Britain’s housing market remains gripped by the Covid-19 pandemic. New mortgage approvals fell to their lowest since at least 199, with just 9,300 new loans approved in May.
Economists warned that the UK is creating a ‘two-tier’ property sector – in which those with insecure jobs or small deposits will find it harder than ever to buy a home.
But in the US, the picture is more encouraging. Home sales surged by over 44% last month, indicating that the economy is warming up thanks to recent lockdown easing.
Boeing also cheered investors, by getting permission to fly recertification flights for its 737 Max plane. Its shares are now up over 7%, helping to lift the Dow Jones industrial average higher.
BP has also rallied, after selling its petrochemicals business to Ineos in a $5bn (£4.1bn) deal. This has pushed the FTSE 100 higher tonight.
So in the ongoing tussle between anxious bears and optimistic bulls, the bulls appear to have the upper hand — despite the steady rise in Covid-19 cases.
Dr Marie Owens Thomsen, global chief economist at Indosuez Wealth Management, says the pandemic will continue to overshadow the markets until the US authorities get a tighter grip:
The global number of COVID-19 cases now tops 10 million, and 500’000 deaths, with a quarter of both being recorded in the US. The failure of the US to stop the numbers rising on the national level is weighing on stock markets.
Some US States are now reconsidering their re-opening plans. For a more lasting risk-on sentiment in markets, it is probably necessary that the US manages to ascertain some success in limiting the spread of the virus within its borders.
The Dow Jones industrial average is now up 331 points, or 1.3%, at 25,347 – as economic optimism trumps Covid-19 anxiety.
Equities in London are turning higher too, with the FTSE 100 now up 85 points or 1.3% at 6,243, as we enter the final hour of trading. Energy, telecoms, financial and industrial stocks are the top performers.
UK shares are also benefiting from a weaker pound today – sterling has lost half a cent, to $1.228.
The Europe-wide Stoxx 600 is up a more modest 0.5% in late trading.
Contracts to buy US homes (excluding new builds) jumped at a record pace in May. The National Association of Realtors’s Pending Home Sales Index, based on contracts signed last month, surged 44.3% to 99.6.
That’s the largest increase since the series started in 2001.
Home sales are still below their pre-crisis levels — the index was 111.4 in February. But this does suggest the US economy is returning towards normality.
UK mortgages down 90% amid lockdown
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