https://t.co/pW9uCMVhfA #GDP pic.twitter.com/wVHuYVWhJj

GERMANY FINAL 2Q GDP RISES 9.8% Y/Y; EST. +9.6%

GERMAN 2Q ECONOMIC GROWTH REVISED TO 1.6% FROM 1.5%

The rebound of the German economy was weaker than in many other eurozone countries as the manufacturing sector suffered from supply chain problems.

In fact, the economy showed two faces in the second quarter. One of strong domestic demand with private consumption increasing by 3.2% QoQ and government spending up by 1.8% and one of almost sluggish investment and exports (both up by 0.5% QoQ each). Of all components, only government spending has currently returned to pre-crisis levels.

We still expect the German economy to return to pre-crisis levels before the end of the year. However, to really get there, the current supply chain frictions must not last for too long.

Supply chain frictions remain biggest risk for German growth outlook | Snap | ING Think - The second estimate of German GDP growth confirms the rebound in the second quarter but also shows that supply chain frictions have become a bigger threat to... https://t.co/YkmFwFvs8i

8.55am BST

The latest COVID-19 data from the UK are encouraging, writes Adam Cole of RBC Capital Markets this morning:

The latest batch of COVID-19 data from the UK government confirm two things.

Firstly, the rate of inflections is trending higher again, albeit at a slower pace than was the case in early-July. Secondly, that hospitalisations and deaths remain much lower, given the level of inflections, than was the case during the last wave, which peaked in January.

8.39am BST

European stock markets all all higher this morning too, with the Stoxx 600 index up 0.3%.

As in London, travel and leisure, technology and mining stocks are among the main risers, following those gains in Asia-Pacific markets after Wall Street's rally.

European Opening Bell

FTSE 100 up 0.3%

STOXX 50 up 0.5%

STOXX 600 up 0.4%

DAX up 0.3%

CAC up 0.5%

IBEX up 0.3%

MIB up 0.4#XGlobalMarkets

8.27am BST

Britain's FTSE 100 index of blue-chip stock has opened a little higher - gaining 11 points, or 0.15%, to 7120 points.

Travel and hospitality firms are among the risers, with British Airways parent company IAG up 1.4%, and hotel operator Whitbread gaining 1.1%.

Investors have for the moment reverted to the glass half-full mentality, with buying interest in big tech propelling the Nasdaq to a record closing high.

Sentiment was also buoyed by the US Food and Drug Administration granting full approval for the Pfizer/BioNTech Covid-19 vaccine, prompting hopes that the level of inoculations could be accelerated as a result. The Delta variant has become a drag on economic recovery generally and measures to mitigate its impact will have positive effects.

8.15am BST

After jumping a cent yesterday, the pound has added to yesterday's gains against the US dollar.

Sterling is up another 0.2 cents at $1.3740, rising away from last week's one-month low.

#AUDUSD bounces strongly overnight on the back of a jump in #commodities, as #taper BS talk settle down pushing down the #dollar - Surging Australian dollar declares taper is off https://t.co/Fnq8xweFp9 pic.twitter.com/iG1niZjcGQ

There was a fear that they were going to announce tapering in Jackson Hole and start in September. But it now looks that will be in 2022."

Equities gain, U.S. dollar falls; Fed seen less eager to taper https://t.co/XCQQZUM1Or pic.twitter.com/wK52mmiUm0

7.58am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

U.S. equities hit record highs https://t.co/IWS9arDE22 pic.twitter.com/EKpHxzoLlm

And crude's risen with it:

Oil in New York surges by the most since March https://t.co/eOITKSkZjF #OOTT pic.twitter.com/2sktF9GqST

Asia-Pac stocks sustain the momentum from Wall St where the S&P 500 and Nasdaq notched fresh record highs, while gains were led by energy and with some encouragement from the FDA's full approval of the Pfizer/BioNTech vaccine; ASX 200 (+0.3%), Nikkei 225 (+0.8%), KOSPI (+1.1%)

European Opening Calls:#FTSE 7127 +0.25%#DAX 15895 +0.26%#CAC 6709 +0.39%#AEX 783 +0.40%#MIB 26127 +0.31%#IBEX 8993 +0.27%#OMX 2375 +0.13%#STOXX 4192 +0.38%#IGOpeningCall

Barely days after the markets were freaking out about a slowing global economy, vaccine durability and an increasing determination on the part of China to pour sand in the wheels of its own recovery story with various crackdowns on parts of its own economy, global stocks have rebounded strongly at the start of the week.

Yesterday's price moves, particularly where US markets, oil prices and the US dollar are concerned, have been almost whiplash inducing in the context of what we saw with last week's price moves.

7 out of 9 Dow Jones sectors ended higher, with 70% of the index's constituents closing in the green. Energy (+2.58%), materials (+1.92%) and industrials (+1.53%) were among the best performers, whereas healthcare (-0.48%) and consumer staples (-0.43%) trailed behind. pic.twitter.com/ZShw03mm5h

After a fairly poor performance for risk assets last week, yesterday saw a sizeable rebound as optimism returned to markets once again, with the S&P 500 (+0.85%) finishing a miniscule -0.004% away from its all-time closing high. In some ways it was a surprising outcome, particularly given the weaker-than-expected numbers from the flash PMIs, but there seemed to be increasing optimism that the weakening outlook might actually lead to a more cautious attitude by central bankers when it comes to withdrawing monetary policy support.

On top of that, there have also been some more promising signs on the pandemic, with the data at a global level indicating that the number of new cases are beginning to plateau following 9 successive weekly increases. That may not be much consolation with case rates still at high levels, but given consumers have become more cautious in a number of key economies, the fact that we're seeing some sort of stabilisation in case rates offers hope that matters aren't set to dramatically worsen.

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