London close: Stocks dip ahead of MPC meeting, rates in focus
London stocks ended lower as the pound gained ground after data on mortgages and consumer credit added to the chances of a rate hike this week with analyst comment also weighing on shares of housebuilders in particular.
The FTSE 100 lost 0.23% to 7,487.81 as the pound rose 0.54% against the dollar to 1.3205 and by 0.37% versus the euro to 1.1352.
Money and credit figures from the Bank of England showed levels of consumer lending remained little changed last month, with no dramatic news to derail a likely nudge higher to interest rates later this week.
Mortgage approvals for house purchases dipped to 66,232 in September from 67,232 amid tepid housing demand at present, but was slightly more than the consensus forecast of 66,000.
There was a £1.6bn annual rise in consumer credit in September following a £1.8bn increase in August, with the annual growth rate remaining broadly unchanged since June, at around 10%.
Growth in net unsecured credit in the third quarter, at £4.6bn, was down slightly on the £4.7bn rise in the second, which economists suggested meant unsecured credit financed 1.5% of households' purchases in both quarters.
September’s money and credit figures provides another reason to think that the economy should be able to hold onto a decent amount of momentum in the near term, said economists at Capital Economics.
"With credit growth only dipping from 10.0% to 9.9% y/y in September, the latest figures will do little to assuage policymakers concerns about financial stability risks. As a result, annual growth in overall bank lending to the real economy held steady at 3.9% in September.
"As a result, there doesn’t appear to be anything in these figures that would prevent the MPC from raising interest rates on 'Super Thursday'," they said.
Meanwhile, UK economic sentiment improved in October thanks to a recovery in confidence in the services and construction sectors.
The European Commission's economic sentiment indicator for Britain increased to 110.7 from 109.2 the month before.
Also weighing on sentiment perhaps, on Monday strategists at JP Morgan reiterated their 'underweight' stance on UK stocks pointing out multiple possible headwinds, including the potential for rate hikes from Bank.
JP Morgan also expressed caution about housing stocks, telling clients that typically they do well going into the first rate hike but afterwards falter.
Investors were also keeping an eye on developments in Spain after Madrid stripped Catalonia of its autonomy on Friday and removed Catalan leader Carles Puigdemont from office.
On the corporate front, housebuilders Bellway, Berkeley, Persimmon, Redrow and Taylor Wimpey were also hit by downgrades from Barclays ahead of the UK Budget, with the sector also suffering on the back of expectations of a rate hike by the Bank of England.
Ahead of the Autumn Budget and with the sector up by 46% year-to-date, Barclays believed that "expectations may have run ahead of themselves."
HSBC was on the back foot after it released a mixed set of results. Led by its "pivot to Asia", the bank said it continued to grow revenues across its three main businesses in the third quarter but increased investment and bonuses kept underlying profits flat.
Business information and events group Euromoney Institutional Investor fell after saying it sold Adhesion Group, and its 74% stake in World Bulk Wine Exhibition, to French exhibitions company Comexposium Holding.
On the upside, budget airline easyJet flew higher as it swooped to acquire part of the collapsed Air Berlin's operations in Berlin's Tegel airport for €40m, while Glencore nudged up after upgrading its full-year marketing guidance, as it said production of some of its commodities fell in the third quarter.
Millennium & Copthorne edged higher as it reported a jump in third-quarter pre-tax profit, helped along by solid growth in New York, while Genus racked up impressive gains as N+1 Singer upped the stock to 'buy' from 'hold' and lifted the target price to 2,485p from 1,844p.
B&Q owner Kingfisher rallied after Goldman Sachs upped the stock to 'buy', while Drax was boosted by an upgrade to 'equalweight' at Morgan Stanley.
Market Movers
FTSE 100 (UKX) 7,487.81 -0.23%
FTSE 250 (MCX) 20,213.25 0.33%
techMARK (TASX) 3,529.69 0.66%
FTSE 100 - Risers
Fresnillo (FRES) 1,337.00p 2.69%
Shire Plc (SHP) 3,694.50p 2.64%
Kingfisher (KGF) 316.60p 2.03%
easyJet (EZJ) 1,298.00p 1.96%
International Consolidated Airlines Group SA (CDI) (IAG) 635.00p 1.84%
Randgold Resources Ltd. (RRS) 7,530.00p 1.62%
Informa (INF) 696.50p 1.53%
Next (NXT) 4,949.00p 1.37%
Smurfit Kappa Group (SKG) 2,272.00p 1.34%
ITV (ITV) 165.70p 1.04%
FTSE 100 - Fallers
British American Tobacco (BATS) 4,917.00p -2.09%
Mondi (MNDI) 1,829.00p -1.98%
Johnson Matthey (JMAT) 3,323.00p -1.98%
Tesco (TSCO) 181.90p -1.94%
Carnival (CCL) 4,994.00p -1.79%
Convatec Group (CTEC) 196.20p -1.70%
Standard Life Aberdeen (SLA) 431.50p -1.69%
HSBC Holdings (HSBA) 737.00p -1.51%
Berkeley Group Holdings (The) (BKG) 3,754.00p -1.39%
National Grid (NG.) 904.80p -1.33%
FTSE 250 - Risers
Genus (GNS) 2,430.00p 8.72%
Tullow Oil (TLW) 185.80p 4.38%
Indivior (INDV) 345.30p 4.01%
Hochschild Mining (HOC) 229.20p 3.43%
Morgan Advanced Materials (MGAM) 315.10p 3.37%
Vectura Group (VEC) 101.20p 3.27%
IG Group Holdings (IGG) 658.50p 2.57%
Stobart Group Ltd. (STOB) 284.10p 2.56%
Royal Mail (RMG) 389.70p 2.53%
Man Group (EMG) 194.20p 2.32%
FTSE 250 - Fallers
Vesuvius (VSVS) 590.00p -2.32%
Greencore Group (GNC) 193.80p -2.27%
Galliford Try (GFRD) 1,219.00p -1.69%
Just Group (JUST) 151.40p -1.69%
Dixons Carphone (DC.) 174.70p -1.58%
Pets at Home Group (PETS) 180.70p -1.42%
RPC Group (RPC) 958.00p -1.39%
Worldwide Healthcare Trust (WWH) 2,544.00p -1.36%
P2P Global Investments (P2P) 780.00p -1.33%
Spirax-Sarco Engineering (SPX) 5,705.00p -1.30%