The FTSE closed higher as investors leveraged the lower-than-expected inflation rate from the ONS on Wednesday. The Office of National Statistics recorded the lowest rate since May 2022 amid a drop to 7.9%. Meanwhile, analysts had presumed the rate would fall from 8.7% to 8.2% in May and April. The Paris CAC rose by 0.2%, the FTSE rose by 1.9%, and the Europe DAX remained almost flat by the market close after several gains in the morning.
Analysts believe that the actual number & finer details do not matter as long as the trend heads in the right direction. They expected the inflation rate to drop after the grocery prices report indicated that supermarkets lowered the pressure on the market last month. But the ONS inflation report lowered the pressure on the Bank of England amid plans to raise rates by about 0.5% in August. Analysts now believe that the bank might raise the rate by 0.25%.
In any case, the United States stocks market also recorded a rise through the ongoing earning season. The NASDAQ rose by 0.4%, the Dow Jones jumped by 0.4%, and the S&P 500 climbed by 0.4% during the early trade session. On the other hand, the pound dropped by more than 1% against the US dollar, breaking its $1.31 hot streak trade period. Thus, the pound hit $1.29 in London by 3 pm while Goldman Sachs also recorded a low quarterly profit.
The drop marked the lowest quarterly profit for the US banking giant in six years. While Goldman’s net income was $2.8 billion earlier this year, it dropped to $1.1 billion by about two-thirds in the second quarter. The bank’s stock struggled through the premarket trading session as the push for consumer banking, fall in investment banking, and drop in trading impacted the results. In the meantime, Britain’s rental costs rose the fastest in seven years.
But the ONS reported that the UK housing cost growth slowed, with private rental tenants incurring a 5.1% rate rise since June 2022. The report marked the largest yearly percentage change since January 2016. Besides, the private rental prices in London rose by 5.3%. The report compared to other economies like Wales, where the yearly rent rate rose by 5.8%, with May marking the highest annual change of 5.0% since 2010.
Overall, ONS maintained that house prices would likely continue to fall, citing some positive news like the lower-than-expected inflation rate. Analysts now believe the next ONS report will also bear good inflation rate news from the financial markets. Above all, mortgage refinancing will likely attract favorable rates in the coming months. Due to the resulting real wage growth, the housing market will appear considerably different in six months.
