February 6, 2018

Pegler’s market report – 06.02.18: Bitcoin extends freefall

by David Pegler

in Insights Press Releases

As published in the Brighton Argus (06.02.18) Business section under the title Pegler’s Market Report:

Bitcoin extends freefall

Bitcoin’s value has crashed by $50bn in just a week after its plunge on renewed concerns of regulatory crackdowns in the US and India. Sentiment on the cryptocurrency market cracked after India’s finance minister took aim at digital currencies and reports surfaced that US regulators are closely watching the world’s largest cryptocurrency exchanges. The digital currency market has also been spooked by Facebook banning “deceptive” cryptocurrency adverts with prices still suppressed from fears of a clampdown in South Korea and China.

A leaked forecast prepared for the government on the economic impact of Brexit says the UK will be worse off after leaving the European Union, under all potential trade arrangements.

The assessment says that if Britain leaves the EU with no deal and trades under World Trade Organisation (WTO) rules, growth will be 8 percentage points below current forecasts over the next 15 years. If instead the UK reaches a free-trade agreement with the EU, growth will be 5 percentage points lower over the same period. And, under the soft Brexit option of Norway-style access to the EU single market, growth would be 2 percentage points lower.

UK construction firms faced a tough start to 2018 with the sector reporting its lowest rate of growth in four months in January, pilling further pressure on the Government’s ambitious home-building target. Housing activity declined for the first time since August 2016 in January. This is a blow for the sector after new demand for housing, supported by Help to Buy schemes, had helped bring it out of recession in the final quarter of 2017.

UK house prices rose 0.6% in January, helped by a shortage of properties for sale, according to Nationwide’s monthly survey. The increase lifted the annual rate of growth to 3.2% from 2.6% in December, although the lender warned that housing market activity remains “subdued”.

Separately, data from the Bank of England showed the number of mortgages approved by lenders remains depressed.

Some 200,000 jobs were added to the US economy, rebounding from a disappointing December. Unemployment remains at 4.1pc, a 17-year low, while wage growth leapt to 2.9pc, helping the dollar claw back some of the losses made in January.

AstraZeneca said its annual revenue will rise in 2018 for the first time in four years as the drugmaker releases a flock of new products for cancer, asthma and other disorders.

Capita shares plunged after the outsourcing company issued a fourth profit warning. New chief executive Jonathan Lewis, who only joined Capita eight weeks ago, said the dividend was being suspended until the company generates sustainable cash flow. Capita also announced a planned rights issue to raise at least £700m this year, and a disposal programme of non-core assets over the next two years.

By David Pegler, Brighton Capital Management