FTSE sees positive start house builders lower

The FTSE edged higher on the Final day of trading for the week, despite a mixed close on Wall Street overnight. 

The appointment of Larry Kudlow as Chief economic advisor in the White House, went some way to calming nerves over trade war fears, given he is known supporter of free markets. 

The Dow eked out a positive close although both the S&P and the Nasdaq closed lower.

Berkley Group’s standoff with Theresa May

Berkeley Group’s announcement not to expect additional growth on top of previously announced housebuilding plans has gone down like a lead balloon. Shareholders quickly sold out this morning as the housebuilder positions itself directly against Theresa May. 

Berkley group appear unfazed by government threats of snatching unused land and planning blocks should housebuilders refuse to ramp up the number of homes it builds. Berkeley group has pitched itself directly against the government citing building costs, limits of mortgage borrowing and prevailing economic uncertainty as reasons not to build more homes that it had originally planned.  

Whilst Berkley stood strong, the same can’t be said for the shares which plummeted 6% in early trade despite the group being confident in its ability to achieve profits in the billions over the next few years. Berkley Group has clearly drawn the line in the sand, the question is how will Theresa May respond? 

Sector peers Barratt Development and Taylor Wimpey were also on the back foot.

Eurozone CPI in focus

EUR/USD was trading higher moving into the eurozone CPI release, although this was more a dollar weakness story. Eurozone inflation is forecast to print at 1.2% year on year in February, down from 1.3% in January. On a monthly basis inflation is expected to tick up from last months -0.9% to 0.2%. Meanwhile core inflation is forecast to remain constant at 1%.

These figures are still a significant distance from the ECB’s 2% target and therefore fully support Draghi & Co’s cautious approach is tightening policy which we have heard on several occasions over the past week. 

After several reminders from Draghi this week that inflation is off target, market probably won’t be overly surprised by a softer reading. A stronger reading is more likely to catch investors off guard and push EUR/USD back towards $1.24. 

This afternoon. Drivers of EUR/USD will be from the US. A barrage of data, including housing permits, industrial production and manufacturing could create some volatility for the pair.