Sector movers: Real Estate under pressure amid slower house price growth, CPI rise

Real Estate stocks were at the bottom of the pile on the FSTE 350 on Wednesday following the release of official data revealing a slowdown in house price growth.

According to the Office for National Statistics, the year-on-year rate of increase in the UK House Price Index slipped from 16.0% in July to 13.6% for August.

And Samuel Tombs, chief UK economist at Pantheon Macroeconomics, was now expecting house prices to drop by 8% over the coming 12 months due to the recent rise in mortgage rates.

Also dampening investor sentiment was the release of a slightly worse-than-expected reading on UK consumer price inflation.

Before the market open, the Office for National Statistics had reported that the annual rate of consumer price inflation edged up from a clip of 9.9% for August to 10.1% in September (consensus: 10.0%).

At the core level meanwhile, which excludes food and energy, CPI accelerated from 6.3% to 6.5% (consensus: 6.4%).

In turn, that served to buoy 10-year Gilt yields throughout much of the session, although by 1550 BST they were slipping by eight basis points to 3.872%.

Nonetheless, in the background, the yield on the benchmark 30-year Gilt had been under pressure from the start of the session and was last off by a hefty 24 basis points to 4.06%.

And while it remained above the levels seen before the previous Chancellor announced his mini-budget, the yield on the 30-year Gilt was now below that for similarly-dated US 30-year Treasuries, which had also climbed since late September.

Falling Gilt yields were likely behind the bid in defensive areas of the market such as Telecommunications Service Providers.

Worth noting, the pound was under some pressure amid expectations that the Bank of England would be going less hard on interest rate hikes across 2023 after the new Chancellor shelved his predecessor's fiscal stimulus plans.

Top performing sectors so far today

Telecommunications Service Providers 2,494.26 +1.34%

Oil, Gas and Coal 7,911.53 +1.31%

Aerospace and Defence 4,726.32 +1.01%

Tobacco 35,675.39 +0.79%

Personal Care, Drug and Grocery Stores 3,908.52 +0.52%

Bottom performing sectors so far today

Real Estate Investment & Services 1,925.29 -2.79%

Real Estate Investment Trusts 2,060.55 -2.65%

Precious Metals and Mining 8,903.87 -2.28%

Automobiles & Parts 1,140.27 -1.84%

Leisure Goods 15,675.88 -1.72%