Signs that some of the inflationary pressures in the economy may be easing continue to drive gains for stocks, with the FTSE 100 higher on Monday.
While in global terms surging prices may be starting to ease, spiralling energy costs in the UK mean it could take longer to get over the peak of inflation, and data later this week may offer some clues as to the exact trajectory.
One area of the economy showing signs of easing is the property market. In what feels like a long overdue return to earth given the backdrop, Rightmove’s latest survey backs up a recent reading from Halifax showing house prices are finally starting to soften.
Shares in the housebuilders barely budged on the news, indicating the market may have already factored in a slowdown.
AJ Bell financial analyst, Danni Hewson, said: “However, strong selling prices have been the one thing insulating the sector from rising costs so it will be worth keeping tabs on future trading updates to see if margins are coming under pressure.
“Chinese stocks were lower as there was further evidence of the harm the country’s zero-Covid approach is doing to the economy in the short term.
“This has obvious implications for global growth and, in particular commodities demand, and in this context it was no surprise to see shares in the big mining firms slip a little in early trading.
“Life insurance group Phoenix may be boring but as record first-half results prove, boring can be beautiful, particularly amid the current turmoil.
“Managing life insurance products which are no longer being actively marketed to customers helps deliver a decent flow of cash and underpins the company’s generous dividends.
Meanwhile Former John Lewis director Jonathon Brown will have a real task on his hands at Joules having agreed to take over as CEO.
Amid squeezed household budgets Joules looks caught in the middle, neither serving an extremely wealthy clientele prepared to spend on luxury brands nor offering a bargain proposition which may benefit from people trading down.”
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