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‘Rate cut likely but affordability pressures won’t disappear overnight’ – Equifax UK comments

Paul Heywood, chief data & analytics officer at Equifax UK, said

“There were already signs before the UK Budget of dampening confidence in the mortgage market, with the initial rally in originations early this year proving to be relatively subdued amidst lingering interest rate uncertainty. With inflation below target, a further base rate cut remains the most likely scenario, but consumer affordability pressures won’t disappear overnight and could yet persist for longer.

“The volume of mortgage originations on loan terms of more than 35 years remains over twice as high as two years ago, as consumers trade off a bigger long-term bill for the short-term relief of smaller monthly repayments. That’s before considering the changes to Stamp Duty relief for first-time buyers, or any fresh inflationary impact from government spending plans.

“Equifax will continue to work alongside its lending partners to ensure consumers understand their creditworthiness and affordability.”

Here are some comments from Frank Sohlleder, analyst at ActivTrades:

The markets ahead of the US election — will the expected impetus materialise?

“The stock markets are facing important decisions this trading week. On the one hand, there is the eagerly awaited election for the US presidency, which takes place tomorrow, Tuesday, and on the other hand, the Federal Open Market Committee headed by its chairman Jerome Powell will make another interest rate decision on Thursday. This means that we can expect quite a bit of volatility this trading week, particularly in the USA.”

Gold fails to offset the sell-offs

“Gold, on the other hand, could potentially be the loser of the US election and the new interest rate decision. Assuming the impetus for a further equity rally is provided, this could result in capital shifting towards the equity markets, which could lead to profit-taking in the safe haven of gold. Investors were already able to see the first signs of this on Thursday and Friday.”

“After the sharp sell-off on Thursday, gold was unable to recover. There is a risk that further sell-offs will lead to a major correction in the shiny precious metal.”

Sainsbury’s (SBRY.L) is going head-to-head with Aldi on 200 core items like bread, baked beans and milk in a radical shift in the grocery market.

Sainsbury’s is the first big supermarket to extend its Aldi price match campaign across its convenience stores.

Russ Mould, AJ Bell investment director, said:

Sir Keir Starmer is reportedly set to raise university tuition fees for the first time in eight years.

The Telegraph has the details...

The yield on UK benchmark 10-year bonds stood at 4.48% on Monday afternoon, up from 4.45% on Friday, suggesting that traders have sold UK government debt.

Although there has not been any bond market turmoil, similar to what followed in the 2022 “mini-budget” of Liz Truss and Kwasi Kwarteng, yields have moved higher. This reflects higher borrowing from the UK government. More borrowing means more bond issuance, which generally makes prices fall.

It comes ahead of a decision from the Bank of England later this week. Money markets expect Threadneedle Street will be slower to cut rates.

Meanwhile, across the pond, rising bets of a win for Republican candidate Donald Trump in the recent weeks had lifted bond yields, the US dollar and bitcoin.

However, since a new poll showed Democratic candidate Kamala Harris leading in Iowa, bond yields have now tumbled, easing pressure on stocks.

The Post Office expects to have paid out more than ￡650m in compensation to subpostmasters by next March, it has been revealed. It comes after the Horizon IT scandal resulted in a huge spike in claims.

Simon Recaldin, the head of the four redress schemes the Post Office runs, said the organisation has so far paid out ￡302m.

He added hat there has been a “clear acceleration” in the number of claims made by Post Office owner operators this year, and the organisation expects to pay out a further ￡500m in the financial year to the end of March 2026.

Alan Bates, the central figure leading the drive for justice for hundreds of subpostmasters in the ITV drama Mr Bates vs the Post Office, has said he will once again consider taking legal action if all claims are not resolved by March next year.

Let‘s take a look at what’s happening in equity markets today:

• Shell (SHEL.L) and BP (BP.L) gushed higher after OPEC+ said it would to delay hikes in output by another month.

• NatWest (NWG.L) was boosted by an upgrade to 'outperform' from 'market perform' at KBW.

• Frasers Group (FRAS.L) gained as RBC Capital Markets upgraded the shares to 'outperform' from 'sector perform'. It said the current valuation fails to discount the likely resilience of its Sports Retail business, its property value and its strategic stakes, for instance in Hugo Boss.

• Burberry (BRBY.L) shot higher after online fashion publication Miss Tweed suggested over the weekend that Italy's Moncler could be considering a bid for the luxury fashion brand.

• Anglo American (AAL.L) rose as it announced the A$1.6bn (￡0.8bn) sale of a stake in the Jellinbah joint venture in Australia as part of its strategy to exit the steelmaking coal industry.

• Ryanair (RYA.IR) was in focus as the airline cut its full-year traffic forecast and reported a drop in first-half profits, as it took a hit from lower fares and Boeing delays.

• Reckitt Benckiser (RKT.L) was knocked lower by a downgrade to 'market perform' at Bernstein, while Smith & Nephew fell after Jefferies slashed its price target on the shares.

• Fresnillo (FRES.L) lost its shine after a downgrade to 'hold' from 'buy' at Canaccord Genuity, which pointed to a strong run over the past three to six months.

Wall Street is set to open higher in a few hours as Americans gear up to elect a new president.

A new poll showed Democratic candidate Kamala Harris leading in Iowa ahead of the vote on Tuesday. Bond yields tumbled as a result, easing pressure on stocks.

Rising bets of a win for Republican candidate Donald Trump in the recent weeks had lifted bond yields, dollar and bitcoin.

Betting site PredictIt showed Ms Harris at 53 cents compared to Mr Trump on 51 cents - what investors are willing to wager for a chance to win $1 - compared to 42 cents to 61 cents just a week ago.

Before the opening bell, the Dow was up 0.1%, while the S&P 500 and Nasdaq 100 gained 0.2%.

As the 5 November US presidential election approaches, the stock market is abuzz with speculation about how a tight race between vice president Kamala Harris and former president Donald Trump will unfold.

Investors are particularly focused on how differing policy approaches to climate, energy, and taxation could shape market dynamics. Harris would likely continue many of the Biden administration's policies, influencing sectors differently.

With the race for the White House heating up, these stocks are set to benefit if Harris claims victory.

Read the full article here

The US continues to remain the top destination for venture capital (VC) investments globally.

It also outpaced peer countries by a significant margin for high-value VC investments and accounted for more than half of deal volume as well as value of those investments during Q1-Q3 2024.

The US accounted for 55.4% share of the total number of high-value VC deals announced globally during Q1-Q3 2024, while its share in terms of the corresponding value stood at 56.4%, according to GlobalData.

Aurojyoti Bose, lead analyst at GlobalData, said:

Europe’s manufacturing production fell for the 19th month in a row in October, according to the closely watched purchasing managers’ index (PMI).

The index rose slightly to 46 points, up from 45 in September, according to S&P Global. However, that was still below the 50 mark that denotes growth in the sector.

European factories were held back France and Germany. France’s reading came in at 44.5, while Germany’s was even worse, at 43.

Manufacturing in Europe has struggled for two years as exports have waned, demand has fallen, and supply chain problems have held back companies from taking advantage when demand is there.

Dr Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said:

Anglo American (AAL.L) has sold a 1.6 billion Australian dollar stake (￡813m) in one of its Australian coal mines as part of its turnaround plan.

Shares in the miner rose more than 2% after it said it has agreed to sell its 33.3% shareholding in Jellinbah Group to Zashvin, which already owns a third of the company, alongside Marubeni.

The deal comes after Anglo fended off a ￡39bn takeover approach from rival BHP in May. It is expected to be completed in the second quarter of next year.

Anglo is in the process of selling off its Australian coal business, and is in talks with half a dozen buyers.

Burberry (BRBY.L) shares rose 7.5% on Monday after a media report said Italian luxury outerwear maker Moncler (MONC.MI) was considering a bid for the British luxury retailer.

Specialist fashion site Miss Tweed reported that LVMH (MC.PA) head Bernard Arnault is “keen” to get a deal done with the British retailer, citing several industry sources.

LVMH had purchased a 10% stake in Double R, the investment vehicle controlled by Moncler CEO Remo Ruffini’s Ruffini Partecipazioni Holding, in September this year.

Double R currently has a 15.8% stake in Moncler, and the deal gave LVMH a seat on the Italian company’s board.

Turkey’s annual inflation rate fell slightly to 48.6% in October, according to figures from the TUIK statistics office, although it was still slightly more than expected.

The consumer prices index came down from 49.4% the month before.

It comes as inflation rose by 2.9% on a monthly basis, which was also slightly higher than expected.

New research from The Global Payroll Association (GPA), has revealed that less than one fifth of UK office workers have asked their employer for a pay rise.

Here are some of the key points:

• Office workers tend to stay with their companies for a long time. 71% have been with their current employer for at least five years, and a further 12% have stayed put for three to four years.

• Some 91% of employees have received a pay increase during their time at their current company, with the majority of people (64%) receiving their raises on an annual basis. However, there remains a sizable chunk of employees (31%) who are having to wait more than two years between increases.

• 67% say they receive a review on an annual or quarterly basis. As such, more than half (56%) of office workers have already received a boost in pay in 2024.

• Just 17% saying they have directly asked for a pay rise.

• One reason for so few actively seeking a boost in pay is a lack of understanding around when and how to best request a rise. In fact, only 24% say they know which time of year is best for asking for a boost in pay.

• For some employees, a pay rise is on the cards without even having to ask for it, as during last week’s autumn budget, one of Rachel Reeves’s biggest announcements was an overhaul of the national living wage (NLW).

• One thing employees need to be aware when asking for a pay rise is income tax thresholds. During the budget, Labour also announced that income tax thresholds are to be frozen through to 2028.

Profits at Ryanair (RYA.IR) slipped in the first half of the year as the airline flew more customers at lower prices.

The budget airline posted a pre-tax profit of €2.1bn (￡1.8bn) for the six months to the end of September on Monday, which was 16% less than the same period last year. This was due to its average air fare declining by a tenth.

However the number of passengers travelled climbed 9% year on year to a record 115 million.

It said demand for flights was strong but that it could continue to be impacted by Boeing (BA) aircraft delivery delays, staff shortages and the ongoing risk of conflict in Ukraine and the Middle East.

Ryanair boss Michael O’Leary said:

Retailers are bracing for an “exceptionally tough festive period”, according to a new survey from advisory firm BDO.

It come as a tax raid by the chancellor in the budget last month adds to mounting troubles after poor sales in October.

New figures showed that store sales last month rose just 1.7% year-on-year, reflecting how retailers were already struggling before last week’s budget.

Including online purchases, overall retail sales in October were up 4.1% on last year, with fashion and homeware among the worst performing.

Sophie Michael, BDO head of retail and wholesale, said these figures marked a poor start to the festive season, as sales volumes are still “not back to 2022 levels".

She said:

The US presidential election and the latest interest rate decisions from the US Federal Reserve and the Bank of England are likely to dominate market focus in the coming week, but there are also a number of major companies still due to report.

Investors will be looking to the latest report from Warren Buffett's firm Berkshire Hathaway (BRK-B), to garner any insights on markets from the "oracle of Omaha".

Server maker Super Micro Computer (SMCI) will also be in focus, as it releases quarterly results, amid auditory scrutiny around the company.

Investors will be looking to see how pharmaceuticals firm Novo Nordisk (NVO) is performing, as it faces growing competition in the weight-loss drug space.

Housebuilder Vistry (VTY.L) is also due to release a trading update, which comes after it warned on profits last month.

Another major UK company scheduled to report is Marks & Spencer (MA6.SG), with investors looking out for more progress on its "reshaping" strategy.

Click for more on what to look out for