European markets lifted as trade tensions ease
Global stock markets have been pushed around by the trade tensions between the US and, notably, China, and signs of a softer tone from the Trump administration has given them a lift today. David Madden, market analyst at CMC Markets, said:
Equity markets are higher now that it seems the US is taking a more relaxed position regarding investment from China. The Committee on Foreign Investment in the United States (CFIUS) will access international investment in the US. Traders are viewing this less aggressive way to monitor overseas investment in the US as a boost for international relations.
Traders welcomed the initiative as the government now appears to have a body that will deal with the issue, and it should lead to less confusion about which investment is allowed and which isn’t. Recently, different members of the Trump administration seemed to be on different wavelengths from one another, and that added to the uncertain economic environment.
Dealers are now happy to enter the market and pick up relatively cheap equities. The trade dispute is still ongoing, so investors’ optimistic mood may not last too long.
Rising oil prices have also helped push shares higher, particularly in the commodity sector. The final scores in Europe showed:
- The FTSE 100 finished 83.77 points or 1.11% higher at 7621.69
- Germany’s Dax added 0.93% to 12,348.61
- France’s Cac closed up 0.87% at 5327.20
- Italy’s FTSE MIB rose 0.65% to 21,557.91
- Spain’s Ibex ended 0.22% higher at 9658.6
On Wall Street the Dow Jones Industrial Average is currently
Elsewhere John Lewis Partnership warned this year’s profits would be well below last year’s figures, and said it was getting rid of five Waitrose stores. Our full story is here:
On that note, it’s time to close for the day. Thanks for all your comments, and we’ll be back tomorrow.
Over in the US, and President Trump is back tweeting about Harley-Davidson (which said it would move some production out of the US due to his tariff plans) and not, perhaps surprisingly, about China (there is still plenty of time for that, of course).
Harley-Davidson should stay 100% in America, with the people that got you your success. I’ve done so much for you, and then this. Other companies are coming back where they belong! We won’t forget, and neither will your customers or your now very HAPPY competitors!
— Donald J. Trump (@realDonaldTrump) June 27, 2018
Markets continue to recover after the signs that the Trump administration may be taking a more conciliatory tone with China. Chris Beauchamp, chief market analyst at IG, said:
Equities are reaching for the stars once again, with healthy gains across the board. Many market watchers will remember when it was the Fed that was scared into policy changes by financial market volatility. Now the financial markets appear to be doing the same to the US president. Trade war concerns remain high on the agenda, but the White House’s comments on using existing legislation rather than new rules has helped boost risk appetite.
Having tied himself so closely to the stock market early on in his presidency, Mr Trump will be wary of anything that prompts a sustained rout in equities. Of course, he may decide that the political advantages of talking tough on trade outweigh those arising from a buoyant stock market. But for now investors will be pleased that a softer tone is being adopted.
Also helping equity markets this afternoon is oil, which has enjoyed a stellar week. OPEC’s move to raise production did not dispel concerns about a supply shortage, and those concerns have only increased thanks to US jawboning on Iranian exports, a Canadian shutdown and now a fresh drop in US crude stockpiles. So long as OPEC keeps a lid on production increases, we can expect further bullish momentum in oil.
Back with John Lewis Partnership, and analyst Greg Lawless at Shore Capital was positive about the moves the business has outlined to deal with a tricky retail environment:
This looks a sensible path for JLP to navigate given the structural shifts across the current retail landscape. The group is playing to its own core strengths with an increased focus on differentiation, innovation and enhanced service. The work in recent years from a balance sheet perspective (slowed the investment in physical space growth, reduced the discretionary pension increases and reduced partnership bonuses) has put it in a stronger position. The stronger balance sheet allows a commitment to continue to invest £400- £500m per annum over the next three years. The group is targeting a net debt to EBITDA of 3.0x ratio over the next five years, suggesting capital discipline over the medium-term.
JLP is now being more realistic in recognising that group profits need to be rebased as it faces into its challenges and charts its own path. The expectation is that there will be no let-up in the headwinds and it is right that the group is being more realistic in its appraisal of the sector. Perhaps other retailers might also want to consider the wider sector implications of JLP acknowledging the current retail environment.
Oil price jumps after fall in US stocks
Crude prices have been rising in recent days, giving a boost to commodity stocks and markets such as the FTSE 100 where mining and oil companies are well represented.
Despite Opec agreeing to increase production, the price was supported on Tuesday by Donald Trump calling for buyers to cut their purchases from Iran, Opec’s third largest producer.
Now a bigger than expected drop in US crude stocks has suggested growing demand, and pushed prices higher. Crude stocks dropped by 9.89m barrels last week, compared to expectations of a 2.6m decline. Gasoline stocks grew by 1.16m but this was less than the forecast 1.3m increase.
Brent crude is now up 2% at $77.82 a barrel, while West Texas Intermediate - the US benchmark - has added 2.7% to $72.5.
Updated
US treasury secretary Steve Mnuchin is predicting strong growth for the country’s economy in the second quarter. He told CNBC he was expecting a “big number” . And although he made it clear he had no advance sight of the figures, the comments have helped push Wall Street even higher.
Yee-haw! Stocks are up today as it looks like Mnuchin may have saved the day. For now at least. Volatility is back with a vengeance and trying to predict DC policy moves remains a crap shoot.
— Paul R. La Monica (@LaMonicaBuzz) June 27, 2018
Nah they were listening to Mnuchin earlier... https://t.co/5JJLUUpKmY
— Shaun Richards (@notayesmansecon) June 27, 2018
Wall Street opens higher
Signs that the Trump administration may been trying to ease tensions with China have given US markets a lift at the open.
As reported earlier the US is moving away from a blanket ban on Chinese firms investing in US businesses, and instead is talking about using a strengthened security review process to deal with the issue.
The news has helped push the Dow Jones Industrial Average up 108 points or 0.46%, while the S&P 500 opened 0.2% higher and the Nasdaq Composite 0.33% better.
There are also some new US figures showing an improvement in the goods trade balance to -$64.85bn in May, down $2.5bn.
Exports for May were up $2.9bn to $143.6bn, while imports edged up $0.4bn to $208.4bn.
May US goods trade balance improves! Big surprise given massive tax cuts were thought to boost demand for foreign consumer goods. Best figure for 9 months. Will help 2Q growth story even more. Atlanta Fed Nowcast model currently has 2Q GDP penciled in at 4.7% annualised growth. pic.twitter.com/zlmbQVFtQC
— James Knightley (@Knightleyeco) June 27, 2018
Still with the US, and new orders for capital goods fell unexpectedly in May, although April’s figure was revised sharply higher.
The commerce department said that orders for non-defence goods excluding aircraft slipped by 0.2% compared to forecasts of a 0.5% increase. But the April figure is now reported as a 2.3% rise, much better than the original estimate of a 1% gain.
Analysts trying to work out how this might affect US interest rate policy might have a difficult time, says David Morrison, senior market strategist at GKFX:
Over the past few years investors have got used to equities rallying on the back of data releases, irrespective of the numbers surprising to the upside or downside. Strong data has reinforced the view that the US economy is powering ahead, at least when compared to other developed countries. But at the same time, disappointing numbers have led to the belief that the US Federal Reserve would decelerate monetary tightening. After all, that’s what we’ve seen repeatedly from both Janet Yellen and her predecessor as Fed Chair, Ben Bernanke.
However, there’s a growing perception that the current chair, Jerome Powell, is doing things differently and that under his lead the Fed is prepared to tighten unless there’s a significant market disruption. Consequently, data disappointments are unlikely to receive the positive reaction that they once did. This shift in sentiment is something to be aware of as we approach the second half of this year.
Markets rally as US rows back from China clash
Newsflash: Donald Trump may have backed away from escalating the trade dispute between America and China.
US officials have revealed that the Trump administration is moving away from plans for a blanket ban on Chinese firms buying stakes in US companies.
Instead, the US government is pushing Congress to strengthen a panel called the Committee on Foreign Investment (CFIUS), to protect US intellectual property rights.
That’s a less confrontational approach, which will calm fears that the row between Washington and Beijing was escalating ever higher.
Earlier this week, there were reports that the US would use national emergency laws to prevent Chinese companies from investing in the US - and possibly other countries too.
But now, the White House seems to have backed away from such an inflammatory step.
One official told CNBC that:
“We considered a number of different mechanisms for addressing the concerns articulated regarding the acquisitions of sensitive technologies that may threaten U.S. national security, national interests.
In the end the president and his advisers settled on the idea that we have a strong and effective mechanism through the CFIUS process ... and that is a mechanism that can be used in the flexible and aggressive way to combat the practices that are troubling to the president.”
Investors have welcomed the news, sending shares higher.
In London the FTSE 100 index is now up 55 points, or 0.7%, and Wall Street futures are recovering too.
Stock markets seeing this as a deescalation of Trade Wars. Stocks up, Yields up, Dollar off. Risk back on, at least for now.
— James Hughes (@James_HughesUK) June 27, 2018
Futures have totally erased their losses after Trump decides against harshest measures on China https://t.co/aRjDc8qUAB pic.twitter.com/jiHGIecoiR
— Joe Weisenthal (@TheStalwart) June 27, 2018
Mark Carney defends Bank of England travel costs
Back in London, the governor of the Bank of England has defended the huge cost of flying policymakers around the globe.
Mark Carney was questioned about the revelation that two members of the Financial Policy Committee spent £390,000 on flights between them in the last couple of years.
In response, Carney told reporters that it was absolutely right to question the Bank’s expenses - before explaining that its officials are jet-setting around the world to attend important international meetings.
Carney says he personally went on 52 trips in the last year, at a cost of £312,000. Some of that cost is covered by Carney’s other jobs (he also chairs committees for the Bank of International Settlements), getting the average price down to £3,000.
As Carney says:
That’s still a lot of money, but it’s a consequence of having to go to these various meetings.
The governor points out, a little defensively, that he was slaving away last weekend while luckier souls were watching England overcome Panama, sunbathing, or wrestling with a barbeque.
As Carney puts it:
I spent what was a glorious weekend here, I hear, in Basel, chairing a group of global governors dealing with issues around Brexit, emerging market risks, the future of financial reforms...
And I was very pleased to be able to get back on Sunday night so I could come into work on Monday morning.
Full story: John Lewis hit by profits tumble
If you’re just tuning in, here’s our news story on John Lewis:
The John Lewis Partnership has said it will make no profit in the first six months of this year and is to close five Waitrose stores as tough trading on the high street takes its toll.
The group said its full-year profits, to be announced next March, will also be substantially lower than last year. It operates 50 John Lewis outlets and 350 Waitrose shops.
JLP blamed market uncertainty and cited significant extra costs as a result of greater IT investment, which would be the main cause of the profit decline.
Waitrose will shut four convenience shops and one small supermarket, affecting aabout 200 staff. The four convenience stores are being sold to the Co-Op.
Sir Charlie Mayfield, the JLP chair, said: “It is very important that we feel the jeopardy of what is happening right now. This isn’t a blip, it is a major shift and it has a while to run.”
Waitrose is expected to see profit growth, but that will be offset by a decline at John Lewis.
The group said: “It is widely acknowledged that the retail sector is going through a period of generational change and every retailer’s response will be different. For the partnership, the focus is on greater differentiation, not scale.”...
More here:
Aldi to take over Camden Waitrose
Newsflash: The Waitrose store on Camden high street will become an Aldi.
The discount chain has exchanged contracts to acquire the Camden store - one of the five being shut by John Lewis. It intends to reopen the site in Spring 2019.
While Waitrose is firmly upmarket (although it does run a popular Essentials range too), Aldi has grown its market share strongly by focusing more on price.
Graham Hetherington, Aldi regional managing director, says North London shoppers will appreciate the difference:
“The Camden store is an opportunity to reach customers in a busy London borough, many of whom may not have experienced Aldi’s award-winning, quality products at unbeatable prices before.
“We expect details of the agreement to be finalised in autumn and work will then begin to refit the store with a view to opening in spring next year.”
Co-op to take over Waitrose stores
Newsflash: The Co-op has swooped in to buy the four small Waitrose stores being axed today, saving them from closure.
The Co-op has exchanged contracts to take over the Little Waitrose convenience stores in Manchester (on the approach to Piccadilly railway, and in the financial centre of Spinningfields).
It will also take over the store on Colmore Row in Birmingham City Centre, and Portman Square in central London.
Stuart Hookins, Co-op Director of Property Portfolio and Development, says:
“We are pleased to have worked with Waitrose to agree the purchase of four of its convenience stores. Our acquisition and refit programme forms a fundamental part of our food strategy.
Our aim is for stores to be at the heart of local life, creating stronger communities and offering great quality products conveniently, when and where our members and customers need them.”
This should also avoid job losses. Waitrose Partners at those shops being acquired by the Co-op will transfer to the Co-op under TUPE (Transfer of Undertakings, Protection of Employment regulations). Waitrose has also promised to find opportunities for staff wh want to say with them.
Updated
Expert: There's growing panic in the retail sector
The slide in John Lewis’s profits this year highlights the wider crisis in British retail, says Richard Lim, chief executive of consultancy group Retail Economics,
“Even the mighty John Lewis has not been able to escape intensifying pressures building on UK high streets. The impact of rising sourcing costs, higher operating costs and the turbulent consumer environment has flatlined profits.
“There’s a growing sense of panic for the retail sector as the intergenerational shift in behavioural trends is fragmenting the market. The emergence of the sharing economy, mass personalisation at scale and the ‘me’ economy has put the emphasis on retailers to differentiate themselves from their competitors. But the pace of change is accelerating and the race is on to pivot business models in a move to become fit-for-purpose in today’s digital age.”
John Lewis’s profits are being eaten by Amazon, and Brexit uncertainty, says Bloomberg:
The operator of department stores and Waitrose supermarkets said it’s unable to give a precise annual profit forecast because of economic uncertainty, some of it linked to the pending departure from the European Union. With Brexit less than a year away, consumer confidence will suffer further in the second half, Chief Financial Officer Patrick Lewis said.
The announcement from John Lewis, at a strategy day Wednesday, continues a run of bad news from U.K. store chains. Brexit is squeezing their costs and prompting consumers to keep closer tabs on budgets, compounding the damage from the rise of online shopping.
Amazon and Brexit could wipe out profit at British retailer John Lewis https://t.co/uxupL8nOCD pic.twitter.com/OyDyHEjXE0
— Bloomberg (@business) June 27, 2018
Bank of England gives Europe a Brexit 'hurry-up'
Newsflash: The Bank of England has issued a warning that Europe needs to do more to prepare for Brexit.
In its new financial stability report, the BoE says that progress has been made in protecting UK households and businesses against Brexit disruption but “material risks remain”.
It is particularly concerned that the EU hasn’t created a temporary permission regime to allow financial firms to continue trading across Europe after next March.
Without such a regime, trillions of pound worth of derivative contracts are at risk, plus millions of insurance contracts.
The Bank says:
Progress has been made, but material risks remain.
The biggest remaining risks of disruption are where action is needed by both UK and EU authorities, such as ensuring the continuity of existing derivatives contracts.
“As yet the EU has not indicated a solution analogous to a temporary permissions regime.”
BoE governor Mark Carney is speaking to reporters in London now, warning that the rise of protectionism could hurt the global economy. We’ll have more details shortly...
List: Which Waitrose stores will close?
Here are the five Waitrose stores that are closing as part of the strategy announced this morning:
- Spinningfields, Manchester
- Manchester Piccadilly
- Colmore Row, Birmingham
- Portman Square, London
- Camden, London
The first four are convenience stores, while the Camden store is a small supermarket.
Updated
John Lewis chairman: No-deal Brexit is unthinkable
John Lewis’s chairman has now weighed in on Brexit, saying it is ‘unthinkable’ that Britain leaves the EU without a deal.
He made the comments at this morning’s media briefing, as he outlines the company’s plans to shut five Waitrose stores and boost investment.
Reuters has the details:
Britain is unprepared to leave the European Union without a deal and chaos would ensue were it to happen, the chairman of department store group John Lewis said on Wednesday.
“A no deal Brexit is in my view a pretty much unthinkable scenario,” Charlie Mayfield told reporters.
Updated
Martin Lane, managing editor of money.co.uk, is alarmed that profits across John Lewis’s business have all but evaporated so far this year.
He says:
“It’s no surprise John Lewis have seen a fall in consumer demand, but to make close to no profit is worrying to say the least. John Lewis are struggling to soak up rising costs whilst improving their own infrastructure. The strategic move to close a few Waitrose stores is part of a wider plan to innovate rather than expand.
“With numerous high street retailers going into administration since Christmas, this news will surely have the John Lewis board members in crisis talks.
Lane believes that Waitrose are losing out to cheaper rivals, as consumers cut back.
John Lewis’s department stores face an even bigger nemesis - the internet.
With lack of wage growth and rising living costs it’s become evident that shoppers are tightening their purse strings and saving where they can. Cheaper supermarkets like Aldi and Lidl are growing in popularity which leaves Waitrose out in the cold. John Lewis on the other hand are battling an even bigger battle - the online retail market. With the recent news House of Fraser are having to shut a large number of their stores, the worry is that John Lewis may end the same way. The partnership has its work cut out to recover from this.
The boss of John Lewis Partnership, Paula Nickolds, is briefing reporters about the challenging retail world:
John Lewis managing director Paula Nickolds says of high street: 'moderate is dead, good is no longer good enough'
— Hannah Uttley (@huttleyjourno) June 27, 2018
Waitrose chief Rob Collins is also there:
Waitrose boss Rob Collins says he expects online sakes to double over next five years
— Sarah Butler (@whatbutlersaw) June 27, 2018
Rob Collins of Waitrose says the grocer is "all about delicious health".
— Ben Woods (@Ben_Woods01) June 27, 2018
The company is also rebranding, to emphasise the partnership element of its business:
John Lewis and waitrose to be rebranded as follows...to demonstrate the contribution of its partners. pic.twitter.com/bPjGWhSEku
— Deirdre Hipwell (@DeirdreHipwell) June 27, 2018
Big branding change coming at John Lewis - will be John Lewis & Partners and Waitrose & Partners from Sept
— Paul Sandle (@paulsandle) June 27, 2018
The official statement
The John Lewis Partnership has now issued a statement, confirming that profits are taking a tumble this year and that several Waitrose stores are being shuttered.
The news comes in a strategic update, outlining its plans for its department stores and supermarkets. This includes £500m of fresh investment over the next few years.
Here are some highlights (I’ve bolded up the key points):
It is widely acknowledged that the retail sector is going through a period of generational change and every retailer’s response will be different. For the Partnership, the focus is on greater differentiation – not scale. We have clear plans to build on our strengths and to sharpen our points of difference in both Waitrose and John Lewis.
These plans include further investment in and development of unique products and service, together with a greater emphasis on own brand and innovation.
On current earnings:
We expect the Partnership’s half year profits before exceptional items – which are always much lower and more volatile than the second half – to be close to zero this year. For the full year there are a wide range of possible outcomes, given the market uncertainty, but we are currently assuming that profits before exceptional items will be substantially lower than last year.
The Partnership currently expects to see profit growth in Waitrose, a decline in John Lewis and significant extra costs at the Partnership level as a result of greater IT investment, which will be a big driver behind the overall profit change.
Today the Partnership has announced that it will take steps to strengthen its balance sheet by a further £500m over three years to invest in product and service innovation. This will be achieved by rebuilding profitability at Waitrose, creating more value from the property estate, and conducting a review of the Partnership’s pension scheme.
And here’s confirmation that five Waitrose stores will close:
Unlike many of its competitors, the John Lewis Partnership has a well balanced and well located store portfolio, with 353 Waitrose shops and 50 John Lewis. As we develop our plans to prioritise differentiation we will continue to make adjustments to our overall estate, including exit or closures, but at a rate that’s in line with what we have seen over the last few years. To this end, Waitrose today announced the disposal of four convenience shops and one small supermarket.
Today’s announcement is clearly bad news for John Lewis’s 85,000 staff, who effectively own the Partnership.
Each employee is a partner, who receives a percentage of their annual salary in a profit-related bonus each year.
In 2017-18 the partners only got a 5% bonus, the lowest in over 60 years, after profits slumped by 77%. This year’s bonus could be even more miserly.
Updated
More gloom from John Lewis Partnership chairman Charlie Mayfield:
“It is very important that we feel the jeopardy of what is happening right now.
Updated
John Lewis is briefing reporters about its plans now.
Chairman Sir Charlie Mayfield warns that the retail slowdown isn’t a “blip”, and could continue for some time:
This is not a blip and it's got plenty if road to run says John Lewis boss Charlie Mayfield of Hugh street's current difficulties
— Sarah Butler (@whatbutlersaw) June 27, 2018
Updated
John Lewis to shut Waitrose stores as profits slide
Newsflash: John Lewis has warned that its profits will be substantially lower than a year ago.
In the latest gloomy news to hit Britain’s retail sector, the John Lewis Partnership admits that profits in the first half of the financial year could be close to zero.
It is also planning to close a handful of small Waitrose stores - including one in Camden, two Little Waitrose outlets in Manchester and one in Birmingham.
John Lewis saying doesn't expect any first half profits and annual profits to fall amid tough times on high st
— Sarah Butler (@whatbutlersaw) June 27, 2018
John Lewis Partnership gives a sober update this morning. Expecting full year profits to be "substantially lower" than last year. Half year profits "close to zero" . Is looking at shop closures, including offloading four Waitrose convenience stores and one supermarket.
— Ben Woods (@Ben_Woods01) June 27, 2018
John Lewis profit will be "close to zero" this year amid heavy investment in service
— Jonathan Eley (@JonathanEley) June 27, 2018
More to follow!
Updated
Markets still gripped by trade war fears
Worries that Donald Trump will trigger a destructive trade war are weighing on the world’s stock markets again today.
China’s benchmark CSI 300 index slumped by 2% today to a two-year low, leaving it firmly in ‘bear market territory’ (more than 20% below its peak in January).
Other Asian markets also slipped, with the Hong Kong Hang Seng index down 1.8%.
It’s been a bad few weeks for emerging market shares, as nervous investors pull money out.
As this chart shows, the entire region is worryingly close to bear market territory:
Bears looking almost in complete control across emerging markets.
— David Ingles (@DavidInglesTV) June 27, 2018
Index about just 4% away from entering a bear market. Reversal doesn't look like it's happening soon looking at steep downward slope on A/D line pic.twitter.com/cyusgZhUOq
European markets are also on the back foot. Germany’s DAX has dropped by 0.75% this morning, as concerns that Trump might slap tariffs on European car imports mount. France’s CAC is down 0.5%.
Things look better in London, though, where the FTSE 100 has lost just 10 points (-0.15%).
Connor Campbell of SpreadEx says that “ongoing trade war concerns continuing to weigh on investors’ minds.”
Economist Howard Archer of EY Item Club has spotted that UK house prices actually flatlined in the last three months, compared to the previous quarter.
This is the first time that prices haven’t risen on a quarterly basis since the third quarter of 2012 - another sign that the market’s cooling.
Archer says people are being cautious because interest rates could rise soon - making a mortgage less affordable:
Housing market activity is expected to remain lacklustre as the extended squeeze on consumer purchasing power only gradually eases, confidence is relatively fragile and appreciable caution persists over engaging in major transactions.
Potential house buyers may also be concerned that they are likely to face further interest rate hikes over the coming months (we believe the Bank of England is more likely than not to raise interest rates from 0.50% to 0.75% in August – although it could be delayed until November). Furthermore, house prices are relatively expensive relative to incomes
House prices growth slows: what the experts say
Worries over Brexit are keeping some potential housebuyers out of the market, keeping prices subdued, says Jonathan Samuels, CEO of the property lender, Octane Capital.
With Brexit on the horizon, households feeling the pinch and interest rate uncertainty lingering, a lot of prospective buyers are sitting tight.
“Nationally, we’re witnessing the revenge of the regions, with the East and West Midlands in especially barnstorming form. Wales also has a significant spring in its step.”London is in a league of its own once again, but sadly, for homeowners in the capital, it’s the bottom league.
North London estate agent Jeremy Leaf says sellers need to be realistic about prices, particularly in his patch:
‘On the one hand, the squeeze on incomes and unrealistic asking prices is reducing activity and confidence to move, particularly in price-sensitive areas such as London.
‘On the other hand, the market continues to be supported by low interest rates and overall supply shortages, although we have found recently that listings and viewings are on the rise. This will translate into more sales if buyers and sellers recognise the new market realities.’
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, reckons we’ll avoid a full-blown house price crash:
“Tight supply, a healthy labour market and a continued lengthening of mortgage terms - 30-year loans now are common - will help to prevent prices from falling outright.
“But it is inevitable that house prices will grow at a slower rate than households’ incomes during a period of rising mortgage rates.”
House prices in the North are closing the gap on their Southern cousins.
Northern property prices have risen by 3.3% in the last year, a vigorous performance compared to the South’s softer growth of just 0.5% (dragged down by London’s 1.9% decline).
But.... that only makes a small dent in Britain’s housing divide.
Prices in London, for example, are still more than 50% higher than in 2007 when the financial crisis stuck. In swathes of the North, though, prices are below those levels.
House prices growth is slowing in most parts of the UK, Nationwide reports.
The Midlands has seen the strongest house price growth recently, followed by Wales and Scotland.
But while London lags behind, the average price in the capital (£469k) are still more than twice the national average (£215k).
Updated
The agenda: UK house price growth slows
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
House price growth in the UK has fallen to its lowest level in five years, in the latest sign that the market is cooling.
Nationwide, the building society, has reported that annual house price growth slowed to 2% this month.
That’s the slowest rate since 2013, with the market dragged down by falling prices in the capital.
Nationwide UK house price index
— Neal Hudson (@resi_analyst) June 27, 2018
annual change: 2%
year to date: 2% pic.twitter.com/VkJhWznz3P
London was the weakest performing region in the last quarter, Nationwide reports, with prices down 1.9% year-on-year.
Robert Gardner, Nationwide’s chief economist, blames weak economic growth and tight household finances, saying:
Surveyors continue to report subdued levels of new buyer enquiries, while the supply of properties on the market remains more of a trickle than a torrent.
“Looking further ahead, much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates.
“Subdued economic activity and ongoing pressure on household budgets is likely to continue to exert a modest drag on housing market activity and house price growth this year, though borrowing costs are likely to remain low.
More details and reaction to follow...
Also coming up today
The Bank of England will highlight key threats to the UK economy when it presents its latest financial stability report this morning.
Governor Mark Carney is also facing questions over the Bank’s conduct and culture, after it emerged yesterday that two policymakers have run up almost £400,000 in travel expenses in the last couple of years.
MPs called the expense ‘staggering’, as we covered in yesterday’s liveblog:
The criticism is mounting this morning....
Wednesday’s Daily Telegraph: “Cabinet at war over ‘Project Fear mark two” #tomorrowspaperstoday pic.twitter.com/mW86Zxx5Zn
— Helena Lee (@BBCHelenaLee) June 26, 2018
The stock markets are still edgy about the prospect of a US-China trade war. Shares have dropped again in Shanghai, but traders hope for a better day in Europe.
China leads Asia lower as Shanghai slides deeper into bear market https://t.co/vv0oLepAJB pic.twitter.com/Qm5ezXU7X5
— fastFT (@fastFT) June 27, 2018
Retailers could also be under pressure today, as Britain runs low on beer! Not great timing, with the World Cup coming to the boil.
Plus, the oil price could be volatile as America puts pressure on other countries to stop buying oil from Iran. The latest oil inventory stats will show whether supplies are holding up.
The agenda:
- 10.30am BST: Bank of England financial stability report
- 1.30pm BST: US trade figures
- 3.30pm BST: US weekly oil inventory
Updated
