- UK inflation provides some relief for Rachel Reeves. 2.8% in February, 2.9% expected
- Institutional investors shun sterling
- US stock rally set to pause as consumer confidence hits new lows
- Vistry – dividends halted as housebuilder’s performance worsens
- Brent Crude remains above $73 after Ukraine and Russia agree partial truce
Derren Nathan, head of equity research Hargreaves Lansdown:
“UK inflation figures haven’t thrown up any nasty surprises ahead of Rachel Reeves Spring Statement later today. That’s helped the FTSE post a small gain at the open. But it will take more than that to fully dispel stagflationary fears.
Prices are expected to rise again in the months to come. Given that this month’s move is also not an enormous change, it’s unlikely to mean a big change of heart at the Bank of England. Although policymakers won’t want to keep rates too high for so long that growth continues to stagnate, they are set to stay cautious with a rate cut looking more likely to come in June, rather than May, and again later in the year.
The flagging economy is also weighing on the pound. Sterling’s made something of a comeback since the lows seen in January, but according to the Bank of America institutional investors have been bailing out of the currency in droves as speculation of fiscal tightening in today’s balancing act has mounted.
US stocks look set to pause for breath at the open later today following three straight days of gains. Rising hopes that Trump’s plans to impose wide-ranging tariffs may prove to be more lenient than first thought have provided a boost to investor sentiment. But yesterday’s consumer confidence index print from The Conference Board may pour cold water on the enthusiasm seen so far this week. The index dropped 7.2 points in March to 92.9, more than a four-year low.
Brent Crude prices are holding on to recent gains helped by US crude inventory data which showed a much bigger decline than expected last week, dipping 4.6mn barrels compared to forecasts of 2.5mn. Prices are still above $73 per barrel. Although for now a US brokered truce between Russia and the Ukraine on sea and energy targets are helping to keep price rises in check.
Housebuilder Vistry for one will be hoping that today’s Spring Statement contains incentives for first-time buyers. However, the poor 2024 results reported today are as much to do with management mis-steps as they are with external factors.”
Aarin Chiekrie, equity analyst, Hargreaves Lansdown:
“With profits falling and debt levels rising, it looks like Vistry’s getting nervous and in a bid to shore up the balance sheet, this year’s final dividend has been halted. Further dividend payments will be subject to improved financial performance, with an uplift in cash generation and lowering debt levels seen as higher priorities for now.
2025 hasn’t got off to the best of starts either, with sales rates down significantly year-to-date as partner-funded transactions have pulled back. More recent government announcements have offered a glimmer of respite from the bad news, with an additional £2bn of funding promised for the affordable housing programme. This aligns well with Vistry’s strategy, which focuses on increasing volumes of affordable housing for UK buyers. Performance is expected to improve as the year progresses, but given its recent series of missteps, management will have to start delivering more good news if they want to rebuild investors’ confidence.”
