Help to Buy to be Hacked by Government?

Friday, August 4: the FTSE 100 started in the red, before swinging into the green as sterling weakened after the announcement of US employment data.  The primary index closed up(+0.49%), held higher by a mixed bag of stocks though a report featured in Property Week weighed housebuilders lower. The report noted that the government’s help to buy scheme could be wound down or replaced before it is due to end. The scheme is important to the industry as 38% of private completions make use of the scheme, therefore removal of the scheme would materially impact margins and sales rates. Barratts(-4.19%), Persimmon(-3.89%), and Taylor Wimpey(-2.80%) all sold off on the sentiment as investors deemed these as the most exposed to any interruption to the help to buy scheme.

Data coming out of the US indicated that US employers continued to hire at a fair clip as the unemployment rate fell to a 16-year low. Non-farm payrolls rose by a seasonally adjusted 209,000 in July from the prior month, prompting the unemployment rate to fall 10bps to 4.3% from 4.4%. Economists surveyed by The Wall Street Journal expected 180,000 new jobs and a 4.3% unemployment rate last month, therefore the actual read represented a beat and prompted stronger trade in the US dollar, relative to sterling.

Across Europe, indices were up at the close with the FTSE 100 +0.49%, the DAX 30 +1.18% and the CAC 40 +1.42%.

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