Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Annual house price growth in the UK has cooled but remains in double digits, according to Nationwide building society. Growth fell back to 10.5% in July from June’s 17-year high of 13.4%. The average price of a home fell 0.5% month on month to £244,229, following a 0.7% rise in June.
Robert Gardner, Nationwide’s chief economist, said:
The modest fallback in July was unsurprising given the significant gains recorded in recent months. Indeed, house prices increased by an average of 1.6% a month over the April to June period – more than six times the average monthly gain recorded in the five years before the pandemic.
The tapering of stamp duty relief in England is also likely to have taken some of the heat out of the market. The nil rate band threshold decreased from £500,000 to £250,000 at the end of June (it will revert to £125,000 at the end of September. This provided a strong incentive to complete house purchases before the end of June, especially for higher priced properties. For those purchasing a property above £250,000, the maximum stamp duty saving reduced from £15,000 to £2,500 after the end of June.
He said Land Registry data indicates that higher priced properties have been driving the strong housing market since the pandemic struck. Over the past six months the proportion of sales involving detached and semi-detached homes has gone up while that of flats has declined significantly, as people switched to working from home and sought out bigger properties.
German consumer confidence has held steady heading into August, with the GfK institute’s barometer unchanged at -0.3 points, while economists had expected an improvement to 1.0.
The survey of 2,000 people shows that Germans became more willing to spend, but took a less upbeat view on the economic outlook than a month earlier, amid rising numbers of Covid-19 infections. After more than two months of decline, cases have been rising again since early July, mainly because of the spread of the more infectious Delta variant. About 60% of Germans have had a first shot of a Covid-19 vaccine and half are fully vaccinated.
Wizz Air said it is starting to see a rise in passenger numbers and expects to be the first large European airline to return to pre-pandemic levels by August, but slumped to a deeper first-quarter loss of €114m after operating at 33% during the latest lockdowns.
Asian shares have suffered a fourth day of losses, as a sell-off in mainland China and Hong Kong rippled through the region following Beijing’s intensifying regulatory crackdown on technology and education companies. Japan’s Nikkei lost 1.4% (SoftBank, a major investor in Chinese tech, tumbled 4.7%) and the Australian market shed 0.7%.
As Chinese state-run financial media called for calm, stock markets in the country were volatile, with the Shanghai Composite Index falling as much as 2% before trimming losses to 0.46%. Hong Kong’s Hang Seng reversed earlier losses to stage a late rebound of 1.3%, following sharp declines of more than 4% on Monday and Tuesday. Shares of internet giant Tencent in Hong Kong dropped 3.5% and Alibaba lost 3%.
Analysts at Bespoke Investment Group noted that there had only been one other period in 2011 when the Hang Seng declined more than 7.5% for two days, CNBC reported. Since then, they wrote:
There hasn’t been a single two-day decline since the financial crisis that has exceeded the magnitude of the last two days.
US stocks posted big declines ahead of results from technology giants Google, Apple and Microsoft. They reported record-breaking quarterly sales and profits on Tuesday night as the firms continue to benefit from a pandemic that has created a “perfect positive storm” for big tech. European shares are expected to open slightly higher this morning.
Also coming up
The US Federal Reserve will announce its monthly policy decision at the end of its meeting tonight. Investors are looking for any clues as to how quickly America’s central bank intends to unwind its stimulus.
The Agenda
- 7.45am BST: France Consumer confidence for July (forecast: 102)
- 9am BST: Italy business and consumer confidence for July
- 12pm BST: US MBA Mortgage applications for week of 23 July
- 1.30pm BST: Canada inflation for June (forecast: 3.2%)
- 1.30pm BST: US Trade in goods for June
- 7pm BST: US Federal Reserve interest rate decision
- 7.30pm BST: US Fed press conference