With the UK’s main investment index breaking 7900 just a couple of weeks ago, volatility has returned, created by a number of factors, tariffs being one of them, dragging the indexes lower.
Investment Markets – bumps in the road increase………
FTSE 100 7566.54 (-1.51%) @ 13.30 25/6/18
FTAS 4173.19 (-1.35%) @ 13.30
Dow J 24240.96 (-1.38%) @ 16.49
Tariff battle – some call it a ‘Trade War’
The European Union has imposed tariffs on €2.8bn worth of US goods, including Whisky and Motorcycles (Harley-Davidson). The levy, which came into effect last Friday, is a direct, retaliatory response to America’s steel and aluminium tariff imposition in imports.
The European Commission President, Jean Claude Junker, reiterated his criticism of the US’s position, saying its tariffs go against ‘all logic and history’.
UK Interest Rates held at 0.5%
The Bank of England maintained rates at 0.5%, although the BoE Chief Economist, Andy Haldane, surprised markets by joining the ranks of those within the Monetary Policy Committee pushing for an immediate rise.
The committee delivered a 6 to 3 vote, raising expectation that a hike could happen at the August meeting of the BoE. Sterling rallied against the US Dollar on the news.
Eurozone governments have granted Greece more time to repay its €96.9bn debt. A plan has been agreed which pushes back repayment deadlines and extends the period during which Athens will pay little or no interest on money owed.
Since 2010, Greece has had 3 bailout programmes.
Residential Property Sales slow
Countrywide stock drops over 25% after profit warning.
Britain’s biggest estate agent stated that the property market was ‘subdued’.
The housing market has weakened where the traditional Estate Agency Sector has also suffered at the hands of ‘online competitors’ – which don’t suffer the costs of running high street offices – and are not so debt constrained.
Single first-time buyers received 17 years to save for London deposit
In an article on Sky News produced earlier today – Hampton’s research used Office of National Statistics (ONS) earnings figures for people aged in their 20’s, assuming that a household could save 22% of their income towards a deposit, after regular bills were accounted for; concluding that it would take 17 years to save a deposit for income related property in London.
The data and ‘subdued’ property market would indicate that property price increases were unsustainable, fuelled by low interest rates. The property sector is likely to suffer further, if interest rates are increased, so are savers ‘likely’ to get any ‘relief’ from interest rate pain anytime soon?
If rates increase, repossessions increase and may create a major effect to the property market.
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