FTSE 100 to rise as investors assess housing market

The FTSE 100 is forecast to rise today, bouncing back from a poor trading day yesterday with the housing market and the appearance of the Bank of England governor in focus.

The blue chip index suffered its worse trading day since mid-May yesterday – tumbling 101 points or 1.7% to 5862 – as investors in London stocks played catch up with falling European markets after the bank holiday.

A mixed picture for the manufacturing sectors across Europe and Asia did little to improve sentiment, and safe haven investments such as gold performed well. The glistering commodity hit a two week high on a soft dollar, before falling back.

Today investors will be watching several key events. Firstly, housing market figures from the Nationwide building society, which showed a 2% increase in prices in August, a increase from the 1.8% notched up in July.

House buyers were discouraged from moving in lockdown to prevent the spread of Covid-19 but, since the market reopened earlier in the summer, there have been signs of a surge in demand to move house, as people reassess their commute amid the work from home boom.

Results from housebuilder Barratt will also help assess the state of the market while gyms chain Gym Group will post half-year results after becoming one of the last types of businesses to be allowed to reopen.

At the same time, German retail sales figures are expected to show a bounce, boosting confidence in Europe’s largest economy, which has suffered due to a Covid-induced slowdown in its crucial automotive sector.

Finally, Bank of England Governor Andrew Bailey is due to appear before the Treasurey Select Committee at 2.30pm. His comments will be closely watched for any signs of a shift in the Bank’s thinking on the health of the economy – its view has changed since the onset of the crisis. Last month the Old Lady of Threadneedle Street forecast that the economic shock of the coronavirus outbreak would be less severe than first expected, but last for longer. Any hints from Bailey that he and his colleagues are considering negative interest rates will also be pounced upon by traders.

In the markets, US stocks notched fresh record highs yesterday aided by a rally in Covid video conferencing sensation Zoom – after strong results – and Apple, which is now worth more than the entire FTSE 100.

Today CMC Markets called the opening 35 points higher at 5897.