Here are this mornings headlines:
OPEC + Meeting
For the first time since July, OPEC+ meets today. Ostensibly it would seem that despite crude prices recovering from a slump in mid-August, and the supply looking fairly stable for the rest of the year, there may be little cause for OPEC to change the established schedule for gradual monthly hikes. It seems likely at this stage that the minister will ratify Octobers 400,000 barrel-a-day supply increment, later today. There has been a lot for The Organisation of Petroleum Exporting Countries (OPEC) to rectify since they have to hugely cut back production last year due to Covid-19, with nearly 45% of the idle supply being revived. At this stage, the coalition’s work has been imperative in keeping prices high enough to support the global petroleum industry, while avoiding any form of turbulence which could easily have jeopardised the global supply. With the inverse link between Oil and the US Dollar, this meeting is important, as should there be any major deviations away from the plan, that typically is reflected in a basked of exchange rates.
India Covid Recovery
Remember when the UK were discussing a ‘V’ shape recovery? Feels like some time ago now. India are now in the process of aiming for one. India’s economy rebounded by 20.1% from April to June, compared to a year earlier. Last year, during the same period, India’s economy shrank by 24%. This is likely to result in the Reserve Bank of India keeping stimulus measures in place, at least until the end of the year. There are a number of areas experts are sure will continue to grow at this pace, however there are a few key areas which are still falling short. Consumer spending is behind pre-pandemic levels, which is typically a major driver of growth, and there is a very real risk of another wave of covid infections changing the ‘V’ shape recovery into whichever letter the UK is on now, I fear it is starting to look like a website address, w w w . The Indian Prime Minister Modi took an alternative approach to drive growth, instead of pumping the economy full of stimulus like the rest of the advanced economies, the Indian Government opted to invest in infrastructure, privatisation of state-owned businesses and tax reforms.
UK House Prices
As the UK Government withdraws any tax breaks for new homes, August saw house prices rebound strongly, intimating that there is an underlaying demand, and a shortage of homes. July saw a 0.6% contraction, which was then followed by a 15 year high of 2.1%, the disparity is being attributed to the ending of a yearlong stamp-duty holiday in July. Analysts had predicted that the tapering of the stamp-duty holiday would supress prices in August, however other key variables which helped drive demand remain in place, such as a property shortages, lower borrowing costs and the Covid-19 inspired desire for city dwellers to elope for bigger, cheaper properties. “The bounce back in August is surprising because it seemed more likely that the tapering of stamp duty relief in England at the end of June would take some of the heat out of the market,” Robert Gardner, Nationwide’s chief economist. It transpires that they key driver behind the spike in prices is a lack of supply. Mortgage approvals fell for a second month in July, typically they are a key indicator of future activity.
Have a great day.
This Morning Report was brought to you by Alex Ayoub
