Join our community of smart investors

Today's markets: Inflation hotting up on both sides of the pond, housebuilders riding the wave & more

Follow our Markets Live blog for the latest news that affects your portfolio
Today's markets: Inflation hotting up on both sides of the pond, housebuilders riding the wave & more

 

  • Inflation surge well and truly underway
  • House prices add 10 per cent in May
  • Decarbonisation plans for UK reliant on private sector 

Inflation hotting up

Although a rise in inflation was totally expected, UK figures this morning have dampened investor sentiment in London. An increase to 2.5 per cent in the CPI reading in June, the highest level since August 2018, exceeded expectations and left investors questioning the belief of central bankers that inflation will only be transitory. A similarly marked increase in inflation in the US reported yesterday, where CPI has hit 5.4 per cent, was pretty much shrugged off by US markets overnight. 

In both the US and UK used car sales were a significant part of the equation although the rise in commodity prices in recent months is also a more long term factor.  The FTSE100 was down 0.5 per cent in early trading in reaction. 

Read more in Neil Wilson’s morning trader column here and for more of our weekly economics content from Chris Dillow, click on the links below: 

Investing in stagnant markets

The virtues we need

Clinging onto wealth

Barratt booms

Talking of inflation, house price inflation has led to strong outperformance at Barratt Developments (BDEV), where housing completions have almost returned to pre-pandemic levels and surging prices have led to a forecast that profits will come in marginally ahead of expectations. 

Read more:

UK housebuilders – when the taps run dry

Barratt Developments’ investors may want to temper enthusiasm.

By-election result sends warning to housebuilders too. 

But is the house price surge abating?

May's house price index from the Office for National Statistics (ONS) showed double digit growth in prices as the final push before the stamp duty holiday began to taper prompted a surge of buying. Average house prices rose by 10 per cent year on year in May, up from 9.6 per cent in April, leaving the average house price at £255,000. The biggest rises were seen in Scotland and Wales with London the laggard with growth of 5.6 per cent. Anecdotal evidence since the beginning of June suggests that housing market activity has begun to calm down a little although we can expect to see more strong headline house price growth figures out to the end of the summer at least with the next big marker the withdrawal of lower bands of stamp duty exemption in September. 

Read more: 

The health of housing

When will the house price boom end?

 

Follow our live blog below: