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FTSE 100 Live: Stock markets weaker, house market ‘losing momentum’

(Evening Standard)

Investors remain on the sidelines after recession and interest rate fears led to heavy selling for stock markets over the past week.

The FTSE 100 index lost almost 2% of its value over August, with the UK-focused FTSE 250 down by 5.5% amid the weakening economic outlook. The pound has also fallen to below $1.16.

Despite inflation and higher borrowing costs, Nationwide said the UK’s average house price grew 0.8% month-on-month in August and is 10% higher over the past year. However, the building society said there are signs the market is “losing some momentum”.

FTSE 100 weakens, pound below $1.16

07:56 , Graeme Evans

The new month is continuing where the last one left off, with CMC Markets forecasting the FTSE 100 index will decline 40 points to 7,244.

London’s top flight fell by 1.9% during August, but the damage caused by the deteriorating economic outlook was greater for the FTSE 250 index after a decline of 5.5%.

Stock market sentiment has weakened since last Friday’s Jackson Hole speech by Federal Reserve chair Jerome Powell, in which he highlighted the need for a “restrictive policy stance” through higher interest rates for some time.

US stock markets have since fallen for four sessions in a row, with the Dow Jones Industrial Average down by another 0.9% last night.

Demand fears caused by the economic outlook and the latest Covid restrictions in China have left Brent crude at $95 a barrel, compared with $105 on Monday.

And the flight to the safe haven dollar has continued, with the pound now below $1.16 despite the prospect of another big interest rate rise by the Bank of England this month. Capital Economics warned yesterday sterling is heading for a record low of $1.05.