Stocks Bounce Back as Risk-off Switched off

Wednesday, August 30: Indices across the globe recovered some of the momentum that was lost yesterday following on from the North Korean missile launch, as safe haven trades abated. Trump’s calm response of “all options are on the table” soothed markets. As it became clear that further escalation of the situation was unlikely, markets recovered. The S&P 500 swung to a gain from a loss and Asian markets followed the lead to close higher overnight.
The FTSE 100 closed +0.38% higher as an array of sectors helped give the index a broad-based leg up, including house builders, consumer staples, support services and engineering equities. As the risk-off trade was switched off, this also prompted miners, yesterday’s biggest movers, to fall back as gold came off highs not seen since September last year.
A raft of UK economic data was released today, shedding light on consumer credit and mortgage lending. Data indicated that UK consumers cut back on borrowing in July, as lending to businesses picked up. This greater proportion of business investment may support growth in the months ahead, in lieu of consumption. The BOE announced that customers borrowed a net £4.8bn in July after repayments, compared with £5.5bn a month earlier. Growth in unsecured borrowing slowed to an annual rate of 9.8%, the slowest pace in more than a year. Net mortgage lending also slowed, though the number of new home loans approved by lenders in July was the highest for 14 months at 68,689.
Across Europe, indices were higher at the close with the FTSE 100 +0.49%, the DAX 30 +0.47% and the CAC 40 +0.47%.

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