Monday 28th July 2008

All eyes on the UK housing market….

After extremely poor retail sales last week further data released from the Office for National Statistics highlights the strain on the UK economy at present. It reported that economic growth between April and June had slipped to 0.2% down from 0.3% last quarter. This slowdown is no surprise to the market and further slowdown is expected for future months. In line with other surveys Hometracker highlighted that UK house prices fell by 1.2% in July, the biggest annual fall since Hometracker began its survey in 2001. As the bad UK data continues to build up the markets expectation that the Bank of England will consider to raise interest rates looks extremely unlikely.

In Germany the consumer confidence out this morning highlighted the global concerns in regards to inflation with falling housing prices and rising food and energy prices. The German consumer indictor predicts that due to low morale August will see a downturn to 2.1 from 3.6 for the month of July, with the index expected to be at its lowest level since 2003.

Over the weekend the US congress met to try and salvage the US financial system. A new bill was sanctioned yesterday with the Federal Housing Agency to secure $300billion for the ever growing suffering American home owners. It is expected to impact over 400,000 homeowners and is forecast to have an immediate effect. This bill could not come at a more crucial time as the US equity markets were down on the week in particular with Fannie Mae and Freddie Mac down 14% and 10% respectively.

The price of oil is still the hot topic of the moment. Oil reported a seven week low last week with oil down to $123 per barrel.

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