UK housing in focus as Barratt further expand with Redrow takeover

• European markets lower as Fed repricing continues
• UK housing sector in focus as Barratt buy Redrow in £2.5 billion deal
• Crude on the rise, as Red Sea attacks continue

European stocks are drifting lower in early trade today, with markets continuing to adjust to a progressively less dovish outlook for US monetary policy in the year ahead. The past month has seen a repricing away from the previously speculated 6-7 cuts in 2024, starting in March. While markets are now looking for five rate cuts starting in May, there could yet be further adjustments to come if Powell’s latest prediction of just three rate cuts are to be believed.

The UK housing sector has received further signs of encouragement, as the Halifax house price index pushed 1.3% in January. That sees UK houses 2.5% higher than this time last year, despite the restrictive impact of the Bank of England’s series of interest rate hikes. Barratt Development shares are trading sharply lower as the UK’s biggest homebuilder laid out plans to buy Redrow for over £2.5 billion today. The newly named Barratt Redrow would hold a market capitalization of over £7 billion, with company execs pointing towards potential £90 million annual synergies in three-years’ time.

Crude oil is on the rise once again this morning, with WTI hitting a fresh high for the week. This comes as we see Houthi Rebels continue their attacks in the Red Sea, shrugging off the actions taken by the US and UK in the region. For equity markets, the need to keep a lid on energy prices is absolutely key, with the US starting to gradually rebuild their own strategic oil stockpiles (SPR) after years of sales. Time will tell whether that shift from supplier to consumer will make a tangible impact upon sentiment for energy markets.