London close: Stocks fall as investors look to US data

26th Feb 2024 15:11

(Sharecast News) - London markets closed in negative territory on Monday, as investors remained cautious ahead of the release of crucial US economic data later in the week.

The FTSE 100 index closed down 0.29% at 7,684.30, while the FTSE 250 experienced a decline of 0.27%, ending the day at 19,126.92.

One notable sector feeling the pressure was the housebuilding industry, following reports of a probe by the UK's competition watchdog.

In currency markets, sterling was last up 0.09% on the dollar to trade at $1.2683, while it weakened 0.23% against the euro to change hands at €1.1685.

"The week has gotten off to a poor start in London, on an otherwise quiet day for corporate news," said IG chief market analyst Chris Beauchamp.

"Ocado looks to be vulnerable to more selling as investors digest the impact of a spat with key partner Marks & Spencer, while a four-month low in iron ore and a major reversal in copper prices seems to spell more pain ahead for mining stocks."

Beauchamp said US stocks had edged higher on the first day of the week, but could now struggle with the bulk of earnings season now behind them and PCE data still to come.

"Nonetheless, the resilience of equities in the face of diminishing expectations of Fed rate cuts in the first half of the year, and maybe even in the second half, shows that there is a lot more to the rally than just hopes of looser monetary policy."

US new home sales manage modest growth

It was a quiet day on the macroeconomic front, but new home sales in the United States did experience a modest uptick of 1.5% month-on-month in January, according to the Census Bureau.

The seasonally-adjusted annualised rate reached 661,000 units, falling short of market expectations which had anticipated a figure closer to 680,000.

Despite that, January marked the second consecutive month of growth in sales, coinciding with a decline in mortgage rates during the initial month of 2024.

Regional variations were notable in the sales data, with a significant surge in the Northeast and the West regions, while growth was more subdued in the Midwest.

Conversely, sales experienced a decline in the South.

The median price of newly-sold homes stood at $420,700, with the average sales price slightly higher at $534,400.

Housebuilders in the red, oil firms rise on crude prices

On London's equity markets, housebuilders were in focus, with Barratt Developments down 1.2%, Bellway off 1.88%, Berkeley Group Holdings slipping 0.66%, Persimmon sliding 2.34%, Redrow 0.38% weaker, Taylor Wimpey sliding 3.14%, and Vistry Group 1.56% lower.

The declines followed news that the Competition and Markets Authority had initiated an investigation into eight companies within the sector.

Its investigation would be centred on concerns over potential collusion and the impact on competition, amidst broader criticisms of the housing market's operations.

"Housebuilder stocks have fallen as the CMA launches a probe into the sector," said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.

"Concerns include poor customer outcomes from the quality of new homes, with faults on the rise over the last ten years.

"A major trigger for the investigation is accusations that some major housebuilders are sharing confidential and commercially sensitive information relating to sales prices and sales rates."

Lund-Yates said further criticism was being levelled at the UK's "overly clunky" planning processes, which were contributing to the under-supply of new homes.

"Seeing rules streamlined could help some of the big listed names shift more houses, but it could also increase competition.

"The accusations of poor build quality and anti-competitive practice will be of more immediate importance, as findings against either strike could lead to margin degradation in the short term, but this is far from guaranteed."

Elsewhere, Ocado Group tumbled 6.98% after reports that Marks & Spencer Group, down 0.87%, was withholding a significant payment due to underperformance in their joint grocery delivery venture.

Distribution specialist Bunzl lost 3.51%, after it reported expectations of a slight reduction in operating margin for the year, despite posting a rise in annual profits.

Merchant bank Close Brothers Group declined 1.54% as the fallout over its exposure to an investigation into motor claims financing continued.

Hammerson slipped 0.31%, reversing earlier gains after agreeing to sell Aberdeen shopping centre Union Square.

On the upside, Standard Chartered added 0.56% following an upward revision of its price target by Berenberg.

In the energy sector, Diversified Energy Company was up 2.31% and Tullow Oil advanced 3.27% as crude oil prices rebounded.

Low-cost carrier easyJet ascended 2.09% on the back of warnings from rival carrier Ryanair regarding potential fare increases stemming from Boeing's aircraft shortages.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,684.30 -0.29%

FTSE 250 (MCX) 19,126.92 -0.27%

techMARK (TASX) 4,389.60 -0.28%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 361.20p 2.29%

Admiral Group (ADM) 2,576.00p 1.86%

Pershing Square Holdings Ltd NPV (PSH) 3,928.00p 1.81%

International Consolidated Airlines Group SA (CDI) (IAG) 155.00p 1.47%

Rentokil Initial (RTO) 435.00p 1.45%

Barclays (BARC) 165.84p 1.28%

BAE Systems (BA.) 1,256.00p 1.25%

Melrose Industries (MRO) 622.80p 1.07%

Convatec Group (CTEC) 251.00p 1.05%

Lloyds Banking Group (LLOY) 45.91p 0.92%

FTSE 100 - Fallers

Ocado Group (OCDO) 496.60p -6.98%

St James's Place (STJ) 617.80p -3.92%

Hikma Pharmaceuticals (HIK) 2,015.00p -3.86%

Anglo American (AAL) 1,726.60p -3.33%

Bunzl (BNZL) 3,204.00p -2.90%

Taylor Wimpey (TW.) 141.90p -2.81%

Rio Tinto (RIO) 5,067.00p -2.50%

Schroders (SDR) 388.20p -2.34%

Persimmon (PSN) 1,379.50p -2.34%

Centrica (CNA) 124.70p -2.31%

FTSE 250 - Risers

Me Group International (MEGP) 160.00p 4.58%

Diversified Energy Company (DEC) 993.50p 4.30%

Tullow Oil (TLW) 29.70p 3.27%

FirstGroup (FGP) 158.90p 3.18%

Octopus Renewables Infrastructure Trust (ORIT) 83.60p 2.70%

Man Group (EMG) 244.80p 2.18%

Ferrexpo (FXPO) 75.90p 2.16%

Syncona Limited NPV (SYNC) 123.20p 2.15%

easyJet (EZJ) 557.20p 2.09%

HGCapital Trust (HGT) 445.00p 2.06%

FTSE 250 - Fallers

W.A.G Payment Solutions (WPS) 75.00p -5.06%

Foresight Group Holdings Limited NPV (FSG) 425.00p -4.28%

Quilter (QLT) 96.70p -3.43%

SSP Group (SSPG) 225.60p -3.18%

IWG (IWG) 191.40p -3.14%

Pets at Home Group (PETS) 283.60p -3.01%

Howden Joinery Group (HWDN) 779.60p -2.79%

Ashmore Group (ASHM) 209.60p -2.69%

Wood Group (John) (WG.) 146.30p -2.53%

Mobico Group (MCG) 78.25p -2.46%