Greg Secker – U.K. Market update brought to you by Traders University

UK Stock Market Report 31st August 2010

The FTSE 100 rose +45.72 points or +0.89% on Friday to 5201.56

According to new research out today, the government is set to make almost £30bn from its emergency bailout of British banks. At the time of the bailout, some observers predicted the taxpayer would end up nursing losses of around £850bn. However, the Banker magazine says a combination of recovering profits, rising equity markets and fees charged on loans and guarantees will net the government a massive £30bn profit. British taxpayers are currently breaking even on their 83.2% holding in RBS and 41.3% shareholding in Lloyds Banking Group.

According to an estimate by the Centre for Economics and Business Research if the equity market rises in line with economic growth, the taxpayer is likely to see a paper profit of £19bn within five years. A further £8bn will be due from fees for loans, bond guarantees and the Asset Protection Scheme (APS). Lloyds paid £2.5bn to join the APS, even though it did not ultimately participate. In separate news the British Bankers’ Association said yesterday, the BoE needs to spell out to consumers what its powers to curb lending will mean for products such as mortgages. When it inherits the remit of City regulation from the FSA in 2 years’ time, the BoE will be tasked with macroprudential oversight of the banking system.

Due for release today is the GBP GfK Consumer Confidence, GBP Net Lending to Individuals m/m and the GBP Final Mortgage Approvals.

UK Stock Market Report 30th July 2010

The FTSE 100 closed down 5.73 points at 5,313.95.
UK Mortgage approvals fell more than expected in June and lending was also weaker than forecast, Bank of England figures showed. The Bank of England figures support recent evidence suggesting the housing market is running out of steam after strong rises last year.  The BOE said mortgage numbered 47,643 in June, falling from a downwardly revised 49,461 in May and below forecasts for a reading of 49,000. Net mortgage lending growth eased to £665m in June from £838m in May, below forecasts for £1bn.
 Fears were stoked that London could lose out to other financial centres if tough rules on pay are rushed in after the Financial Services Authority (FSA) said it would update its remuneration code to match harsh measures put forward by the European Union in time for January. The UK watchdog revealed plans to curb bonuses yesterday. Hedge funds, asset managers, building societies, stockbrokers and many others will be caught in the crackdown as the regulator widens the scope of its powers on pay from 26 key banks to more than 2,500 financial companies.
Iain Duncan Smith, the work and pensions secretary is expected to today unveil plans to scrap all out-of-work benefits and replace them with a single payment. A so-called “universal credit” will replace the myriad of different benefits that are currently available. The credit will also be available to those working in low income jobs, to ensure they don’t lose out when they move off of benefits and into employment.

UK Stock Market Report 15th June 2010

Yesterday, the FTSE 100 closed up 38.45 points or 0.74% to close at 5,202.13.

Yesterday, the new Office for Budget Responsibility (OBR) said that the economy was more damaged by the banking crisis than was previously admitted; it will grow more weakly and may never fully recover. This conclusion adds billions of pounds to the total that George Osborne must find in order to restore the public finances to health, the Times reports. Sir Fred Goodwin has been summoned by the FSA to answer questions regarding the Royal Bank of Scotland’s management in the run up to its near-collapse in October 2008. Goodwin is understood to meet FSA investigators at the office of his lawyers rather than at the regulator’s Canary Wharf office. On Tuesday, one of the biggest investors in the UK wind power will warn the government that it must extend subsidies for the industry or risk losing investment as European countries plan to build up wind capacity.

Due for release today is the JPY BOJ Press Conference, GBP CPI y/y, EUR German ZEW Economic Sentiment, GBP Inflation Report Hearings and USD TIC Long-Term Purchases.