FTSE 100 dips ahead of Jackson Hole and Asian central bank action, Barratt and Redrow to press ahead with tie-up

“The FTSE 100 started the week in sluggish fashion, starved of catalysts either from a macro-economic or corporate point of view,” says AJ Bell Investment Director Russ Mould.

“The attention in terms of central bank action will centre on Asia over the next week. Bank of Japan governor Kazuo Ueda is due to appear before the country’s parliament to discuss the 31 July rate hike which precipitated much of the recent market volatility, while the People’s Bank of China is expected to keep rates steady. Indonesia, South Korea and Thailand are also due to update on monetary policy.

“Later in the week attention is likely to turn to the Jackson Hole Symposium in Wyoming, with Federal Reserve chair Jerome Powell scheduled to speak on Friday. Investors will be looking for hints on the trajectory of rate cuts, with a cut in September more or less a racing certainty in the minds of most observers.

“Powell’s words and tone could help determine whether the market’s bounce since the short, sharp shock in early August is sustained.”

Barratt Developments / Redrow

“Barratt’s acquisition of Redrow is expected to clear within the week, creating a new leader in the UK housebuilding space.

“The issues raised by the competition authorities always looked surmountable given they were restricted to just one part of Whitchurch in Shropshire and Barratt has waived the CMA clearance condition which had been written into the deal. An enforcement order from the regulator is likely but Barratt and Redrow are ready for it and will presumably do what’s necessary to prevent the probe going any further.

“The all-share deal should allow Barratt to replenish its landbank – a necessary precondition to ramping up volumes – with prices in the open market not having retrenched as much as might be expected in the current cycle.

“Barratt will hope its timing is good as the industry looks to pick itself off the floor following a difficult few years marred by a weak property market and rising interest rates. Management will be buoyed by figures from Rightmove showing a big increase in enquiries on homes for sale since the Bank of England cut rates at the beginning of this month.

“Speculation could now build over whether either of Barratt’s main rivals – Taylor Wimpey and Persimmon – might pursue their own deal in response.”

These articles are for information purposes only and are not a personal recommendation or advice.