Proactive Investors -
- FTSE 100 up 16 points
- BoE head sees interest rates falling further
- Miners rally on China economic measures
Gold on course to hit US$2,700 as yet another record hit - UBS
Gold prices are on course to rise even further over the coming months after the yellow metal broke yet another record on Tuesday, UBS analysts suggest.
Further easing of US base rates by the Federal Reserve, worsening geopolitical tensions and ongoing demand from central banks should keep driving gold higher.
UBS said gold could climb as high as US$2,700 an ounce by mid-2025 as a result, with the factors having driven the metal to several records this week already.
Gold had climbed to a new high of US$2,642 on Tuesday morning, after breaking its own record twice on Monday, with the rise following the Fed’s 0.5% base interest cut last week.
As of Tuesday afternoon, gold sat at $2,636, having climbed by 0.2% during the day... Read more
UK food supply squeezed by labour shortages, Arla warns
Food supply in the UK is under pressure due to labour shortages in the agriculture sector, the UK’s largest dairy provider Arla has warned.
According to the firm, the end of free movement and a shift in people opting for remote-working roles after the pandemic has hit farmers.
One in 12 responded to a survey by Arla saying they had been forced to cut output due to such shortages, including by reducing herds.
Some 16% also said they would consider stopping farming unless the situation improved, Arla’s survey found.
“Our farmers have told us for some time that they are facing real challenges with the state of the labour market,” Arla UK managing director Bas Padberg commented.
“If we want our farmers to continue to put food on the table in millions of homes around the country they need help.”
Staff shortages have also led to wage inflation across the sector, with farmers found to be paying a third more this year than before the pandemic struck and free movement between Europe and the UK ended as a result of the Brexit referendum.
World stocks at record after China economic package
Global equities have hit a new high on Tuesday after China unveiled a host of measures overnight aimed at reinvigorating the world’s second largest economy.
The MSCI world index climbed 0.3% to hit a new record on Tuesday on the back of the measures, which will see the likes of interest rates and bank’s cash reserve requirements cut.
This followed a jump in Chinese stocks on Tuesday, with the Shanghai Composite and CSI300 index each adding over 4% while markets in Europe also gained.
In London, miners continued to lead the FTSE 100 higher as the Chinese announcements also sent commodity prices upwards, including oil and copper.
Anglo American PLC (LON:AAL) held its spot as the day’s biggest gainer, having climbed by 6.2%, ahead of Antofagasta PLC (LON:ANTO) and Asia-focused insurer Prudential PLC (LON:PRU).
London nearing New York as top financial centre
London is said to be closing the gap to New York as the world’s top financial centre, according to research from thinktank Z/Yen.
New York retained the top spot in Z/Yen’s latest Global Financial Centres index with a rating of 764 points, though London closed the gap by three points since March to score 750.
Stretching over the last 18 months, this gap has been narrowed by 15 points, with New York having overtaken London in the rankings six years ago.
Z/Yen added average ratings across the index, where Hong Kong claimed third place ahead of Singapore and San Francisco, slipped slightly in the latest reading as economies continued to grapple with slow growth and subsiding inflation.
Dow Jones, S&P 500 set to fall after hitting latest records
Wall Street appeared on course for a negative start on Tuesday after Monday saw the Dow Jones and S&P 500 notch up record closing values.
Futures had both indexes slipping slightly on Tuesday’s opening bell, alongside the Nasdaq, following recent gains on the back of last week’s base interest rate cut.
This had seen the Dow Jones and S&P 500 close at record highs of 42,124 and 5,718 respectively on Monday.
A drop would come despite Chinese plans overnight aimed at buoying the world’s second-largest economy, which will see bank’s cash reserve requirements and interest rates cut.
Scope Markets analyst Joshua Mahony noted the move to “flood” liquidity into the Chinese economy could in turn help to boost demand for US goods there.
However, questions remain over the health of the US economy itself, he pointed out, with eyes on Tuesday set to be fixed on the Conference Board’s consumer confidence survey.
“Coming after last month’s five-month high of 103.3, there is an expectation that we will see further improvements that could allay fears over a notable slowdown in domestic consumption,” Mahony added.
“With Friday also bringing fresh personal spending and personal income data, this week should tell us a lot about the financial health of the average US consumer.”
Mortgage rates remain on downward trajectory
Mortgage rates kept falling in recent days after Nationwide Building Society (LON:NBS) became the latest to ramp up competitive deals among lenders.
As of Tuesday, average two-year fixed rates sat at 5.43%, against Monday’s 5.45%, according to comparison site Moneyfacts.
Five-year fixed rates slipped to 5.09% from 5.12% in the meantime, as lenders kept tussling to attract buyers in spite of last week’s move by the Bank of England to hold base interest.
Nationwide on Monday became the latest to try and tempt new buyers with better offers, lifting its lending limit to six times prospective owners’ salaries in a first for a major bank.
Mortgage Advice Bureau chief executive Ben Thomspon commented that such a move meant “conditions for first-time buyers had improved markedly”... Read more
Caution remains over China economic package
Shares in London-listed miners remained inflated by late morning following China's economic stimulus announcements overnight.
Up 7.2%, Anglo American PLC led the likes of Antofagasta PLC, Glencore PLC (LON:GLEN), Rio Tinto (LON:RIO) to the top of the FTSE 100's risers, followed by Asia-focused Prudential PLC and Standard Chartered PLC (LON:STAN).
Aimed at lowering borrowing costs and reducing restrictions on lending, the People's Bank of China said overnight that short-term interest rates and cash reserve requirements would be cut.
Such cuts included an initial 0.5% reduction in reserve requirement ratios for banks, said to equate to US$142 billion (£106 billion), and the likes of lower mortgage costs and minimum down payments on homes.
However, the range of measures were met with caution by some, given demand across China was still seen at a weak point.
Citing conversations with local investors, Citi analysts said there was “very little expectation” for a recovery soon, with the rate cuts rather feeding through next year.
Outlook on iron ore remained cautious, Citi said, and better for copper but worse for battery metals as markets mulled the effect of the measures.
Tickmill Group strategy partner Patrick Munnelly added: “When it comes to flashy bursts of credit-driven stimulus, it feels like we have been here before.
“And yet, China's housing crisis keeps getting worse and equity markets have performed poorly”... Read more
Pound continues charge to two and a half-year high
Sterling continued to gain against the dollar on Tuesday following last week’s move by the Bank of England to hold base interest as US policymakers announced a 0.5% cut.
By late morning, the pound was up 0.2% against the greenback at US$1.3379, hitting its highest since early 2022.
The pound also reached a two-year high versus the euro of over €1.20, after data on Monday fuelled fears the German economy was heading for recession.
Expectations are for a more gradual scaling back of interest rates in the UK over the rest of the year compared to the likes of the US, in turn buoying the pound.