UK house price growth slows to its lowest rate since mid-2020; All eyes on the Fed’s decision – Live Business | Business

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GSK exceeds expectations, with the help of Shingrix

GSK, Britain’s second largest drug maker, beat expectations with its annual results, helped by sales of its shingles vaccine Shingrix.

The company, which spun off from consumer health firm Haleon last summer, reported sales of £29.3bn for 2022, an increase of 19%, and a 56% increase in profit before tax to £5.6bn. Shingrix contributed £3 billion to sales.

The pharmaceutical company, which is leaving its vaccine and pharmaceutical businesses, has developed a vaccine for respiratory syncytial virus (RSV), a common respiratory virus that usually causes cold-like symptoms, but can lead to severe illness in infants and the elderly. GSK hopes to secure regulatory approval for the vaccine this year, one of four approvals expected.

Yesterday, US competitor Moderna was awarded Outstanding Therapeutic Designation for its RSV mRNA vaccine, which means a faster development and review period. Pfizer is also in the late stages of developing an RSV vaccine for adults over 60. There are no RSV vaccines at present.

Emma Walmsley, CEO, hailed the “historic year”.

2022 was a landmark year for GSK delivering the turnaround in performance we committed to, driven by strong growth in specialty medicines and vaccines, including record sales for Shingrix. We enter 2023 with good momentum, which reinforces confidence in our ambitious sales and earnings outlook for 2026.

At the same time, we continue to build a stronger portfolio and pipeline based on infectious disease and immunology, including a potential new RSV vaccine. This momentum, combined with further targeted business development, means that GSK will also be in a strong position for growth from 2026 onwards.

Some analysts worry about GSK’s long-term prospects, since some of its best-selling HIV drugs will be out of patent by the end of the decade, meaning generic companies could make much cheaper versions.

Market summary

European stock markets opened slightly higher, with Britain’s FTSE 100 Index in London up 15 points, or 0.2%, at 7,786 on the company’s positive results. The German Dax was unchanged, the French CAC rose 0.1%, and the Italian FTSE MiB rose 0.5%.

The pound is trading slightly lower against the dollar and the euro, at $1.2317 and €1.1320.

Oil prices rose slightly, with Brent crude, the global benchmark, rising 15 cents to $85.64 a barrel.

Updated at 08.34 GMT

Here’s our full story on how UK house prices have fallen for five consecutive months:

You can read more on our Alarms blog here:

As many as half a million workers strike today

Today is also a major strike day in the UK, in what is believed to be the largest industrial strike in a decade.

Up to 500,000 workers will strike with thousands of schools closed, railways closed and major disruption to borders, with unions saying negotiations to end the strikes are “fading back”.

Ministers have been accused of “deceiving the public” and freezing any moves towards settlement with NHS workers and railway unions. Government sources privately acknowledged that optimism at the beginning of the month about ending the strike had faded.

The series of coordinated strikes includes teachers, civil servants, Border Force employees and train drivers, as the government tells people to prepare for “major disruption”.

John Stone, politics correspondent for The Independent, tweeted:

Teachers’ salaries have eroded by £6,600 since 2010 (IFS). They now work 46-49 hours per week on average (UCL). Teaching vacancies increased from 64,283 in 2021 to 107,104 last year (TeachVac). The government’s offer to cut their real salaries is objectively more stupid

— Jon Stone (@joncstone) February 1, 2023

Updated at 08.49 GMT

Tom Bell, Head of UK Residential Research at Knight Frank, said:

The UK housing market is heading for an annual decline in prices as mortgage rates are still significantly higher than they were 12 months ago. To predict the extent of the decline, you need to look beyond the short-term distortion of the micro-budget. For example, buyers and sellers stopped working early for Christmas, but activity rebounded again in January.

Price elasticity and sales volume will be tested in the spring when greater numbers of transactions occur, around which time no five-year fixed-rate mortgages below 4% will remain in circulation. We expect prices to drop 10% over the next two years as budgets recalculate.

Neil Hudson, UK housing market analyst, tweeted:

Nationwide Report UK house prices rose just 1.1% in the year to January 2023, prices are already below February 2022 levels and 5.6% below their August 2022 peak based on its non-seasonally adjusted index. https://t.co/ahaJkrl15o

— Neil Hudson (@resi_analyst) February 1, 2023

Updated at 08.49 GMT

Gabriela Dickens, chief UK economist at Pantheon Macroeconomics, says UK house prices will fall further.

We still believe that home prices will only find a floor after they have fallen about 8% from their peak. The real disposable incomes of households will decline further over the next two quarters, as the government cuts subsidies on energy bills, and as companies cut jobs in the face of higher borrowing costs.

Meanwhile, mortgage rates are three times higher than they were at the start of 2022, although they are down from their highs in October, and appear to be only dropping slowly this year, ensuring mortgage approvals remain near their lows in the fourth quarter. . Demand will also be constrained by affordability tests on the part of the lenders, which are based on the bank rate. Many potential buyers will wait until prices drop significantly.

MPC [monetary policy committee]However, there should be room for a cut in the bank rate next year, as soon as recession appears in the labor market. In addition, the recent sharp decline in wholesale energy prices indicates that real incomes will recover in the second half of the year. As a result, last week we revised our forecast for the subsequent recovery in house prices through 2024, to 5.0% from 3.7%.

Updated at 07.49 GMT

Introduction: UK house price growth has slowed to its lowest rate since mid-2020; All eyes are on the Fed’s decision

Good morning, and welcome to our renewed coverage of business, the global economy, and financial markets.

The year started with a further slowdown in UK house price growth.

Annual home price growth slowed to 1.1% in January from 2.8% in December, the lowest rate since June 2020, according to the National Building Association.

Real estate values ​​fell 0.6% in January from December, after declining 0.3% in December, the fifth consecutive monthly drop, and the worst series of declines since the 2008 financial crisis.

The median home value is now £258,297, down from £262,068 a month ago, and prices are 3.25% below their August peak.

Robert Gardner, chief economist at Nationwide, said:

However, there are some encouraging signs that mortgage rates are returning to normal, but it is too early to tell whether activity in the housing market has begun to recover. The drop in house approvals in December reported by the BoE largely reflects the sharp drop in mortgage applications after the mini budget.

“It will be difficult for the market to regain much momentum in the near term as economic headwinds are expected to remain strong, real earnings are likely to decline further and the labor market is widely expected to weaken as the economy contracts.

“As we highlighted in our recent Affordability Report, the biggest change in terms of housing affordability for potential buyers over the past year has been the higher cost of servicing typical mortgages as a result of increases in mortgage rates.

Today’s main event is the US Federal Reserve meeting. The US central bank is expected to raise interest rates by 25 basis points to 4.75%, a more modest hike than in previous months, but the question remains whether it will stop for a breath.

Markets assume that the Fed will start cutting interest rates before the end of the year, as inflation slows. Fed Chair Jerome Powell’s post-decision press conference should give some clues to the Fed’s thinking.

Michael Hewson, Senior Market Analyst, CMC Markets UK, said:

It is this disconnect between the Fed’s rhetoric and what the market is pricing in that makes today’s rate decision and Powell’s press conference so much a “live” meeting.

How Powell sees how the Fed sees the future path of rate hikes and the markets belief that the central bank will start cutting rates again before the end of the year.

While Fed officials have insisted that interest rates will remain high for some time to come, the markets simply don’t believe them, especially when several key inflation indicators showed that rates are still falling on a steady track.

This is what makes Powell’s press conference today a difficult proposition when it comes to the state of the market. The risk for the Fed is to allow the market to continue to believe that interest rates are likely to fall this year, which in turn could send inflation rising again, especially with the labor market being as tight as it is. Powell simply cannot stand the financial conditions and get the inflation genie out of the bottle again.

agenda

9am GMT: Final S&P Eurozone Global Manufacturing PMI for January (expected: 48.8)

9.30am GMT: UK S&P Global/CIPS Manufacturing PMI final for January (46.7 forecast)

10am GMT: January Eurozone inflation flashes (expected: 9%, previous: 9.2%)

10am GMT: Italy inflation for January (expected: 10.1%, previous: 11.6% 0

1.15pm GMT: US ADP Employment Change for January (expected: 178,000)

2.45pm GMT: S&P Global Manufacturing PMI Final for the US for January (Previously: 46.2)

3pm GMT: US ISM Manufacturing PMI for January (Forecast: 48, Previously: 48.4)

7pm GMT: US Federal Reserve interest rate decision (expected: rise 25 basis points to 4.75%)

Updated at 08.47 GMT

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