The FTSE 100 and European stocks were lower on Monday as the Federal Reserve will announce its final rate decision of the year on Wednesday, with the Bank of England and European Central Bank following on Thursday.
The FTSE 100 (^FTSE) slipped 0.1% points at the open to 7,543 points, while the CAC 40 (^FCHI) in Paris rose 1% to 7,532 points. In Germany, the DAX (^GDAXI) was also muted at 16,759. The Stoxx 600 (STOXX) followed the trend and opened flat.
Ipek Ozkardeskaya at Swissquote Bank said: “The economic calendar for the week is heavy.
“The US will announce its latest CPI update on Tuesday and the Fed will announce its latest policy verdict on Wednesday, then the Swiss National Bank (SNB), the European Central Bank (ECB) and the Bank of England (BoE) will give their last verdict for this year on Thursday.”
“All four major central banks are expected to keep their interest rates steady at the current levels, but we will closely scrutinize how they address the rate cut expectations.”
“Chances are that the accompanying statements will attempt to cool down the doves.”
Read more: UK households expect Bank of England to hike interest rates in 2024
Across the pond, US stocks closed out the first full trading week of December with a win on Friday as investors assessed the US monthly jobs report in a positive light, embracing the case that the Federal Reserve will start cutting interest rates next year.
The Dow Jones (^DJI) climbed 0.4% to close at 36,247 points. The S&P 500 (^GSPC) rose 0.4% to finish at 4,604 points and the tech-heavy NASDAQ (^IXIC) gained 0.5% to finish at 14,403 points.
S&P 500 futures (ES=F), Dow futures (YM=F) and Nasdaq futures (NQ=F) were all in the red as trade began in Europe.
Investors are looking ahead to this week’s Federal Reserve meeting in the hope for signals as to when policymakers will begin cutting interest rates.
In Asia, the Hang Seng (^HSI) in Hong Kong tumbled 1% to 16,178 while the Shanghai Composite (000001.SS) rose 0.7% to 2,991 points. Tokyo’s Nikkei 225 (^N225) also finished in the green, rising 1.5% to 32,791 points.
Read more: UK house prices to drop in 2024, predicts Rightmove
Japan’s stocks jumped on growing bets that its central bank might not hike interest rates next week.
Meanwhile, oil prices rose and extended Friday gains following reports that the US government is buying up to 3 million barrels for the strategic petroleum reserve.
West Texas Intermediate (CL=F) rose 0.7% and was trading at $72per barrel. Brent (BZ=F) crude climbed 0.8% to $76 per barrel.
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A ‘sharp contraction’ has been forecast for mortgage lending in 2024, as the cost of living continues to weigh on household incomes and affordability in the UK.
According to a forecast by UK Finance, despite the fact that the outlook for 2024 is one of continuing challenges in the mortgage market, the main pressures on affordability look to have peaked.
“With these pressures unlikely to ease significantly in the short term, we expect lending to remain weak in 2024, with a gradual improvement in affordability reflected in a modest increase in activity levels in 2025,” said James Tatch, head of analytics at UK Finance.
For those looking to enter or move in the housing market, the higher cost-of-living and interest rate rises seen since the start of 2022 significantly raised the bar for consumers to pass affordability tests for mortgages. This led to a fall in lending for house purchase in 2023 of some 23%, to £130bn.
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House prices London- Terraced residential houses in Fulham SW6 area of south west London. Photo: PA/Alamy The average UK house price is expected to ease by 1% over the next year as mortgage rates continue to drop, giving some relief to those trying to jump on the housing ladder.
Prices for properties hitting the market are expected to drop by an average of 1% in 2024, according to Rightmove.
The pressure is on sellers to price under the competition to secure a buyer as affordability remains stretched, the property site said.
“With mortgage rates more settled and on a slow downward trend, potential movers who have been biding their time and waiting for calmer market conditions may decide to act in the early part of next year,” said Tim Bannister, Rightmove’s director of property science.
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Begbies Traynor (BEG.L) said it has increased its staff numbers to deal with an influx of new insolvencies and it expects more to come.
The insolvency practitioner said the number of corporate insolvencies in the UK increased by 17.3% in the year to the end of September, hitting 24,326.
The rise helped the company grow revenue by 12.6% to £65.9m in the six months to the end of October. Begbies said it anticipates a “continued increase in insolvency activity”.
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Manufacturers have reported the first signs of business confidence after the global uncertainty and domestic political chaos of the last few years.
Make UK said its research showed that export orders had surpassed domestic orders for the first time in four years, suggesting that companies are taking advantage of either faster growing or new markets, in contrast to the “anaemic” UK economy.
Recruitment intentions have also rebounded, according to a survey of more than 300 companies.
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The UK’s tax level across the economy has increased to its highest rate on record, according to new data from the OECD.
It came as separate figures showed the UK also now faces the highest level of property taxes across the developed world.
The OECD’s (Organisation for Economic Co-operation and Development) annual revenues statistics update found the total tax-to-GDP ratio across the UK hit 35.3% for the 2022/23 financial year – the highest since OECD records began in 2000.
It represents a 0.9 percentage point increase from the 34.3% record a year earlier.
It ranks the UK as having the 16th highest rate of 38 OECD countries, and is 1.3 percentage points above the group’s average of 34%, in relation to tax competitiveness.
Watch: Business Lookahead: Last central bank push of 2023
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