London close: FTSE gives up gains to end lower amid weak miners
London stocks ended a touch weaker on Monday, unable to hold on to earlier gains despite a strong showing from housebuilding and energy shares, as weakness in the mining sector weighed.
The FTSE 100 closed down 0.1% at 10,684.88 , while Brent crude was 3.2% higher at $107.67 a barrel and West Texas Intermediate was up 3.3% at $95.47 after US President Donald Trump rejected an Iranian proposal for a seven-day truce that would have led to the reopening of the Strait of Hormuz.
Conditions of the Iranian proposal included the US release of frozen Iranian funds, the lifting of oil sanctions and an end to its naval blockade on Iranian ports. According to the Wall Street Journal, Trump not only rejected the plan but said he also expects to resume bombing Iran after November’s mid-term elections.
The top-flight index spent most of the session in the black, with housebuilders underpinning the gains on news of a new scheme to help first-time buyers.
Patrick Munnelly at Tickmill Group said: "UK equities succumbed to resource sector weakness as a major mining sell-off and surging crude oil prices erased early gains driven by a flagship government housing scheme. While homebuilders celebrated policy support for first-time buyers, persistent Middle East geopolitical frictions and elevated energy inflation keep the market's broader stance strictly defensive."
Investors were also mulling a speech by John Healy at the Labour Party Conference, during which the new chancellor to pledged take control of Britain’s finances, warning that high government debt levels were "an affront" to Labour’s values.
Healey said the government was focused on bringing about a "new age of industrialisation". He confirmed fresh funding for shipbuilding and manufacturing, including a £6bn plan to build three new floating docks on the Clyde in Scotland, and more support for apprenticeships.
In equity markets, miners and precious meals miners fell in tandem with gold and copper prices, with Fresnillo, Antofagasta, Anglo American, Glencore and Hochschild all weaker.
Ladbrokes-owner Entain lost ground as it trimmed its full-year guidance after Brazil banned online sports betting and gaming.
Bodycote fell as CVC said it was not planning to make another offer for the company, which agreed earlier this month to be bought by US private equity firm Veritas Capital in a £1.65bn deal.
On the upside, housebuilders surged following news over the weekend that there would be a new scheme to help first-time buyers, with Barratt, Persimmon, Bellway, Taylor Wimpey, Vistry and Berkeley all sharply higher. The Your First Home scheme will enable purchases of newbuild properties with a deposit of 2.5% and a government-backed equity loan worth 20% of the property’s value.
B&Q owner Kingfisher, builders’ merchant Travis Perkins and Breedon also advanced.
Russ Mould, investment director at AJ Bell, said: "The prayers of the housebuilding sector have been answered with news of a revived scheme to support first-time buyers in getting on the housing ladder, helping to drive their shares sharply higher.
"Executives in the sector have been calling for government help for some time. Housebuilders benefited materially from the Help to Buy scheme in the 2010s, the difference from today being that they also enjoyed a period with negligible build cost inflation and rising property prices, supported by ultra-low borrowing costs. The backdrop is now very different, with margins squeezed by a subdued housing market and significant inflationary pressures on input costs.
"Nonetheless, the new ‘Your First Home’ scheme - with details to be laid out at the Budget on 28 October - is a welcome fillip for an industry which has been in the doldrums for much of the last five years. The government will hope the scheme helps meet its ambitious target of delivering 1.5 million homes over the course of the current Parliament.
"The biggest gains in the sector were reserved for those who operate at the lower end of the housing market or across the spectrum, with higher end operator Berkeley seeing more modest gains. Suppliers and retailers with ties to the property market were also riding higher on the housebuilders’ coattails as they enjoyed this rare spot of positive news."
Oil giants BP and Shell gushed higher as oil prices rose.
Market Movers
FTSE 100 (UKX) 10,684.88 -0.10%
FTSE 250 (MCX) 24,335.32 0.31%
techMARK (TASX) 6,181.05 0.01%
FTSE 100 - Risers
Barratt Redrow (BTRW) 345.20p 11.72%
Airtel Africa (AAF) 306.60p 2.34%
JD Sports Fashion (JD.) 79.18p 2.17%
Admiral Group (ADM) 3,674.00p 1.55%
InterContinental Hotels Group (IHG) 158.50p 1.38%
Kingfisher (KGF) 332.60p 1.28%
Spirax Group (SPX) 7,140.00p 1.28%
Convatec Group (CTEC) 212.00p 1.24%
Shell (SHEL) 3,654.50p 1.20%
Tesco (TSCO) 478.80p 1.18%
FTSE 100 - Fallers
Fresnillo (FRES) 2,743.00p -5.09%
Experian (EXPN) 2,517.00p -3.56%
Pershing Square Holdings Ltd NPV (PSH) 3,630.00p -2.47%
Antofagasta (ANTO) 3,652.00p -2.09%
The Sage Group (SGE) 982.40p -2.00%
Coca-Cola HBC AG (CDI) (CCH) 4,288.00p -1.92%
Anglo American (AAL) 3,965.00p -1.90%
Relx plc (REL) 2,480.00p -1.86%
Glencore (GLEN) 551.50p -1.71%
Autotrader Group (AUTO) 448.80p -1.67%
FTSE 250 - Risers
Genuit Group (GEN) 306.40p 15.27%
Persimmon (PSN) 1,324.00p 14.68%
Taylor Wimpey (TW.) 89.32p 11.51%
Vistry Group (VTY) 286.60p 10.66%
Bellway (BWY) 2,282.00p 10.35%
Breedon Group (BREE) 335.60p 9.53%
Ocado Group (OCDO) 253.20p 7.02%
Bridgepoint Group (Reg S) (BPT) 318.00p 6.00%
NCC Group (NCC) 150.20p 5.77%
Keller Group (KLR) 3,438.00p 3.99%
FTSE 250 - Fallers
Raspberry PI Holdings (RPI) 618.50p -13.07%
Hochschild Mining (HOC) 529.50p -7.19%
Ceres Power Holdings (CWR) 387.80p -7.18%
Entain (ENT) 426.90p -5.07%
Pan African Resources (PAF) 117.20p -5.02%
Endeavour Mining (EDV) 4,325.00p -4.42%
Bodycote (BOY) 917.00p -3.12%
Rank Group (RNK) 74.30p -3.00%
Trustpilot Group (TRST) 207.40p -2.90%
BlackRock World Mining Trust (BRWM) 958.00p -2.34%