London midday: Stocks fall as housebuilders slump on probe

26th Feb 2024 10:55

(Sharecast News) - London stocks were still in the red by midday on Monday as investors eyed the release of key US data this week, with housebuilders under pressure amid news of a probe by the competition watchdog.

The FTSE 100 was down 0.3% at 7,683.01.

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: "The FTSE 100 has lost ground in early trading, following muted US futures activity. This of course follows record trading last week, so the slow down signals a pause for breath rather than anything more sinister.

"Investors are looking ahead to the monthly personal consumption expenditures price index reading, which is the Federal Reserve's preferred measure of inflation, on Thursday."

In equity markets, housebuilders were under the cosh after the Competition and Markets Authority said it had started an investigation into eight companies over evidence they may have been sharing information which could be harming competition in the sector.

In a major report released earlier, the watchdog said it had "fundamental concerns" with the operation of the housing market, revolving around the planning system, estate management charges and the quality of new housing.

Companies being investigated are Barratt, Bellway, Berkeley, Bloor Homes, Persimmon, Redrow, Taylor Wimpey, and Vistry.

Lund-Yates said: "Housebuilder stocks have fallen as the CMA launches a probe into the sector. 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.

"Other criticism is levelled at the UK's overly clunky planning processes, which are 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."

Ocado was under the cosh following a report over the weekend that Marks & Spencer is withholding a multi-million-pound payment to the group after its grocery delivery tie-up failed to meet key performance targets.

Distribution specialist Bunzl also fell after saying it expects a slight decline in operating margin this year. It posted a 10% rise in annual profits, despite a dip in revenue driven by a weaker trading in its North American operations.

Bunzl also announced the acquisition of an 80% stake in UK-based Nisbets for £338m and Pamark in Finland for an undisclosed sum.

On the upside, Standard Chartered gained as Berenberg upped its price target on the buy-rated shares to 1,050p from 1,000p. It said the 2023 results last week "provided clear confirmation that recent improvements in the bank's returns can be sustained".

It added that while the shares rose by around 5% following the results, the bank's 0.5x TBV valuation continues to poorly reflect Berenberg's FY 2026 estimate for return on tangible equity of 11.3% versus a 12% target.

Hammerson edged up as it agreed the sale of Aberdeen shopping centre Union Square to an affiliate of Lone Star Real Estate Fund VI for £111m in cash.

Market Movers

FTSE 100 (UKX) 7,683.01 -0.30%

FTSE 250 (MCX) 19,122.09 -0.30%

techMARK (TASX) 4,392.20 -0.22%

FTSE 100 - Risers

Standard Chartered (STAN) 650.80p 2.49%

International Consolidated Airlines Group SA (CDI) (IAG) 155.55p 1.83%

Endeavour Mining (EDV) 1,285.00p 1.74%

Rolls-Royce Holdings (RR.) 358.40p 1.50%

M&G (MNG) 227.20p 1.16%

Rentokil Initial (RTO) 433.40p 1.07%

Barclays (BARC) 165.40p 1.01%

Pearson (PSON) 962.60p 0.99%

Entain (ENT) 919.80p 0.94%

Convatec Group (CTEC) 250.60p 0.89%

FTSE 100 - Fallers

Ocado Group (OCDO) 499.40p -5.49%

Bunzl (BNZL) 3,148.00p -4.78%

Taylor Wimpey (TW.) 140.40p -3.84%

Persimmon (PSN) 1,361.00p -3.65%

Rio Tinto (RIO) 5,045.00p -2.92%

Anglo American (AAL) 1,736.60p -2.77%

Glencore (GLEN) 368.30p -2.00%

St James's Place (STJ) 630.40p -1.96%

Burberry Group (BRBY) 1,279.50p -1.88%

Fresnillo (FRES) 465.50p -1.88%

FTSE 250 - Risers

Me Group International (MEGP) 159.00p 3.92%

Bakkavor Group (BAKK) 95.40p 3.25%

Man Group (EMG) 245.80p 2.85%

easyJet (EZJ) 558.20p 2.27%

Tullow Oil (TLW) 29.40p 2.23%

AO World (AO.) 93.45p 2.19%

North Atlantic Smaller Companies Inv Trust (NAS) 3,810.00p 1.60%

NB Private Equity Partners Ltd. (NBPE) 1,618.00p 1.38%

Ferrexpo (FXPO) 75.00p 1.21%

Abrdn Private Equity Opportunities Trust (APEO) 530.00p 1.15%

FTSE 250 - Fallers

Watches of Switzerland Group (WOSG) 412.60p -3.05%

Future (FUTR) 655.50p -2.82%

FDM Group (Holdings) (FDM) 402.00p -2.78%

Vistry Group (VTY) 999.00p -2.54%

IWG (IWG) 192.70p -2.48%

Bellway (BWY) 2,692.00p -2.46%

W.A.G Payment Solutions (WPS) 77.20p -2.28%

Aston Martin Lagonda Global Holdings (AML) 167.80p -2.27%

Quilter (QLT) 98.45p -2.14%

Computacenter (CCC) 2,878.00p -2.11%