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U.S. Manufacturing Activity Increases and Sends the S&P Higher, House Prices in the UK Rise by The Most in 15 Years & OPEC+ Maintains Supply Output

U.S. indices higher as manufacturing activity increases

The benchmark S&P 500 was one of a few indices which traded higher on Wednesday, as data showed that manufacturing activity was rising.

Figures from the Institute for Supply Management showed that its national factory activity index rose to 59.9 in August.

How does manufacturing impact economic growth?
While factory sector employment may not provide politicians the cover they need on the job creation front, they are still correct when they tout manufacturing’s crucial role in the economy. That’s because no sector does more to generate broad-scale economic growth — and, ultimately, higher living standards — than manufacturing.

This was an increase from a reading of 59.5 in July, and better than the 58.6 reading markets had anticipated.

Typically, readings which come in above 50 indicate expansion within the manufacturing industry. Although not as important as it once was this sector still accounts for 11.9% of the U.S. GDP.

Both the S&P 500 and blue-chip Dow Jones were higher on the news.

Rise in British house prices sends Sterling higher

On Wednesday, house prices in the United Kingdom rose by the most in 15 years, after falling in July.

Data released by British mortgage lender Nationwide showed that house prices increased by 2.1% from July to August, with analysts forecasting a 0.2% rise.

The drop in property prices in July of 0.6% was attributed to the completion of a year-long break of stamp duty for the first £500,000 of a house purchase.

How housing data affects Forex
Housing data attracted lots of attention in 2006 leading up to the global financial crisis in 2008 following the collapse of the mortgage market in the US, the UK, Europe and several other prominent world economies. Since then, housing data have become a benchmark with which to measure economic performance in many countries and as such, they now have a marked influence on the values of the currencies of the countries where these data come from.

However as the UK has now fully re-opened its economy it was shown that last month’s property prices were 11.0% higher than in 2020.

The FTSE 100 climbed by 0.42%, whilst GBPUSD hit an intraday high of 1.3798

Oil prices drop, OPEC+ maintains supply output

Oil prices were lower in today’s trading session as OPEC and its allies, which include Russia opted to maintain output.

The cartel chose to maintain the current level of supply, as markets continue to monitor the spread of the Delta variant, and the potential impacts it could have on demand.

How OPEC+ affects oil prices
Responding to the highly dynamic economic and geopolitical developments, OPEC+ nations make changes to their oil production capacities, which impact the oil supply levels and result in oil price volatility.

This month will see OPEC+ continue to add 400,000 barrels per day in supply to markets, as agreed in July.

In a statement following the decision, the group stated, “While the effects of the COVID-19 pandemic continue to cast some uncertainty, market fundamentals have strengthened, and OECD stocks continue to fall as the recovery accelerates”.

WTI crude fell to an intraday low of $68.44 after the decision.

Quote of the day – “Sheer will, and determination is no substitute for something that actually works.”

– Jason Klatt

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