Stock prices in London were largely in the red around midday Monday, as the FTSE 350 fell amid the UK competition watchdog investigating a ‘persistent under delivery of new homes.’
The FTSE 100 index was down 24.14 points, 0.3%, at 7,682.14. The FTSE 250 was down 60.60 points, 0.3%, at 19,118.96, and the AIM All-Share was up 0.17 of a point at 747.94.
The Cboe UK 100 was down 0.3% at 769.39, the Cboe UK 250 was down 0.6% at 16,483.39, and the Cboe Small Companies was down 0.2% at 14,385.15.
In European equities on Monday, the CAC 40 in Paris was down 0.3%, while the DAX 40 in Frankfurt was down 0.1%.
The US Federal Reserve’s cutting cycle was once again on the minds of investors, and should continue to inform sentiment for the next few days.
Though Monday is relatively sparse in terms of data releases, Thursday’s core personal consumption expenditure read from the US will be important for market bets on when the Federal Reserve will begin its cutting cycle. Also due this week is the latest US gross domestic product data, out on Wednesday.
‘In all cases, a strong growth could revive the goldilocks optimism if inflation numbers continue to trend lower. For the market rally to continue, we just need strong growth and soft inflation data from the US. Easy, no?’ said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
The pound was quoted at $1.2678 at midday on Monday in London, higher compared to $1.2667 at the equities close on Friday. The euro stood at $1.0847, up against $1.0818. Against the yen, the dollar was trading at JP¥150.59, higher compared to JP¥150.44.
In the FTSE 350, housebuilders took a hit.
The Competition & Markets Authority said it is investigating Barratt, Bellway, Berkeley, Persimmon, Redrow, Taylor Wimpey, Vistry, as well as privately-held Bloor Homes. The CMA said the new investigation concerns ‘suspected sharing of commercially sensitive information’ among housebuilders, which could be influencing the build-out of sites and new home prices.
In the FTSE 100, Persimmon, Taylor Wimpey, Barratt Developments and Berkeley fell 3.8%, 3.7%, 1.7% and 2.0% respectively. In the FTSE 250, Redrow fell 1.9%, whilst Bellway and Vistry both lost 2.3%.
The investigation comes as the CMA published its final report on the housebuilding market, ‘finding that the complex and unpredictable planning system, together with the limitations of speculative private development, is responsible for the persistent under delivery of new homes’. The CMA also noted concerns over estate management charges, as well as the quality of some new housing. CMA Chief Executive Sarah Cardell noted the need for ‘significant intervention’ within housebuilding to ensure the quality of homes.
The suspected sharing of information is not one of the ‘main drivers of the problems’ highlighted in the CMA’s report, Cardell said, adding: ‘it is important we tackle anti-competitive behaviour if we find it.’
In the FTSE 100, Bunzl lost 4.2%.
The London-based distribution and services company cautioned that following a ‘slower than expected’ start to the year in North America, it now expects to deliver slight revenue growth in 2024, at constant exchange rates, driven by acquisitions announced in 2023.
But underlying revenue, which is organic revenue adjusted for trading days, is predicted to decline slightly. Group operating margin is now expected to be slightly below 2023, Bunzl said.
Bunzl said revenue in 2023 edged down 2.0% year-on-year to £11.80 billion from £12.04 billion, though remained ‘significantly ahead’ of 2019. This drop is in line with company and market expectations. However, despite the weaker topline performance, pretax profit rose 10% to £698.6 million from £634.6 million, as operating margin increased to 8.0% from 7.4%.
Recommending a final dividend of 50.1 pence, the total dividend for 2023 increased by 8.9% to 68.3p from 2022’s 62.7p. However, there was no share buyback.
‘Investors consider Bunzl to be as boring as you can get as there is no glamour to its business, but equally that means the market doesn’t expect any shocks when it reports. Therefore, warning on margins has caught people by surprise,’ said Russ Mould, investment director at AJ Bell.
Amongst London’s small-caps, Wincanton shares jumped 11% to 500.00p.
It said it has accepted a revised, increased bid from CEVA Logistics UK Rose, as it disclosed a further approach had been received from an unnamed third party.
The new offer from CEVA, worth 480p per share, values Wincanton at £604.7 million on a fully diluted basis.
The Wiltshire, England-based logistics provider noted this represented a premium of 6.7% to CEVA’s original bid of 450p per share, made in January.
CEVA is a subsidiary of CMA CGM, a shipping and logistics company based in Marseille, France.
Stocks in New York were called lower. The Dow Jones Industrial Average and the S&P 500 index were both called down 0.1%, and the Nasdaq Composite up slightly.
Brent oil was quoted at $81.25 a barrel at midday in London on Monday, down from $82.16 late Friday.
Gold was quoted at $2,033.09 an ounce, lower against $2,033.76.
Still to come on Monday’s economic calendar, there is US building permits data at 1300 GMT, followed by a US new home sales reading at 1500 GMT. At 1530 GMT, the US Dallas Fed manufacturing index will be released.
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