Fuel Costs Reach 18-Month High

Thursday, 5 January: Continuing from yesterday’s data, showing that British consumer borrowing increased by the biggest amount in more than 11 years, today’s data from the Society of Motor Manufacturers and Traders (SMT) said 2.69m cars were registered in 2016, 2% higher than 2015. Low-interest finance deals are contributing to the rise, alongside an increase in consumer confidence, as well as new model releases. It continues a trend of 5 consecutive years of increased sales  but sales are expected to fall by 5-6% in 2017. And if you were wondering, the UK’s two best selling cars in 2016 were the Ford Fiesta and Vauxhall Corsa, according to SMT.

Car owners will have seen their running costs creep up recently as the price of petrol and diesel rose to its highest level since July 2015. In December 2016, fuel increased by 3p a litre with the average cost of unleaded petrol hitting 117.23p and diesel reaching 119.63p at the month end, according to the RAC. The price rise comes on the back of a price rise in oil, following a production cut by OPEC at the end of November. Not helping UK fuel prices is the fall in sterling, as oil, priced in dollars, has become more expensive to buy/import.

The turn of UK Services PMIs data today, and again another reading demonstrating expansion. The reading of 56.2 in December, a rise from 55.2 in November, was the fastest pace of growth since July 2015. Services account for almost 80% of the UK’s annual output and this expansion has been attributed to new product launches, marketing efforts and “bumper” exports, the latter benefitting from the fall in sterling post-Brexit.

The FTSE 100 was pushed higher in early trade as housebuilder Persimmon reported a rise in sales, despite what many thought would be uncertainty following the UK’s decision the leave the EU. Once again, the blue-chip index reached new record highs intra-day, this time peaking at 7,211.96. Persimmon led the pack over the course of the day and despite still being below pre-Brexit levels, the stock has rebounded from lows of £11.70 recorded as investors reacting to the June 23rd decision. The stock closed higher by 7.18% at £19.40. Fellow housebuilders rode the wave of momentum as both Taylor Wimpey and Crest Nicholson closed more than 4% higher.

At the time of writing GBP/USD is up 0.8% at $1.24, rising post PMI data release this morning and continuing to do so over the course of the day. Following the Fed’s minutes from their December meeting, whereby uncertainty was evident over Trump’s election win and what his upcoming policies will do to the economy, the US dollar has pared back and is currently lower against major currencies. On the back of the green-note falling, Gold (often referred to as a safe-haven asset) has risen, up 1.8% at the time of writing.