Look Ahead 13/9/23: US CPI; UK GDP; IEA oil report; Redrow

(Video Transcript)

UK GDP, industrial production and trade balance figures due

Hello, I'm Angeline Ong, and welcome to your Look Ahead to Wednesday, 13 September 2023. We begin in the United Kingdom, where we have gross domestic product (GDP) numbers and industrial production, along with trade balance figures.

Just looking at sterling versus the euro here, because this is a really interesting cross, given that we are in an European Central Bank (ECB) week. The UK economy has also been in an interesting states, given that its growth of 0.2% in the second quarter confounded and surprised economists who were expecting a weaker number.

Sterling has also been supported versus the euro, as increasingly data has started putting the Bank of England (BoE) on track to hike rates again, although they are watching data points very closely, especially that inflation data. Manufacturing investments also will be ones to watch, given they perform relatively strongly in the second quarter.

Turning to the US, where inflation will be key. We are looking out for the consumer price index (CPI) number there. What will be very, very interesting is if suddenly we see inflation start kicking up again. There's no expectation from that from the polls at the moment.

But don't forget, those are backward-looking numbers. Those polls would have been done many, many weeks earlier. Now there is this growing concern that actually inflation is starting, those inflation pressures are starting to creep back again. And this might mean that the Federal Reserve Bank (Fed) will have to keep rates higher for longer.

Read more: everything you need to know about the Arm IPO

Oil investors wait on inflation data

I also want to chat to you about oil, because oil is going to be quite key in this coming session. We've got the EIA oil market report and also the EIA crude oil inventories. What they say will be interesting, given that Brent futures are still holding above $90 a barrel.

Investors, of course, waiting on the inflation data as well, because that could give us an indication of where interest rates are hedged and whether they might go higher for longer in the US and Europe.

Brent, though, reaching $90 a barrel in the last week, for the first time in 10 months, if I widen out this chart for you, after Saudi Arabia and Russia announced that they would extend voluntary supply cuts, or they combined 1.3 million barrels per day until the end of the year. And sticking with the energy theme, we've got Tele Oil also out with first-half numbers.

Housing sector volatility evident

In the housing industry, Redrow is out with four-year numbers. Now, this is going to be interesting reading, because home builders like Redrow, like Belware, and like Persimmon, they've all flagged persistent, stubborn market challenges, despite some signs that there is a pick-up in activity.

Of course, rising interest rates and also the slowdown amid uncertainties of the consumption have meant that it's really been quite a difficult time for this industry as a whole. And you can see here Redrow's chart.

Look at that volatility there, even on a daily basis. So trading between 4.27 and 5.40, struggling to break above the 5.20 resistance point here in the near term, and also longer-term view, that 5.40 resistance level.

Now, if we see that Redrow comes out saying that perhaps inflation and those pressures on new mortgage borrowers, those that are wanting a mortgage for the first time, first-time buyers, if pressures are easing there, then perhaps we could see this stock pick higher.

If not, if we don't get any positive comments in that sort of regard, then we could see Redrow and its peers still being under the cosh in the months to come.

And that's it for now. For more market-moving news, I'll be back on Beat the Street at 1.30pm, London time, every single day to give you a heads-up to the Wall Street Open.

My colleague Jeremy Naylor will be on at 7.30am every morning for Early Morning Call ahead of the European opening bell. Follow me on Twitter at IG.com and @aAngeline Ong. This is IGTV. Thank you.