Must read: interest rates, inflation, house prices, John Lewis
ii’s head of investment rounds up the morning’s big news.
11th September 2025 08:43
by Victoria Scholar from interactive investor
GLOBAL MARKETS
European markets have opened mostly higher with the FTSE 100 up around 0.5% - BAE Systems (LSE:BA.) is at the top of the basket amid geopolitical unease on multiple fronts followed by Fresnillo (LSE:FRES).
In Asia, the Nikkei closed at its highest level ever, while Taiwanese shares also hit new highs thanks to tech stocks with Softbank surging 10% following its Stargate partner, Oracle Corp (NYSE:ORCL)’s impressive AI demand forecast.
US futures are pointing slightly higher after a mixed day on Wall Street and a fresh high for the S&P 500. Klarna Group (NYSE:KLAR) closed up 15% following its New York IPO, valuing the ‘buy now, pay later’ firm at around $17.3 billion by the close.
In data out later today, US August CPI is expected to rise by 2.9% year-on-year, the highest since January and 0.3% month-on-month driven by higher gas prices and tariffs pushing up prices for beef and coffee among other things. It comes after PPI in August unexpectedly dropped by 0.1% on Wednesday, paving the way for a Federal Reserve rate cut next week.
UK RICS HOUSE PRICE BALANCE
The UK RICS house price balance hit -19 in August versus -13 in July, reaching the weakest level since January 2024. This was worse than analysts had expected with sluggish new buyer enquiries and softer agreed sales over the quieter summer month. Uncertainty in terms of the outlook for interest rates from the Bank of England and taxes in the upcoming Autumn Budget are weighing on demand. Plus with inflation continuing to land above target, there are concerns about higher for longer interest rates, which would put continued pressure on mortgage affordability for potential buyers or movers.
Meanwhile, in the rental market, the survey’s measure of landlord instructions hit -37, the weakest since April 2020 at the height of the pandemic. It looks like landlords are fleeing the market as rental incomes from buy-to-let properties brace for higher taxes, as the Chancellor looks for ways to improve the state of the public purse when she outlines her tax and spending plans in November.
JOHN LEWIS PARTNERSHIP
John Lewis reported a loss before tax and exceptional items of £34 million in the six months to 26th July, widening from a loss of £5 million in the same period last year. It blamed the Extended Producer Responsibility (EPR) packaging levy, higher National Insurance contributions, and additional investment for the deepening loss.
John Lewis might have got a boost from disruptions at its rival M&G Ordinary Shares (LSE:MNG) during its cyber attack in April. While its 36 physical bricks and mortar retail stores have been operating in a challenging space for many years, Waitrose has been a bright spot which continues to prioritise quality while also focusing on competitive pricing, particularly in the face of intense competition from the likes of Aldi and Lidl.
The partnership said it remains ‘well positioned’ to deliver full-year profit growth despite the challenging macro backdrop. The final quarter of the year is seasonally important for John Lewis and its supermarket Waitrose because of typically strong sales in the build up to Christmas.
ECB INTEREST RATE DECISION
The European Central Bank (ECB) is expected to keep interest rate unchanged at its meeting today, possibly refraining from any further cuts this year too. The central bank has already reduced interest rates eight times over the current cycle. Inflation data published this week ticked up above forecasts to 2.1% in August, the first reading above the 2% target since April, supporting the view that the ECB is at or close to the end of the current loosening cycle.
The Eurozone economy is proving to be quite resilient thanks to monetary accommodation, government spending and record low unemployment. There have been pockets of outperformance like Spain which has benefitted from tourism, immigration, green energy investments and Next Generation EU pandemic assistance funds to support growth. However the Eurozone’s largest economy Germany is in recessionary territory although the government’s 1 trillion euro investment plan on infrastructure and defence is likely to provide support down the line.
Elsewhere, there are significant headwinds from Trump’s tariff uncertainty, a strong euro, and political turmoil in France.
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