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In our Market Insights, Prosperity Investment Management examines the latest developments across the globe's biggest financial markets - providing you with all the latest information you need to know.
Mortgage rates cut as New Year begins
Homeowners bracing for their two-year fixed mortgage deals to end could save thousands of pounds in higher interest repayments after major lenders kicked off the new year by drastically cutting rates.
With the rapid rises in the Bank of England’s base rate over the past two years from historically low rates to their current 15-year high of 5.25%, anxiety rose quickly for tens of thousands of homeowners whose time to renegotiate expiring fixed-rate deals is approaching in 2024.
But with competition among lenders growing ever greater in a slowing market looking towards multiple cuts to the Bank of England’s base rate this year, Britain’s biggest lender Halifax, kickstarted 2024 by cutting its fixed mortgage rates by nearly 1%.
Slashing its rates across its two-year, five-year and 10-year fixed deals by up to 0.83 per cent, Halifax also cut rates by up to 0.92 per cent for its existing customers.
Leeds Building Society also cut rates on its mortgage deals by up to 0.49%, with its cheapest two-year fixed now sitting at a rate of 4.6%.
It comes after inflation fell back to 3.9% in November 2023, increasing pressure on the Bank of England to start cutting interest rates as both the economy and housing market began to slow.
This greater slowing of price rises, which sit well below prime minister Rishi Sunak’s target to halve inflation from 10% to 5% by the end of 2023 , combined with the decision to keep its base rate at 5.25% for a third consecutive month have both served as fuel for anticipation of further falls in the mortgage market.
But leading economists have also recently warned that mortgage owners coming off fixed rate deals agreed two years ago would still face a tough market, whilst Britain’s slowing economy and higher mortgage costs mean living standards will remain difficult to navigate for some.
Chinese Stocks See Worst Start to Year Since 2019 as economic woes continue
Chinese stocks recorded their worst start to a year since 2019, as weak manufacturing and home sales data reinforced further investor concerns about the ongoing economic outlook.
The CSI 300 Index ended 1.3% lower on Tuesday to halt a welcome three-day gain while the Hang Seng China Enterprises Index declined 1.7%.
It was the worst first trading day of the year since 2019 for both gauges. Markets in Hong Kong and the mainland were shut on Monday for the new year holiday which further added to the observed data.
Sentiment took a hit after reports on Sunday showed China’s factory activity had shrunk in December 2023 to the lowest level in six months and a slide in home sales accelerated alongside this.
The weak data may now fuel expectations for more stimulus from authorities after leaders vowed to maintain a pro-growth stance in 2024 to help combat stagnation issues.
Chinese stocks had gained momentum in the last few trading sessions of 2023, helped by year-end position adjustments and a jump in foreign buying. However, the CSI 300 Index still ended 2023 with an unprecedented third year of losses after annual foreign purchases of the nation’s equities shrank to the lowest on record due to the poor economic performance.
Global funds sold a net 5.3 billion yuan ($743 million) of onshore equities on at the beginning of this week, the biggest one-day outflow since the 13th of December 2023 as markets looked to start the year positively.
