Must read: ECB rate decision, UK house prices, Heathrow

GLOBAL MARKETS

European markets have opened around the flatline ahead of the European Central Bank (ECB) and further US inflation data out today.

Kingfisher (LSE:KGF) has soared to the top of the FTSE 100 after HSBC raised the stock to a 'buy' from a 'hold' and upgraded its price target to 305p. Aviva (LSE:AV.), Lloyds Banking Group (LSE:LLOY) and Reckitt Benckiser Group (LSE:RKT) are among the biggest losers on the UK blue-chip index as they go ex-dividend today. 

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Markets await today’s ECB rate decision, which is largely expected to see the central bank keep rates on hold at a record high. Focus instead is on comments from Christine Lagarde as investors hunt for clues into when the ECB could begin cutting rates, potentially in June. Unlike the US, Europe’s economy has been stumbling, which boosts the case for monetary loosening which may pave the way for the ECB to move before the Fed. 

Meanwhile, Bank of England policymaker Megan Greene told the Financial Times, UK rate cuts ‘should still be a way off’.

RICS HOUSE PRICE BALANCE

According to the Royal Institute of Chartered Surveyors, interest in the housing market hit a more than two-year high last month while the RICS gauge of house prices also reached the highest level since 2022. The RICS house price balance rose to -4 from -10 in February and its new buyer enquiries measure rose to +8 up from +4 in the previous month. 

Expectations that interest rates will be cut this year have helped to stimulate buyer interest in the housing market, even though rates remain at a 15-year high of 5.25%. It is likely that once the Bank of England finally begins cutting rates sometime later in 2024, this will encourage a fresh wave of buying and selling activity as mortgage affordability starts to improve. However, some buyers may hold off in anticipation of further rate cuts into 2025, when borrowing is likely to become less expensive again. 

HEATHROW

Almost seven million passengers travelled through Heathrow Airport in March, marking the second record breaking month for the London airport in a row. 

Heathrow enjoyed a boost in March thanks to the earlier-than-normal Easter weekend and school holidays with many families taking the opportunity to go on holiday abroad. It was the busiest Easter weekend ever for Heathrow, and Good Friday was the busiest ever direct departure day with 118,000 travellers passing through.

Despite pressures from inflation and a weak economic backdrop, individuals and families clearly continue to prioritise their travel plans at the expense of other spending. Plus, with cost-of-living pressure easing and wage growth still strong, the economic dynamics in the UK have been improving at the start of 2024 following last year’s recession, encouraging greater spending in the economy, including on air travel.