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September 12, 2017

Pegler’s market report – 12.09.17: ECB kicks the can down the road on quantitative easing


in Insights Press Releases

As published in the Brighton Argus (12.09.17) Business section under the title Pegler’s Market Report:

ECB kicks the can down the road on quantitative easing

On the currency markets the pound’s stumble towards parity with the euro took further impetus after European Central Bank (ECB) president Mario Draghi revealed that the Governing Council will make the “bulk” of its decisions on tapering its €60bn-a-month quantitative easing programme in October. The ECB also agreed to keep interest rates unchanged at historic low levels.

The euro surged on forex markets even as Mr Draghi warned against the strength of the currency, which has advanced more than 7pc against the dollar since the ECB president first teased markets by hinting earlier this summer of an imminent shift in policy.

US president Donald Trump’s deal with the Democrats to extend the debt limit in the US and secure government funding until mid-December has lifted the mood on the markets. Some commentators are now claiming they may have been slightly premature in writing off the Trump pro-growth, reflation story – a shift to the center, highlighted by this 3-month extension, could be the start of something real. A unified US government could have profound effects on the general market outlook.

Thousands of graduates across the UK will move to London this month in the hopes of embarking on a successful career, but many will face the extortionate rents and living costs associated with living in the capital. Data by the think tank Centre for Cities published last year revealed that 22pc of graduates who had moved within six months of finishing their degrees were living in London and had found work. But those who make the move to the capital risk losing more than 45pc of their monthly salary – which is £1,972 after tax, on average – to rent, according to the latest Landbay Rental Index.

ZPG, the parent company of property portal Zoopla, has snapped up another property technology business in its quest to become a ‘one-stop shop’ for buying homes. It bought the financial services comparison website in a “cash-free, debt-free basis” deal worth up to £140m. The site allows customers to look up more than 60 products including mortgages, loans, credit cards, bank accounts and insurance. ZPG will pay £80m in cash for Money, as well as a performance-based payment of up to £60m. Its shares were up higher on the news.

Bovis Homes’ share price has shown some improvement as its new chief executive updated investors on his strategic review, which will include building fewer homes and paying out more cash to shareholders, in an attempt to get the beleaguered housebuilder back on track. Greg Fitzgerald, who joined the company in May, described Bovis’s problems as “very fixable”. He said that he would streamline the business and its balance sheet, reducing the number of employees, disposing of developments outside its core areas, and lowering infrastructure spending.

By David Pegler, Brighton Capital Management

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