Sector movers: Housebuilding and defence sector lead fall
Leading London's main stock indices lower on Thursday were industrial metals, housebuilders and the defence sector.
Iron ore pellet producer Ferrexpo was a big faller as iron ore prices alongside steel and other metals due to softer Chinese economic data, renewed fears around trade wars and further supply coming on stream.
"We remain cautious in the near term on iron ore due to potential for moderating Chinese steel demand and increasing barriers to global trade," said analysts at RBC Capital Markets, also noting that the restart of Brazil's Samarco could impact pellet market with reports that settlement over the disaster could be imminent.
Construction & materials and the home construction sectors were both lower.
Housebuilders were down, led by Barratt, Berkeley, Persimmon and Taylor Wimpey setting off on a further leg lower after what for most of the group has been a sustained fall over the past two weeks. Following some bearish comments from Berkeley bosses a day earlier, Thursday's unexpectedly hawkish turn from the Bank of England slightly raised expectations for an interest rates hike in August, which would increase mortgage borrowing costs. The BoE monetary policy committee surprisingly voted 6-3 to stand pat on rates, rather than the 7-2 vote predicted, which led to investor expectations of an August rate hike rising to 65%.
Melrose Industries, though it now owns defence contractor GKN, is still included in the construction & materials sector. Several defence contractors were sent lower by reports that Prime Minister Theresa May questioned the Ministry of Defence's spending plans. In a tense meeting with her former chief whip, May told relatively new defence secretary Gavin Williamson he needed to rethink what was needed by modern armed forces and appeared to question the UK’s position as a 'tier one' military power, the Financial Times reported, sending shockwaves through the MoD.
May later denied the report and said the UK was a "leading defence nation", though could not be pushed by the press to say it was "tier one".
Top performing sectors so far today
Tobacco +0.96%
Health Care Equipment & Services +0.44%
Fixed Line Telecommunications +0.25%
General Retailers +0.18%
Media +0.01%
Bottom performing sectors so far today
Industrial Metals & Mining -2.69%
Leisure Goods -2.66%
Construction & Materials -2.37%
Automobiles & Parts -2.19%
Household Goods & Home Construction -2.05%