The pound is at a long-term low. Jittery financial markets getting close to the summer recess helped convince the Treasury's monetary policy committee not to raise the interest rate for July, but to keep it at its current 4%.
The UK stock market continues to be driven by the USA. The latest scandal to hit the headlines there – accounting irregularities at WorldCom and other large corporations – further helped to undermine confidence in the equity sector.

The question is whether to be in equities or bonds. In the USA, the markets are finding it difficult to price equities in the wake of the recent corporate accounting irregularities – no one is sure what returns these companies are delivering. They are also finding it tough to assess the stocks' risks.

Nicola Horlick, chief executive of Society General, believes that the UK equities market is at its bottom. She thinks that because of historic scares such as Polypec and Maximile, the UK accounting profession doesn't suffer from the same faults as the USA.

As to whether the market is at the bottom or not will depend on whether terrorism in the USA re-asserts itself – and whether the accounting upsets hit another major corporation.

Surprise of the month? That must be the Council of Mortgage Lenders' recommendation to Gordon Brown that interest rates should rise to suppress the unabated increase in house values – the first time it has ever made such a suggestion.

Source

Housing Today

Postscript

Ben Denton is senior director of housing consultant ABROS

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