London midday: Homebuilders knocked lower by remarks from Carney

14th Jul 2015 13:09

(ShareCast News) - Bank of England Governor Mark Carney told the Treasury Select Committee Bank Rate may be headed higher a little bit sooner than markets anticipated, sending stocks - especially homebuilders - listed on the second tier index promptly lower.As of 12:13 the top flight index was off by 19.22 points to 6,718.36 and the FTSE 250 lower by a hefty 141.80 points to 17,567.33.In testimony to the Committee Carney said that, "the point at which interest rates may begin to rise is moving closer given the performance of the economy."That sent the yield on the benchmark 10-year Gilt higher by four basis points to 2.15% and saw the pound snap higher towards 1.56 versus the US dollar."We judge these comments as supporting our view that the Bank is likely to deliver the first rate hike earlier than the current market pricing of May 2016. Our forecast is for a February 2016 move," economists at BNP Paribas said in a research report e-mailed to clients.Subdued core inflation in the UKHis remarks came after the latest CPI figures from ONS revealed that core inflation in the UK slipped a tad in June, to a 0.8% year-on-year pace after a reading of 0.9% in May - the joint lowest print since March 2001.Nevertheless, "this weakness continues to largely reflect cheaper goods imports. Inflation in the services sector, while below its average of 3.5% over the last decade, was a much stronger 2.2%," Samuel Tombs, Senior UK economist at Capital Economics pointed out.The headline consumer price index was flat versus a year ago, after a rise of just 0.1% in May, as expected by economists."We believe it is most likely that consumer price inflation will hover around zero through the summer and then start heading gradually but decisively up from September. There is obviously the risk that there could be another very brief dip into deflation if oil prices extend their current softening," Dr.Howard Archer, chief UK+European economist at IHS Global Insight explained to clients.All eyes on AthensActing as a backdrop, all eyes were on the parliament in Athens and whether it approve the list of reforms asked of it by creditors.That came amid an urgent need for fresh funds by Greece to meet a 20 July payment of €3.5bn falling due to the European Central Bank and to recapitalise the country's banks and restore the flow of credit in the economy."Capital control implementation can be swift, but its full removal is a lengthy process," Goldman Sachs told clients, adding that a normally functioning banking sector could be expected immediately.Defence sector finds a bidShares in defence and aerospace engineer Meggitt rose on Tuesday following a report in the Financial Times that a merger with Cobham might be on the cards. Atif Latif, director of trading at Guardian Stockbrokers, said he sees the rationale of a tie-up between the two as a defence play.Analysts at Deutsche Bank upgraded their rating for Sky from 'hold' to 'buy' and raised estimates for 2017 by 20% more than consensus. In a note to clients, Deutsche Bank said the FTSE 250 firm was the best positioned in Europe to capitalise on growth areas related to online video.Shares in homebuilders such as Taylor Wimpey, Barratt Developments and Persimmon were all knocked lower by Carney's remarks.AstraZeneca's Iressa drug, which is used in the treatment of metastatic non-small cell lung cancer (NSCLC), has been approved by the US Food and Drug Administration.Iressa is approved in 91 countries for the treatment of adult patients with locally advanced or metastatic epidermal growth factor receptor mutation-positive NSCLC, which is the most common type of lung cancer.Miner BHP Billiton reported that director Sir John Buchanan died on Monday, having served on the board from 2003 up until the time of his death. Buchanan, who was the senior independent director of Anglo-Australian giant, "provided wise counsel to his fellow directors and to management, and made an invaluable contribution to BHP Billiton," said chairman Jac Nasser.Market MoverstechMARK 3,173.01 -0.20%FTSE 100 6,717.31 -0.31%FTSE 250 17,563.25 -0.82%FTSE 100 - RisersSky (SKY) 1,113.00p +3.25%Meggitt (MGGT) 478.40p +1.68%Reed Elsevier (REL) 1,095.00p +0.92%International Consolidated Airlines Group SA (CDI) (IAG) 553.50p +0.82%Unilever (ULVR) 2,904.00p +0.80%British American Tobacco (BATS) 3,642.00p +0.69%Carnival (CCL) 3,494.00p +0.60%Lloyds Banking Group (LLOY) 85.76p +0.54%Morrison (Wm) Supermarkets (MRW) 178.80p +0.45%Hikma Pharmaceuticals (HIK) 2,073.00p +0.34%FTSE 100 - FallersTaylor Wimpey (TW.) 185.80p -3.18%Barratt Developments (BDEV) 624.00p -2.73%Persimmon (PSN) 1,967.00p -2.33%Weir Group (WEIR) 1,587.00p -2.22%GKN (GKN) 317.70p -2.10%TUI AG Reg Shs (DI) (TUI) 1,066.00p -1.93%Aberdeen Asset Management (ADN) 401.30p -1.91%Johnson Matthey (JMAT) 3,003.00p -1.54%Pearson (PSON) 1,231.00p -1.52%Marks & Spencer Group (MKS) 539.50p -1.46%FTSE 250 - RisersInternational Personal Finance (IPF) 363.30p +3.03%Evraz (EVR) 121.00p +2.89%Centamin (DI) (CEY) 59.90p +1.53%AO World (AO.) 133.20p +1.52%Greggs (GRG) 1,146.00p +1.42%NMC Health (NMC) 810.50p +1.31%Carillion (CLLN) 356.30p +1.31%Pace (PIC) 372.00p +1.20%Laird (LRD) 365.10p +1.11%Telecom Plus (TEP) 1,055.00p +1.05%FTSE 250 - FallersDrax Group (DRX) 248.50p -5.08%Tullow Oil (TLW) 288.80p -4.47%Hiscox Limited (CDI) (HSX) 869.00p -3.87%Man Group (EMG) 151.70p -3.80%Bellway (BWY) 2,304.00p -3.52%Hunting (HTG) 518.50p -3.36%Bovis Homes Group (BVS) 1,116.00p -3.21%Berkeley Group Holdings (The) (BKG) 3,258.00p -2.78%Just Retirement Group (JRG) 173.10p -2.75%Paragon Group Of Companies (PAG) 384.10p -2.61%