Introduction: Oil prices climb amid supply fears and shipping attacks; prospect of rate rise weighs on UK housing market
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Oil prices have risen towards $103 a barrel on worries about crude supplies from the Middle East amid growing attacks on shipping in the Gulf and the strait of Hormuz, while the US has reduced its output as a hurricane threatened offshore production.
Brent crude, the global benchmark, advanced $2.62 a barrel to $102.8 a barrel, up 2.6%.
Attacks on tankers sailing through the strait were at a weekly high last week since the US and Israel unleashed the Iran war on 28 February, Reuters reported, citing maritime security sources.
There were at least 12 attacks on oil, liquefied natural gas and liquefied petroleum gas tankers around the strait in the week to 5 October. At the same time, Gulf producers have stepped up oil exports.
Asian shares fell again amid the strain in government bond markets and reports that some big tech companies are seeking to raise billions of dollars in debt.
Japan’s Nikkei lost 1.4% while the South Korean Kospi tumbled 2.6%, even though SamsungElectronics, the world’s largest memory chipmaker, projected a nearly ninefold jump in third-quarter operating profit, to 107.4tn won (£61bn), compared with the same period last year.
The prospect of higher interest rates is weighing on Britain’s housing market, the Royal Institution of Chartered Surveyors said this morning.
Rics said its house price balance fell to -32 last month, from a five-month high of -28 in August, a bigger decline than expected, while the number of new properties coming onto the market rose for the first time since the middle of last year. The balance deducts those who say prices fell from surveyors and estate agents who reported rising prices.
Rics head of market research Tarrant Parsons said:
A renewed rise in interest rate expectations has created a fresh headwind for the housing market, with buyers becoming a little more cautious and sales activity losing some momentum.
Surveyors and estate agents expect property prices to fall further over the next three months but to be stable over the coming year. London had the most negative price balance while Scotland and Northern Ireland reported rising prices.
Financial markets expect the Bank of England to raise interest rates from 3.75% to 4% in November, followed by three more quarter-point rises next year. Unlike the US Federal Reserve, European Central Bank and Bank of Japan, the UK’s central bank has kept borrowing costs unchanged so far, despite a pick-up in inflation since the Iran war started.
New buyer enquiries weakened for the first time since March, though the level remains well above the low hit just after the outbreak of the US-Iran war.
The Rics survey also points to rising rents. Growing demand from tenants and fewer properties from landlords has pushed the net balance for rents above its average in the first half of the year, though it is lower than in August.
The report comes after the mortgage lender Lloyds reported unchanged house prices in September while Nationwide building society reported a small drop.
Andrew Bailey, the Bank of England governor, chief economist Huw Pill, the deputy governor for monetary policy, Clare Lombardelli, and Megan Greene, who also sits on the rate-setting committee, are giving speeches today.
The Agenda
9.30am BST: Bank of England credit conditions survey
10.15am BST: Megan Greene speech in Cape Town
1.15pm BST: Andrew Bailey speaks at the Istanbul Economic Forum