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UK Stocks flat as markets wait for Powell speech on Thursday

UK Stocks flat as markets wait for Powell speech on Thursday 150 150 Realm

UK stocks are flat this morning despite the US market reaching new highs again on Tuesday. The main focus now is a speech tomorrow by Fed Chairman, Jerome Powell, and investors will be looking for hints of further stimulus measures and any comments regarding inflation.

 

Global Macro

  • The Manufacturing Activity Index in the US fifth district including the District of Columbia, Maryland, North Carolina, South Carolina, Virginia, and most of West Virginia increased to +18 in August of 2020 from +10 in the previous month. It was the highest reading since January, as all three components shipments, new orders, and employment increased. The index for local business conditions also rose and many firms reported increased capital expenditures. Manufacturers were optimistic that conditions would continue to improve.
  • Sales of new single-family homes in the United States soared 13.9% from the previous month to a seasonally adjusted annual rate of 901 thousand in July of 2020, easily beating market expectations of 785 thousand. It is the highest reading since December of 2006 as the housing market continued to recover from the coronavirus hit amid record low interest rates and as people move away from the big cities. New home sales increased in the Midwest (58.8% to 127 thousand), the South (13% to 513 thousand) and the West (7.8% to 221 thousand) but fell in the Northeast (-23.1% to 40 thousand). The average sales price went up to $391,300 from $373,500 a year earlier. The number of new houses for sale available on the market fell 1.6% to 299 thousand.
  • The average prices of single-family houses with mortgages guaranteed by Fannie Mae and Freddie Mac in the United States jumped 0.9% from a month earlier in June 2020, the most since September las year. The housing market saw a recovery from a 0.2% fall in May, which was the first decline in home prices since January 2012, as local economies reopened following weeks of business closure due to the pandemic and transactions picked up again. House price changes ranged from -0.1% in the Middle Atlantic division to +1.3% in the Pacific and East South Central divisions.
  • The United Kingdom, CBI distributive trades survey’s retail sales balance dropped to -6 in August 2020 from an over year high of +4 in the previous month and well below market expectations of +8. The latest figure pointed to a slight fall in retail sales on a year ago, which comes after broadly flat sales in the year to July, while a faster fall is expected next month. The decline was broad-based across sectors, with only grocers, furniture & carpets, non-store and ‘other’ goods sales seeing growth. In addition, the survey showed retail employment dropped at the fastest rate since February 2009, with an even sharper decline anticipated in the year to September.
  • On Tuesday: European stocks opened higher but couldn’t keep up the momentum as investors locked in gains from the previous day in a mixed session. momentum was provided when it was reported that U.S. biotechnology company Moderna Inc. said it concluded advanced talks to provide 80 million doses of its experimental coronavirus shot to the European Union. US stocks ended higher as the S&P 500 and Nasdaq Composite notched records as investors cheered trade talks among U.S. and Chinese officials, following weeks of escalating tensions between the world’s two largest economies. Dow moved to the downside over the course of the session after reaching a six-month intraday high in early trading. Asian stocks rose broadly after U.S. stocks rallied overnight amid positive news on the coronavirus front and signs of progress in U.S.- China trade negotiations.

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