Market Round-Up

April marked the second consecutive month of falling house prices in the UK, data from lender Nationwide revealed. House prices contracted by 0.4% between March and April 2024, having already fallen 0.2% the month prior. The results surprised the market, which expected a 0.2% expansion. Robert Gardner, Nationwide’s Chief Economist, states that this development “likely reflects ongoing affordability pressures,” attributed to 16-year-high interest rates.

Mortgage rates have begun ticking up again, as confidence in the Bank of England’s (BoE) commitment to start cutting rates wanes, with traders now only expecting two BoE rate cuts this year, down from more than six in January. Despite this, mortgage rates remain substantially below the July 2023 peak, with UK mortgage approvals reaching an 18-month high this March. Consequently, an eventual cut to interest rates could unlock more demand and provide an uplift for house prices.

The average house is now worth £262,000. This is £12,000 less than the August 2022 peak, but still approximately £50,000 more than in February 2020, before a combination of pandemic lockdowns, low borrowing costs and changing preferences triggered a spike in demand.

Apple’s announcement of a US$110bn share buyback scheme marks the largest in the company’s history, surpassing its previous record of US$100bn in 2018. As a result, Apple sits in the top six spots of the largest share buyback announcements made in the United States, alongside energy firm Chevron and Google’s parent firm, Alphabet. Furthermore, Apple increased its cash dividend by 4%, bringing its annual yield to 0.55% of net asset value. The market responded positively to the news, with Apple’s shares increasing by 6% in its extended trading hours. This is particularly significant since Apple has been underperforming its peers recently, with its stock falling by 10% in the year to date, as it suffers from competitive and regulatory headwinds.

The announcement came as a surprise to investors, as Apple saw a 4% decrease in sales for Q1, amounting to US$90.8bn, due to a drop in demand for the iPhone. However, CEO Tim Cook expressed his confidence in revenue growth for the current quarter, which was reinforced by the announcement of the share buyback program and dividend increase. Subsequently, analysts believe that the narrative for Apple could shift as sentiment improves, causing a possible resurgence of the stock.
 
Please note that this communication is for information only and does not constitute a recommendation to buy or sell the investments mentioned. Investments and income arising from them can fall as well as rise in value. The information and views were correct at time of publication but may have changed at point of reading.