Market Report

UK stocks held steady on Friday as investors digested a slew of data releases and inflation readings both in Europe and the US.  UK house prices fell unexpectedly in August, a sign affordability remained stretched even after the Bank of England eased borrowing costs.  The Nationwide Building Society said its index of house prices declined 0.2%, the first drop since April.  Most economists had expected a 0.2% increase.  The average cost of a home was £265,375, up 2.4% from a year earlier but 3% below the all-time high reached in the summer of 2022.

In Europe markets were buoyed by the release of eurozone inflation figures which fell sharply to a three-year low in August boosting hopes that the European Central Bank will cut interest rates at its next monthly meeting.  Economists expect a quarter-point cut in the ECB’s benchmark interest rate to 3.5% when policy makers meet on September 12.

 The US market found support with the release of the US Core PCE Price Index, the Federal Reserve’s preferred measure of underlying inflation which rose at a mild pace in line with analyst expectations (+2.6% YoY).

The US Dollar held steady to snap a 5-week losing run versus major peers.

 Oil prices fell sharply after a report that OPEC+ plans to proceed with previously announced output hikes in the fourth quarter.

Gold was weaker falling back from recent highs.

In corporate news Burberry was out of fashion ahead of its expected demotion from the FTSE 100.  The stock looks poised to drop down to the midcap FTSE 250 Index at September’s quarterly rebalancing, ahead of final changes being announced next week. 

Hampered by an industry-wide slowdown in demand and a faltering brand revamp, Burberry shares have slumped by a third over the past three months.  The British firm has been hit particularly hard by a softer Chinese market, which resulted in a recent profit warning.