Yahoo Finance Markets are Mixed as Sentiment from New U.S. Tax Law Fades
European stocks markets are mixed as euphoria over a new tax law in the United States is driving riskier assets, Europe is wrestling with ending QE. German wages are rising faster than inflation while French business confidence improves. The UK government budget fell to its lowest since 2007 following a small rise in tax receipts. European stock markets started to recover after a slow start as the rise in EUR and GBP against the Dollar started to stall. Data, including weaker than anticipated U.K. confidence data and a rise in German wage growth having little impact on bond markets.
UK consumer confidence fell to a four-year low, according to the December Gfk survey. The poll headline fell to a -13 reading after -12 in November. High inflation, which was running at a rate of 3.1% year over year in the November CPI measure, and the failure of wages to keep pace has led to households taking a gloomier view of their financial situation. November also saw the BoE hike interest rates for the first time since 2007, while uncertainties persist about Brexit amid an increasingly convoluted political backdrop.
The UK government’s budget deficit fell to its lowest since 2007
The UK government’s budget deficit fell to its lowest since 2007 in November following a 5% month over month rise in tax receipts. Headline public sector net borrowing came in at GBP 8.7 billion, below the median forecast for GBP 9.0 billion and after a GBP 7.8 billion figure in October, which was revised down from GBP 8.0 billion. The budget deficit since the start of the current fiscal year in April to November was a 10-year low of GBP 48.1 billion, down 6.1% from the year prior.
German house price inflation cools slightly, with the annual rate in the Europace home price index falling back to 5.9% from 6.2% in the previous month. Prices still rose 0.7% month over month, up from 0.3% month over month in October and the annual index for apartment remained at a very strong 7.8% year over year. The ECB continues to insist that there are no signs of wide spread asset price bubbles, but the German housing markets clearly is showing signs of strain with prices in some areas significantly overvalued. Draghi is relying on national regulators to try and deal with the issue, but in light of the last housing bubbles and crisis there remain concerns whether this will be sufficient if the ECB continues pump cash in an already overheating market.
This article was originally posted on FX Empire
