Global News Round-up: 01/02/23

The UK housing market is facing a difficult time, with home prices declining for the longest period since the 2008 Global Financial Crisis, according to Nationwide. The average cost of homes fell 0.6% in January and 0.3% in December, a larger drop than previously thought. This is due to the issue of affordability. 

Meanwhile, the number of people turning to floating rate mortgages (the interest rate on loan changes according to the interest rate changes in the economy) that track the Bank of England’s key rate has more than doubled, indicating a belief that the bank will soon start lowering borrowing costs. This dip in the UK housing market follows similar trends seen in other countries, including the US, China, Australia and New Zealand, which could have wider implications for global growth. 

The EU has also unveiled a roadmap for keeping its industries competitive with regards to green technologies as it tries to catch up to the US and China.

While on one hand, Adani’s new stock issue was taken positively by the market, the proceeds are overshadowed by the ‘confidence crisis’ in Adani as he needs to arrange extra collateral to cover the group’s loans. Adani Enterprises shares plummeted to Rs.1,941.20 (-38% below its offer price’s lower band).

FedEx has planned to cut management jobs globally by 10%

Volatility has replaced liquidity as the top concern of traders in financial markets, according to a survey of 835 traders by JPMorgan. Traders had listed liquidity as their biggest concern for the previous six years, but this changed in 2022 as markets managed to survive a series of major shocks without severely impairing the ability to buy and sell. Nearly half of the traders surveyed listed volatile markets as their daily challenge, with 22% mentioning liquidity, down 13 percentage points from previous years. The shift reflects the changing economic environment, with a growth slowdown, record inflation, rising interest rates, and the threat of a recession fueling big swings in markets.

In the light today is:

India has set its sights on narrowing its budget deficit to below 6% of its gross domestic product (GDP) for the first time since the year ended March 2020. Finance Minister Nirmala Sitharaman announced the goal of a 5.9% deficit in the budget presented on Wednesday, smaller than the current year’s 6.4%. The government hopes to improve its credit rating by maintaining fiscal stability and to boost capital spending to support growth. Sitharaman proposed increasing spending on asset creation by 33% in the next fiscal year, with investment in infrastructure being a priority. The budget aims to cut personal income taxes to increase consumption and ramp up infrastructure spending to boost the economy. The 45-trillion-rupee ($550 billion) spending plan hopes to increase tax collection by nearly 12% and borrow a record 15.4 trillion rupees to fund the budget. The budget, which comes ahead of a national election next year, aims to reduce the budget shortfall and also increase employment and incomes to boost consumption and investment. The budget’s measures will aim to increase consumption, strengthen the financial sector and create jobs with the creation of 100 new projects and the addition of 50 airports, heliports, and aerodromes. The budget is a part of the government’s vision of turning India into the world’s third-largest economy by the end of the decade.

Key highlights before you switch off for the day:

The UK Treasury is seeking to regulate the cryptocurrency sector and create a “world-first regime for crypto lending” in an attempt to turn the country into a hub for the industry. The proposals, which follow the high-profile failure of FTX exchange and the bankruptcy of Celsius Network, are aimed at bringing the rules for crypto tokens in line with traditional financial assets. Regulated crypto lenders will be expected to take steps to protect customer funds and to warn consumers of the risks involved. The Treasury also intends to regulate the issuance and custody of stablecoins and activities such as crypto lending.