Equites Rally on US Jobs Data
Equity markets react to US jobs report, expansion of London's ULEZ area, and falling house sales reach decade lows.
On the back end of yesterday’s US jobs report, equity markets were buoyed on the view that there was now an increased likelihood for a Fed pause. With job opening’s falling 338,000 to 8.827m in July, markets considered the implications that a seemingly easing labour market would have on the FOMC’s monetary policy moving forward. This data of course follows the Jackson Hole symposium where markets remained relatively upbeat on the absence of any hawkish surprises from Powell.
As such, this market sentiment saw all three major indexes close higher with the S&P 500, Nasdaq and Dow Jones finished 1.45%,1.74% and 0.85% higher, respectively. For the S&P 500, this marked the greatest intra-day gain since 2 June as it closed north of its highest level in two weeks. A similar situation was seen for the Nasdaq, which also closed at its highest level in over two weeks after seeing its strongest session this month. This came as interest rate futures indicated a 87% chance that the Fed would hold rates at their meeting on 20 September.
Tesla and Nvidia were some of the major climbers of the day with the former rallying 7.7% over the session. As Reuters’ Shristi Achar and Noel Randewich noted, Tesla’s rally came “even
after documents showed a U.S. regulator sent a special order to the electric vehicle maker asking questions about changes to the driver monitoring system for its Autopilot software.” Meanwhile, Nvidia climbed 4.2% on the day to fresh all-time highs. Here, investors were bullish on the news that they would enter into a partnership with Google to see its services sold through the cloud. The two tech giants also announced that they will pursue further AI partnerships.
This follows Nvidia’s announcement last week which indicated that their quarterly revenue doubled on an annualised basis. Nvidia is now up some 234% over 2023, making it the strongest performer of the S&P 500. Up in second place is Meta, which has rallied a considerable 148% in the course of the calendar year.
The mood was shared both sides of the Atlantic where Eurostoxx 50 futures rose and German DAX futures were up 0.39% and 0.29%, respectively. This came as FTSE futures were also up 0.31% with Asian markets also rallying this morning.
ULEZ Expands
Mark Harper, the UK’s Transport Secretary has told the London Mayor Sadiq Khan that drivers should enjoy a grace period as the ULEZ zone expands. London’s ULEZ is now said to be the largest of its kind in the world, and many motorists were dumbfounded to see that a website to check whether cars were compliant suffered technical problems. This came as many ULEZ cameras around London were vandalised as protests over its expansion continue.
ULEZ, or London’s Ultra Low Emission Zone is a scheme whereby the most polluting vehicles are charged a fee (currently £12.50 for cars, motorcycles and vans ≤ 3.5 tonnes) per day for driving in certain areas of London. According to TfL, the expansion of ULEZ would reduce road transport nitrogen oxide emissions by 5.4% across London. However, given that in outer London car ownership is as high as 69%, the policy of expansion is controversial given cost implications to households.
Zoopla Sees House Sales Falling to Decade Lows
This morning, A report from Zoopla see’s UK house sales falling to their lowest level in over a decade as the housing market suffers from rising mortgage rates. According to Zoopla, house sales reaching completion are projected to decline 21% on an annualised basis to around 1 million over the course of 2023.
Their report comes on the back end of Nationwide’s House Price Index which saw the value of homes slipping 3.8% on a year-on-year basis as they fell at their greatest level in 14 years. Presently, the cost of a typical two-year fixed mortgage is now at 6.73%, while the five year was 52bps lower. However, with wage growth figures showing some reason for optimism, Zoopla stated that “Surprisingly, affordability has improved most in London where the price to earnings ratio will move to single digits for the first time in 11 years as house price growth continues to lag earnings growth”.
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WTFX: Issue 5
A special edition on the United Nations as this month saw delegates from around the world meet for the General Assembly. Here is your depth analysis on the geo-political uncertainty that continues to make headlines.
UK GDP, Household Incomes, and Eurozone Inflation
Discussion UK growth figures, increase of real disposable incomes, and release of eurozone inflation date.
Government Borrowing Under the Microscope
Estimates of government borrowing exceeding forecasts, release of US GDP figures, and rise in Australian CPI ahead of rate decision.
German Confidence Sinks as Propensity to Save Rises
Consumer confidence weakens for Germany, UK regulators approve Equinor developments, and today's data.
Dollar Index at 10-Month High as Yields on T-Notes Push Higher
Raising rates from Federal reserve, DXY appreciates to highest level, and average sick days on the rise for the UK
Speculation Mounts Over HS2’s Second Leg
Breaking the second leg of HS2, release of UK GDP figures on Friday, and Financial Times suggest US are sending long-range missiles to Ukraine.
Bank of England Hold Rates
Interest rates held by Bank of England, lower-than-expected UK retail sales, and contracting German PMIs.
The Fed’s Hawkish Hold
Possibility for another Fed rate hike, today's Bank of England interest rate decision, and a look at ONS labour market data.
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