Must read: ECB decision, UK house prices, John Lewis

GLOBAL MARKETS

European markets have opened mostly lower, with the FTSE 100 bucking the negativity with miners like Rio Tinto, Anglo American and Glencore trading near the top of the basket. This follows a stronger session overnight in Asia. 

All eyes are on the ECB’s interest rate decision later today, with investors divided over whether the central bank will raise interest rates for a 10th time to combat inflation or keep rates on hold to avoid inflicting additional economic pain.

• Learn more: SIPP Portfolio Ideas | How SIPPs Work | Transfer a SIPP

UK RICS HOUSE PRICE BALANCE

The UK RICS August house price balance fell to -68, below estimates for -56. This represents the biggest fall in house prices in the UK in 14 years as the percentage of surveyors see a much greater number of falls in house prices versus rises. 

Following similarly gloomy housing market figures from Nationwide and Halifax, today’s data highlights the dampening impact of 14 consecutive rate hikes from the Bank of England is having on property prices. Sellers are less willing to list their properties since asking prices are coming down, and buyers are struggling with mortgage affordability. Both factors are contributing to rising rents and falling real estate prices.

JOHN LEWIS 

John Lewis reported a loss before tax which narrowed by 43% to £56.2 million. Before tax and exceptionals, losses reduced to £54.5 million down from £66.8 million a year ago. Total sales rose 2% year-on-year to £5.8 billion. While earnings at Waitrose improved, John Lewis trading fell back. 

John Lewis said it is expecting an improvement in full-year results, but warned that the economic outlook is uncertain. Its turnaround plan is now expected to take two years longer than expected because of inflationary pressures. 

The cost-of-living crisis with a softer consumer backdrop means John Lewis shoppers are holding off from spending on expensive big-ticket items like white goods and technology. However, they are still spending on cheaper items like fashion and beauty. In Waitrose, inflation has been responsible for the rise in sales with average prices rising by 9% whereas the volume of goods sold dropped by 5%. 

Profits have been struggling at John Lewis for a number of years amid high costs relating to its vast store estate and the rise in cheaper e-commerce rivals like Amazon. Waitrose has struggled as customers become increasingly price sensitive amid the elevated inflation, rising interest rate environment, as well as stiff competition from cheaper rivals like Aldi and Lidl. Focus will be on the all-important festive period when John Lewis typically enjoys a seasonal boost. Dame Sharon White has a daunting task at hand to revive John Lewis’ fortunes at a challenging time for retail more broadly, laid bare by the recent collapse of Wilko.