Monthly Market Pulse: February 2020

One of the key developments over the past month has been the spreading of the new coronavirus, which has so far claimed 2,765 lives and infected 81,171 worldwide. Goldman Sachs recently has cautioned the risk of a correction in equity markets is “high” as the impact of the coronavirus on earnings is being underestimated by investors. As a result, we have seen investors going into safe havens such as gold and US Treasuries. Meanwhile, the UK house price growth has continued its upwards trend in recent months. In January 2020, it edged up to 1.9% year-on-year, the largest increase in fourteen months and up from 1.4% in December.

Chart of the month: UK GDP quarterly data

Picture 1

Source: Office of National Statistics (ONS)

Politics

  • In the UK, Boris Johnson gave the final approval to continue HS2 after the project had been on hold following the estimated costs skyrocketing to above £100bn.
  • In the US, the Senate acquitted Donald Trump of the impeachment charges laid against him. The day before the verdict, Mr Trump used his state-of-the-union speech to laud a “great American comeback” under his administration.
  • The new coronavirus continued to claim lives with cases reported worldwide so far climbing to 81,171 and 2,765 The lunar new-year holiday remains extended in many Chinese provinces because of the spread of the new deadly virus.

Business & Economics

  • British GDP was flat in Q4 2019 compared to the previous three months. Year-on-year, the UK economy grew by just 1.1%, the weakest since the start of 2018.
  • In the US, Q4 2019 GDP rose by 2.1% (in line with expectations) and full-year 2019 posted its slowest growth in three years at 2.3% (2.9% in 2018 and 2.4% in 2017).
  • The January update of the IMF’s World Economic Outlook remained downbeat. It now expects 2020 real GDP growth in advanced economies to be only 1.6%, slightly below 2019’s 1.7% growth and substantially below 2018’s 2.2% growth.

Real Estate

  • In January 2020, The UK house price growth edged up to 1.9% year-on-year, the largest increase in fourteen months and up from 1.4% in December.
  • This follows twelve successive months of sub-1% annual price growth and is a continuation of the upwards trend since September 2019’s trough of 0.2%.
  • Recent data from the Ministry of Housing, Communities and Local Government shows work started on only 39,510 new homes between July and September 2019, down 11% from a year earlier.

Equity Markets

  • HSBC announced a drastic overhaul including 35,000 job cuts and Apple warned its sales will fall short of target due to the impacts of the coronavirus.
  • As a result, other stocks – including the FTSE 100 – also tumbled. Apple’s warning is probably a sign of what is to come from other companies with Chinese exposure.
  • Goldman Sachs warned that coronavirus puts stocks at ‘high risk of correction’.

FX & Commodities

  • Equity market volatility sent investors into safe havens such as gold and US Treasuries, while the Australian Dollar, oil prices and Sterling all suffered.
  • In Europe, a recent period of hopeful data has been short-lived and concerns of further slowdown in the Eurozone economy have returned. As a result, the Euro has remained broadly unappealing.
  • Turkey’s banking regulator intervened to prop the lira during a bout of volatility, tightening the restrictions on forex swaps between Turkish and foreign banks.

Closer to home here at Blend Network, we continue to see a healthy deal flow coming from across the UK and have some exciting loans in Stoke-on-Trent and Bournemouth that are currently undergoing due diligence by our team. We continue to like Houses of Multiple Occupancy (HMOs) deals and are keen to fund more in the right locations. We also see good appetite from our lenders who are keen to deploy cash on good deals. Our recent loans were snatched up by hungry investors in minutes – two of our three recent loans were funded in less than 1 minute.

Keep an eye on our upcoming loans, and make sure you’ve got yourself on AutoLend with your e-wallet topped up, so you don’t miss our new loans as soon as they are listed.

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