Market Report - 05/04/2024
UK house prices fall for first time in 6 months ; Markets await Nonfarm payrolls data
The final day of the working week is a busy one on the economic calendar with a host of data being released across both the UK, EU and US. Starting with the UK, it was announced this morning that house prices across the United Kingdom fell by 1% last month, following five months of growth, according to Halifax, the biggest mortgage lender in the country.
The average house price in the UK is now £288,430, which is circa £3k less than the previous months reading. This represents the first monthly drop since the September last year and came after a gain in February’s data (0.3% gain).
Elsewhere in the UK, it was announced that Britain’s construction sector had officially returned to growth last month to finally end a 6 monthly consecutive decline. The UK Construction PMI showed this morning a slight increase in overall construction output last month. The index rose from 49.7 in February to 50.2 in March, above what is deemed the all-important reading of 50 which indicates expansion. Whilst house building and commercial construction activity were unchanged, civil engineering and increased opportunities in general infrastructure projects and in the energy sector rose according to S&P global.
This in theory should have bolstered the GBP; however we have seen a relatively flat response from FX markets. Versus the EUR, the pound has seen a very slight retracement on the day, with a tight trading range between 1.1646-1.1667. GBP/USD has also traded incredibly narrowly, with a range between 1.2613-1.2649. Markets could be waiting for the all important non-farm payroll release this afternoon, which is always a key driver of volatility for the cable pair.
In the EU, German industrial orders data this morning displayed a steep decline at an annual rate of 10.6% in February, which is a significant change from January’s decline of 6.2%. Factory orders in Germany showed a small increase rising 0.2% over the same period, missing forecasts of 0.8% (despite recovering from an 11.4% drop in January).
In the US, Treasury Secretary Janet Yellen said today that concerns are growing over the global economic fallout from China’s excess manufacturing capacity as she begins her visit in the far east. US officials are concerned about the overproduction of electric vehicles, chips and other goods that are flooding into other markets. Some trade experts see the increased US criticism as an initial step towards raising US tariffs on Chinese electric cars and clean energy goods to protect US industry.
Elsewhere in the US, the main event of the week is due to take place today – with Nonfarm Payrolls data released at 1pm. Following a decent 184,000 jobs added in the private sector in March, economists are forecasting a rise of 200,000 in March and the unemployment rate is expected to hold steady at 3.9%. This is down from a 275,00 increase registered in February, meanwhile January’s data was significantly revised down to show 229,000 jobs were created, instead of the initial figure of 353,000. Average Hourly earnings is forecasted to rise by 4.1% year on year, which is generally an important indicator of wage inflation for the period. Investors will be keeping a close eye for the results of today’s figures following Fed Chair Jerome Powell’s comments earlier this week, where he reassured markets of the opportunity for rate cuts later this year.
With the above in mind, should you wish to target any specific rates ahead of this afternoons US data, or if you preferred for further information – please don’t hesitate to get in touch.