Housebuilding
Creeping confidence
The UK housing market is being boosted by government initiatives such as NewBuy and the cheap Funding for Lending scheme according to the latest mortgage figures. The number of mortgages agreed in December rose to 55,785, up 10 per cent on the average for the previous six months and the highest level of approvals since last January. Other surveys indicate that house prices were flat in January after several consecutive months of falls. Meanwhile, in the US, the housing recovery is gathering pace with the S&P/Case Schiller index rising by 5.5 per cent at its last reading compared with a year previously.
QE effect
Pensions warning
The longer-term effects of the recent splurge of quantitative easing in the UK are still up for debate but pensions experts are claiming that the money printing scheme has pushed inflation up, blunting consumer spending power and also pushing gilt yields to record lows. This in turn has hit pension funds, which use gilt yields to forecast future liabilities, and annuities rates. The National Association of Pension Funds believes pension fund deficits have been inflated by a collective £90bn hit over the past three years due to the use of quantitative easing. Saga director general Ros Altman said: "History will judge this as a monumental mistake."
Amazing Amazon
Record performance
Online retailer Amazon turned in a record performance in the fourth quarter of 2012, emphasising its position as the biggest online retailer in the world. International sales surged by 20 per cent to $9.1bn, contributing to total quarterly sales of $21.3bn, 23 per cent higher than the previous year and operating profits of $405m. The growing presence of the likes of Amazon, with its ever widening selection of products, is putting increasing pressure on traditional high street retailers, illustrated by the meltdown of Comet, Jessops and HMV in recent weeks.
January effect
Equities bounce
The rally in equity markets which began in the weeks leading up to Christmas has carried on through January, boosted by the fiscal cliff fudge in the US and improving sentiment towards the eurozone, with the FTSE 100 set to post its best January since 1998. And past statistics indicate that a strong January is normally a good leading indicator to annual returns. Research by Fidelity suggests that stock markets have risen in January in 18 out of 30 years since 1984 and in all but three of the previous 17 years that began positively, equities have posted gains for the year as a whole.
RIM return
New Blackberry
Canadian smartphone business Research In Motion (RIM) was scheduled to release its long awaited new smartphone designs on Wednesday, running its new BB10 operating system which, the company hopes, will give it a chance to claw back lost ground in the smartphone space. The much-delayed launch has only helped to exacerbate negative sentiment towards RIM in recent months as rivals Apple and Samsung have scorched ahead in the ultra-competitive smartphone market while the latest Blackberry has been locked down in development. Shares in RIM bounced more than 200 per cent in the run-up to the launch, although this partly reflects how far they had fallen.
Bonds beat equities
Pension fund demand
The popularity, and positive performance of bonds, over the past year is reflected in the fact that UK pension funds held more bonds by value than equities for the first time in nearly 40 years at the end of 2012. The last time bonds were more popular than equities was on 1975, in the wake of the crippling 1973 oil crisis. In 2012, pension funds held 42 per cent of their assets in bonds against 35 per cent in equities, a sharp turnaround from 2007 when they held almost twice as much in equities as bonds. Holdings of UK-listed companies in UK pension funds fell below 10 per cent of total value last year. But this may represent a peak with increasing signs that a rotation from bonds back into equities is underway across the globe.
