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FTSE and Wall Street fall as US mortgage approvals hit lowest since 1995

A look at how the major markets are performing on Wednesday

Traders work on the floor at the New York Stock Exchange in New York, Friday, June 2, 2023. (AP Photo/Seth Wenig)
Traders work on the floor at the New York Stock Exchange in New York, Friday, June 2, 2023. (AP Photo/Seth Wenig) (ASSOCIATED PRESS)

FTSE 100 and Wall Street

Wall Street stock took their lead from Europe after opening, mainly slipping into the red on news that mortgage approvals for US home purchases fell to their lowest level in nearly 30 years in May.

The Mortgage Bankers Association index of applications for home purchases dropped 1.7% to 151.7 in the week to 2 June, the second-lowest level since 1995.

The FTSE 100 (^FTSE) was down 0.1%, while the CAC (^FCHI) also tumbled 0.1% in Paris, and the Frankfurt DAX (^GDAXI) was also 0.3% lower.

The Dow Jones Industrial Average (^DJI) edged up less than 0.1%, while the broad-based S&P 500 (^GSPC) slipped 0.1% by the time of the European close. The tech-rich Nasdaq Composite index (^IXIC) lost 0.4% at the time of writing.

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Sam Hall, property economist at Capital Economics, said: "This points to further near-term weakness for home sales, which we think will stay close to their current lows for the remainder of the year.

"Refinancing activity also edged lower by 2.9% month on month. This was driven by a rise in mortgage rates from an average of 6.5pc in April to 6.7pc in May.

"As a result, affordability still looks badly stretched by past standards, which will continue to weigh on mortgage demand in the coming months."

It came as homebuilders stocks declined more than 1% in London following news that UK house prices dropped on an annual basis in May for the first time in 11 years.

Meanwhile, miners also declined as copper prices dipped after data showed China’s exports shrank much faster than expected in May, and imports fell. Energy stocks also edged 0.4% lower, tracking lower crude oil prices.

Asia markets

Stocks were mixed in the Asia-Pacific markets on Wednesday as expectations for stimulus from China and overnight gains on Wall Street started to encourage investors.

The Nikkei (^N225) fell 1.8% on the day, after touching a 33-year high on Tuesday, while other key markets rose. The Hang Seng (^HSI) gained 0.8% and the Shanghai Composite (000001.SS) climbed 0.1%.

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Pound

The pound (GBPUSD=X) was down against the US dollar by 0.1% to 1.2408. Against the euro, sterling (GBPEUR=X) was trading flat, climbing just 0.03% to 1.1617.

The dollar weakened against major currencies as markets increasingly price out the possibility of the US Federal Reserve cutting interest rates later this year.

Oil markets

In commodities, oil prices continued their downward movement despite Saudi Arabia announcing at the weekend that it would reduce how much oil it sends to the global economy in a bid to prop up crude prices.

US crude oil, or West Texas Intermediate (CL=F), lost 0.9% to trade at $71.07 (£57.23) a barrel, while Brent crude (BZ=F) fell 0.85% to $75.64.

Economic data

UK house prices saw their first annual drop since December 2012 last month, as the average property price fell by 1% compared with May 2022.

According to mortgage lender Halifax, the cost of a typical UK home came in at £286,532, slightly below the £286,662 recorded in April.

This is despite average house prices remaining flat in May, following a 0.4% decline in April. It comes amid signs that the UK housing market is cooling, amid rising interest rates and increased mortgage rates.

House prices in the south of England remain under the greatest pressure, while detached properties continue to post modest house price growth.

Properties in the South East were down 1.6% to an average price £385,943. It was closely followed by the South West, down 1.4% to £301,079.

Read more: UK mortgage approvals slump after interest rate hikes

In Greater London prices are down over the last year by 1.2% to an average price £536,622.

The West Midlands remains the best performing region, with house prices rising 2.7% to an average of £251,137. In Wales, growth was unchanged at 1.1%, with the average property price sitting at £218,365.

Watch: Will UK house prices ever fall?

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