FTSE makes early push higher

There’s been a bright start for the stock market here in London today, with the FTSE 100 adding more than 50 points and pushing up to its highest level of the week. The benchmark appears to remain in a broader consolidation range, with trading volumes light as is typical for this time of year. The pound is little changed on the day and remains near its recent lows and below the 1.30 handle against the US dollar.

UK house price growth accelerates

According to a survey from Halifax, UK house prices picked up last month, increasing at the fastest annual pace since November. In the 3 months to July, the average house price rose by 3.3% to a record £230,280. In month-on-month terms, July showed a rise of 1.4% from the previous month but despite these figures, Halifax said that housing activity remained “soft”. The lender also commented on the recent increase in the base rate from the Bank of England, saying that it did not foresee the move as having a significant effect on either mortgage affordability or transaction volumes.

US reimpose Iranian sanctions

US have reimposed sanctions against this morning, with an executive order signed by President Trump that targets financial transactions involving the US dollar, the purchase of commercial plans and metals including gold and the Iranian automotive sector coming into effect. From a financial markets point of view, the price of crude oil could be where these decisions are most keenly felt, with the increased animosity threatening to disrupt Tehran’s significant output. This is unlikely to be reflected immediately, with Iranian production expected to remain at present levels for the time being, but should further more stringent sanctions come into play then we could well be set for a supply shock in the oil market which would trigger a sharp move higher.

The complex nature of this situation means that it is not just the US and Iran that could be impacted, with the bulk of Iranian crude actually being sold to other countries. The issue lies in whether the US look to force allies to also shun oil from Iran, and if this occurs then there’s a real chance that OPEC will struggle to make up the lost supply and this would drive the price of oil up.    

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