Your daily market update from Knight Frank Research Tuesday 28th April

Good morning,

Economic headlines

Stock market performance was mixed in Asia during the early hours of Tuesday, and US futures dipped slightly. The oil price declined once again as the shutdown seems likely to create a glut of supply.

Markets remain volatile as large companies publish quarterly earnings and governments add further stimulus as they reopen economies.

The euro-area posted a 3.7% contraction in GDP during the first quarter. This weakness is likely to worsen in the second quarter, followed by a rebound in the final half of this year.

The UK government is fleshing out plans to reopen the economy after Covid-19 deaths dropped to 360 yesterday, the lowest level in a month. Measures are likely to include helping workplaces to reduce the spread of the virus by enforcing social distancing and allowing people to mix with a wider group of friends and family under an expanded definition of a household that creates limited “bubbles” of people who can see each other.

According to the Johns Hopkins Centre for Health Security: Spain's daily incident rate has been declining since early this month, Italy's has been falling for five weeks, Germany's continues to fall and Austria's remains low. All are in the process of relaxing restrictions.

China now hasn’t reported a fatality in 12 straight days. Some of China’s leading heavy equipment manufacturers have announced 5-10% price increases since sales hit a record high following a rebound in infrastructure construction activity.

Property market headlines

Zoopla estimates 373,000 transactions are on hold, or about £8.2 billion in sales. 

As discussed in our weekly outlook, activity from residential buyers is beginning to rise with a growing number joining waiting lists for viewings in an attempt to gain a 'first-mover' advantage when government guidelines change.

A rising number of prospective buyers are also spending time during lockdown submitting mortgage applications, again in the hope of being well positioned once something like normal activity recommences. 

Flora Harley continues her monitor of real-time economic data from global cities. The latest data from China shows normality is returning. Beijing continued to see traffic congestion above its 2019 level, increasing by six percentage points in the last week alone.

There were small upticks in congestion, by one or two points, in many European and North America cities including Paris, New York and even London – confirming speculation in the UK media that people appear to be slowly loosening their strict adherence to social distancing rules.

Increasing activity in China and Hong Kong is already being felt in London's new homes market, according to Knight Frank’s head of new homes Priya Black. The rise in interest in international markets from Chinese buyers is beginning to felt in many locations.  

If you have any questions, please contact me, or the team.