London midday: Stocks slip into the red as housebuilders slump
London stocks had slipped into the red by midday on Tuesday, with housebuilders under the cosh, while sterling regained some poise after hitting an all-time low versus the dollar a day earlier.
The FTSE 100 was 0.2% lower at 7,009.90, while the pound was 1.1% firmer against the dollar at 1.0807, having fallen to its lowest level against the greenback since 1971 on Monday.
Sterling was battered as investors continued to fret about the swathe of tax cuts announced by chancellor Kwasi Kwarteng at the end of last week. An attempt by the Bank of England to assuage concerns did little to lift the mood as it ruled out an emergency meeting on interest rates and said it was ready to act, but not until the next scheduled meeting in early November.
"Needless to say, that reassured no one and sterling plummeted again after recovering amid the rumours of the announcement," said Oanda market analyst Craig Erlam.
Russ Mould, investment director at AJ Bell, said there is an advantage to the BoE not moving on rates just yet.
"Conditions have been so febrile that it risked an emergency rate hike failing to make any impact on the direction of the pound - the equivalent of turning up to gunfight with currency traders with a banana in the holster," he said.
"Governor Andrew Bailey and his colleagues will hope that allowing things to calm down first will allow any action they eventually take to have a tangible impact on markets.
"There has been at least an attempt at some co-ordinated action between the Treasury and the Bank of England to reassure investors that these situations often take on a life of their own amid continued speculation the pound might hit parity with the dollar and even the euro.
"Questions about the long-term implications of the events of the past few days might have to wait for now. Downing Street, Threadneedle Street and almost any street with mortgage holders will be crossing their fingers things don’t get any worse."
In equity markets, housebuilders Barratt Developments, Taylor Wimpey, Persimmon and Vistry all fell amid worries about the impact of further interest rate hikes. Property portal Rightmove was the biggest loser.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "With banks and building societies pulling mortgage deals and reassessing their product lines amid expectations of steeply higher interest rates, anxiety is rising that repayments may become unaffordable for great swathes of homeowners.
"Forward order books for house builders have been pretty resilient but an increasing number of buyers are likely to baulk at taking on huge new loans if monthly payments shoot up by as much as feared. The financial markets are expecting that the Bank of England will be forced to raise the official bank rate to 6%, to counter the inflationary effect of the Treasury’s mammoth tax cuts."
United Utilities slumped as it warned on profits after the water company was hit by lower consumption and higher costs.
JD Sports fell as it was fined along with Glasgow Rangers football club and Elite Sports by the UK’s Competition and Markets Authority after being found guilty of price fixing on official merchandise.
Merchant bank Close Brothers lost ground after it posted a decline in full-year operating profit, with the Winterflood business hit by a slowdown in trading activity.
Admiral shares slid after Bloomberg reported an offering of 1.61m shares in the insurance company. The offering was priced at 2,011p, according to terms of the deal obtained by Bloomberg, to raise £32m.
Outside the FTSE 350, over-50s specialist Saga tumbled after a profit warning.
On the upside, British Airways and Iberia parent IAG was boosted by an upgrade to ‘buy’ at Davy.
Waste management firm Biffa surged to the top of the FTSE 250 after agreeing to be bought by private equity firm Energy Capital Partners (ECP) for around £1.3bn.
Travel food outlet operator SSP rallied after saying it still expects a return to pre-Covid levels of like-for-like revenue and core earnings by 2024.
FTSE 100 - Risers
Burberry Group (BRBY) 1,720.00p 3.80%
Smurfit Kappa Group (CDI) (SKG) 2,665.00p 2.38%
Airtel Africa (AAF) 141.70p 2.16%
International Consolidated Airlines Group SA (CDI) (IAG) 103.16p 1.88%
Mondi (MNDI) 1,402.00p 1.70%
Antofagasta (ANTO) 1,067.00p 1.62%
Hargreaves Lansdown (HL.) 883.40p 1.59%
Standard Chartered (STAN) 590.80p 1.58%
Centrica (CNA) 77.70p 1.44%
3i Group (III) 1,139.00p 1.42%
FTSE 100 - Fallers
Rightmove (RMV) 524.00p -4.59%
Admiral Group (ADM) 1,951.50p -3.87%
Kingfisher (KGF) 226.90p -3.03%
United Utilities Group (UU.) 914.00p -2.99%
Convatec Group (CTEC) 205.20p -2.93%
Barratt Developments (BDEV) 376.80p -2.18%
Taylor Wimpey (TW.) 93.76p -2.17%
Unite Group (UTG) 861.50p -2.10%
SEGRO (SGRO) 722.20p -2.09%
Ashtead Group (AHT) 3,856.00p -2.01%
FTSE 250 - Risers
Biffa (BIFF) 408.40p 28.51%
W.A.G Payment Solutions (WPS) 93.10p 4.84%
Network International Holdings (NETW) 294.40p 3.23%
Diversified Energy Company (DEC) 126.00p 2.69%
SSP Group (SSPG) 217.10p 2.55%
Hammerson (HMSO) 19.22p 2.53%
HGCapital Trust (HGT) 346.50p 2.51%
Syncona Limited NPV (SYNC) 165.00p 2.48%
Bank of Georgia Group (BGEO) 2,095.00p 2.44%
4Imprint Group (FOUR) 3,635.00p 2.39%
FTSE 250 - Fallers
Aston Martin Lagonda Global Holdings (AML) 147.20p -8.00%
Close Brothers Group (CBG) 958.00p -6.35%
International Public Partnerships Ltd. (INPP) 146.60p -4.18%
Urban Logistics Reit (SHED) 129.50p -4.07%
Warehouse Reit (WHR) 113.20p -4.07%
Synthomer (SYNT) 143.10p -3.90%
SDCL Energy Efficiency Income Trust (SEIT) 100.00p -3.85%
888 Holdings (DI) (888) 109.10p -3.54%
HICL Infrastructure (HICL) 160.40p -3.49%
UK Commercial Property Reit Limited (UKCM) 57.90p -3.34%