London midday: Stocks maintain losses as pound gains, housebuilders weigh
London stocks remained in the red by midday on Monday as the pound gained ground after data on mortgages and consumer credit added weight to expectations of a rate hike this week, while a poor performance from housebuilders weighed.
The FTSE 100 was down 0.3% to 7,486.54 as the pound rose 0.5% against the dollar to 1.3187 and 0.2% versus the euro to 1.1332.
Money and credit figures from the Bank of England showed levels of consumer lending remained little changed, 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.
Growth in the broad money supply slowed further in September, with year-on-year growth in households’ broad money holdings falling to 2.9% in September, below the rate of CPI inflation for the first time since March 2012.
Year-over-year growth in private non-financial corporations’ broad money holdings also declined, to 7.8% from 9.0% in August.
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, judging the solid rise in consumer credit suggested households are "still confident enough to borrow in order to smooth their consumption while their real incomes are being temporarily squeezed".
"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'."
The three-month annualised rate of lending to non-financial firms on the M4 measure of money excluding intermediate other financial corporations - the Monetary Policy Committee's preferred measure - dropped to 2.0% from 2.8%.
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 increased to 110.7 from 109.2 the month before.
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.
Housebuilders Bellway, Berkeley, Persimmon, Redrow and Taylor Wimpey were all 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.
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) 7,486.54 -0.25%
FTSE 250 (MCX) 20,193.94 0.24%
techMARK (TASX) 3,517.03 0.30%
FTSE 100 - Risers
Kingfisher (KGF) 317.90p 2.45%
easyJet (EZJ) 1,302.00p 2.28%
Smurfit Kappa Group (SKG) 2,277.00p 1.56%
International Consolidated Airlines Group SA (CDI) (IAG) 632.00p 1.36%
Antofagasta (ANTO) 967.00p 1.10%
3i Group (III) 955.50p 1.00%
Shire Plc (SHP) 3,633.00p 0.93%
Fresnillo (FRES) 1,314.00p 0.92%
ITV (ITV) 165.50p 0.91%
Rentokil Initial (RTO) 335.60p 0.90%
FTSE 100 - Fallers
Berkeley Group Holdings (The) (BKG) 3,734.00p -1.92%
HSBC Holdings (HSBA) 736.20p -1.62%
British American Tobacco (BATS) 4,950.00p -1.43%
Mondi (MNDI) 1,847.00p -1.02%
Imperial Brands (IMB) 3,145.50p -0.96%
National Grid (NG.) 908.20p -0.96%
Coca-Cola HBC AG (CDI) (CCH) 2,552.00p -0.89%
Persimmon (PSN) 2,806.00p -0.88%
Centrica (CNA) 168.60p -0.88%
Reckitt Benckiser Group (RB.) 6,791.00p -0.79%
FTSE 250 - Risers
Genus (GNS) 2,377.00p 6.35%
Tullow Oil (TLW) 183.80p 3.26%
Indivior (INDV) 342.10p 3.04%
Drax Group (DRX) 289.50p 2.41%
Morgan Advanced Materials (MGAM) 312.90p 2.25%
Stobart Group Ltd. (STOB) 282.50p 1.99%
McCarthy & Stone (MCS) 158.30p 1.74%
Senior (SNR) 285.60p 1.64%
Hill & Smith Holdings (HILS) 1,299.00p 1.56%
Provident Financial (PFG) 911.00p 1.56%
FTSE 250 - Fallers
Galliford Try (GFRD) 1,224.00p -1.29%
Tate & Lyle (TATE) 645.50p -1.15%
Bellway (BWY) 3,657.00p -1.11%
Dixons Carphone (DC.) 175.70p -1.01%
The Renewables Infrastructure Group Limited (TRIG) 108.60p -1.00%
Kaz Minerals (KAZ) 806.50p -0.98%
National Express Group (NEX) 366.10p -0.97%
Sophos Group (SOPH) 614.00p -0.97%
Spirax-Sarco Engineering (SPX) 5,725.00p -0.95%
Temple Bar Inv Trust (TMPL) 1,304.00p -0.91%