Daily Market Report - 09/09/2014

Yesterday was heavily focused around the UK. Sterling took a big hit in the morning after the Yes campaign took the lead in the Scottish independence poll, just 10 days prior the actual vote. as a result GBP fell by 2 cents versus the US dollar to its lowest level since November 2013.

Factors which are pulling sterling down are the fears over the Scottish banking sector, it's currency choices if it went independent and the level of debt from the UK Scotland would have to accumulate.Some analysts  have suggested that the pound could fall by at least 5% more if Scotland votes “Yes” on 18 September.

The poll results also had a big impact on the UK stock market with the blue-chip FTSE 100 index , led by two Scottish-based banks Lloyds Banking Group are down by 3.3%, wiping £1.74bn off its value. Royal Bank of Scotland fell by 2.8%, or £1.1bn which shows the seriousness of how the decision can potentially impact the UK.

Also in the UK, with the housing market evidently having a great run, it eased off last month with prices only rising at a minimal rate.Halifax’s monthly survey of the market indicated that prices increased by just 0.1% in August, dramatically lower than the 1.2% reading in July.

Recent affordability tests, and the concept of the Bank of England increasing interest rates sooner rather than later, are still also key factors potentially influencing the market. With this said, weak wage growth, and pay packets failing to keep up with inflation, can also be damaging the demand for properties.

Yesterday it was reported that  Spanish house prices rose for first time since 2008. With many reports suggesting Spain’s long property decline may be over.House prices in Spain rose by 0.8% year-on-year in the second quarter of 2014, the first annual rise since the financial crisis began six years ago.

Spain’s housing market boomed during the early days of the Eurozone, fuelled by easy credit. This eventually led to banks suffering huge losses, forcing Spain to take rescue funds from the EU due to lending to individuals who could not afford to pay back. However, banks in and around Spain have now began advertising bank loans for property buyers, so this shows a high level of confidence again.

Key Announcements: 
09:30 - BST - GBP - UK Trade balance (July) Deficit expected to fall to 9.1B

11:45 - BST - GBP - BoE Govenor Mark Carney will make a speech
15:00 - BST - GBP - NIESR UK GDP Estimate for three months to August

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