Less-than-stellar data from Rightmove and a guidance cut from Crest Nicholson hurt housebuilding shares and meant the FTSE 100 underperformed continental peers on Monday afternoon.
Despite housebuilders keeping a lid on enthusiasm, the blue-chip index traded solidly in the green and looks set to avoid the ignominy of a seventh-successive day in the red, a fate it has not suffered since July 2019.
The CAC 40 in Paris was the star of the show, however, registering more confident gains as its luxury retail constituents were supported by a rate cut in China.
The dollar was mixed, meanwhile, ahead of a big week for monetary policy. The upcoming Jackson Hole economic symposium could offer a clue about what the US Federal Reserve does next.
The FTSE 100 index was up 43.77 points, 0.6%, at 7,306.20. The FTSE 100 looks set to snap-up a six-day losing streak.
The FTSE 250 was down 48.39 points, 0.3%, at 18,048.21, and the AIM All-Share was down 0.91 of a point, 0.1%, at 731.33.
The Cboe UK 100 was up 0.6% at 728.43, the Cboe UK 250 was down 0.5% at 15,819.90, and the Cboe Small Companies was up 0.3% at 13,518.07.
In the FTSE 100, Taylor Wimpey, Persimmon, Barratt and Berkeley fell 2.8%, 2.3%, 2.0% and 1.9%, respectively.
UK house prices declined at the fastest pace for the month of August since 2018, according to numbers from Rightmove on Monday.
The property portal’s latest findings showed house prices fell 1.9% on-month to £364,895 in August. It is the chunkiest August price fall since 2018. Prices had declined by 0.2% in July from June.
AJ Bell’s Russ Mould said the data ‘is hardly a surprise’.
Rightmove noted that would-be buyers were ‘preoccupied by holidays, inflation, and the highest base rate since 2008’, Rightmove said. The Bank of England earlier in August lifted bank rate by 25 basis points to 5.25%.
‘However, Crest Nicholson’s profit warning has laid bare the scale of the impact of a housing slowdown on the housebuilding sector,’ Mould added.
Crest Nicholson was down 6.7%, making it the worst FTSE 250 performer.
Crest Nicholson lowered profit guidance after warning that conditions in the housing market worsened over the course of the summer. It said it does not expect conditions to improve before the Surrey-based housebuilder’s financial year-end on October 31.
The company now expects to achieve annual adjusted pretax profit of £50.0 million, which would represent a 64% decline from the £137.8 million achieved in the prior year. It had previously expected a profit outcome of £73.7 million, the company said in June, which would have been in line with published consensus at the time.
‘Against a backdrop of persistently high inflation and rising interest rates, trading conditions for the housing market have worsened during the summer of this year. While pricing has remained resilient in a market with limited supply and few distressed sellers, the economic uncertainty is deterring prospective home movers,’ Crest Nicholson cautioned.
Elsewhere in the FTSE 250 index, Indivior rose 2.4%. It said it is resolving claims brought in an antitrust multi-district litigation regarding its drug Suboxone by paying claimants millions of dollars.
The Virginia-headquartered pharmaceutical company, which specialises in treating addiction and mental illness, said it has agreed to pay $30 million to end payor claimants. This is in line with its current provision of $188 million for the multi-district litigation.
Suboxone is a medicine to treat dependence on opioid drugs such as heroin or morphine.
Among London’s small-caps, Fulcrum Utility Services plummeted 64%.
The Sheffield, England-based provider of utility infrastructure services said it has proposed to de-list from AIM, having reviewed the advantages and disadvantages of being listed on the London exchange.
The disadvantages, it said, included its limited prospects of raising additional equity financing on AIM, and that it had so far experienced limited trading in its shares there. Fulcrum also cited the ‘legal and regulatory burden’ associated with the listing, and the ‘significant cost’ associated with maintaining it.
Also on Monday, Fulcrum said its pretax loss widened to £25.7 million in the year that ended March 31, compared with £14.2 million the previous year. Revenue decreased 18% to £50.6 million from £61.8 million, and infrastructure revenue decreased 19% to £46.4 million from £57.6 million.
Stocks in New York were called higher. The Dow Jones Industrial Average was called up 0.4%, the S&P 500 index up 0.5%, and the Nasdaq Composite up 0.6%.
This week’s focus will be on US interest rates, with all eyes on the Federal Reserve’s Jackson Hole symposium.
Fed Chair Jerome Powell is expected to speak on Friday at the Jackson Hole meeting, which will take place in Wyoming. This year’s topic of the meeting is ‘Structural Shifts in the Global Economy.’
Investors are bracing for some potentially hawkish rhetoric, in light of last week’s minutes from the Fed’s most recent meeting. The minutes had shown the central bank still sees ‘significant’ upside risks to inflation.
Brown Brothers Harriman said it expects Powell’s opening speech to ‘underscore the Fed’s commitment to meeting the 2% inflation target’.
The meeting comes at a time that US interest rates are at their highest in over two decades. At July’s meeting, the US central bank lifted rates by a further 25 basis points to 5.25% to 5.50%.
The pound was quoted at $1.2732 at midday on Monday in London, slightly lower compared to $1.2736 at the equities close on Friday. The euro stood at $1.0895, up against $1.0876. Against the yen, the dollar was trading at JP¥145.94, higher compared to JP¥145.20.
In European equities on Monday, the CAC 40 in Paris was up 1.2%, while the DAX 40 in Frankfurt was up 0.7%.
Luxury goods companies supported the CAC. LVMH added 1.6%, Kering rose 1.5% and Hermes added 1.3%. Burberry was up 1.1% in London.
China’s central bank cut a key interest rate in an attempt to counter the post-Covid growth slowdown in the world’s second-largest economy.
The one-year loan prime rate, which serves as a benchmark for corporate loans, was reduced to 3.45% from 3.55%, the People’s Bank of China said in a statement, while the five-year LPR, which is used to price mortgages, was held at 4.2%.
Markets in Europe initially reacted in a tepid fashion, before gaining in confidence as the morning progressed. China is a key market for luxury retail, boosting shares in the sector.
Brent oil was quoted at $85.54 a barrel at midday in London on Monday, up from $84.21 late Friday. Gold was quoted at $1,868.93 an ounce, lower against $1,892.45.
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