LONDON (Alliance News) - Stocks in London started lower Tuesday, with real estate investors amongst the worst performing stocks again after downgrades by French bank Societe Generale.
The FTSE 100 index was down 0.3%, or 20.63 points, at 6,501.63. The FTSE 250 down 1.8% at 15,835.53 and the AIM All-Share was down 0.4% at 711.22.
Land Securities Group traded down 5.4% after SocGen cut its recommendation on the stock to Hold from Buy, British Land was down 4.3%, having received the same downgrade, and Great Portland Estates was down 4.7%, being cut to Sell From Hold.
SocGen said the UK exit from the European Union comes at a time when the property cycle was reversing due to fast-rising speculative supply. While the outcome of this is difficult to predict, SocGen forecasts property prices to fall 25% peak-to-trough.
Also in the property sector, Persimmon shares were down 3.9% even though it posted strong results in the first half of its financial year. It said it was too soon to tell how Brexit will affect the UK new homes market.
The FTSE 100-listed housebuilder said both its average sales price and number of legal completions rose in the six months ended June 30, with legal completion volumes up 6.0% to 7,238 from 6,855 for the same period a year earlier, whilst average sales price rose 6.0% to GBP205,500 from GBP194,378. As a result, revenue rose by 12% to GBP1.489 billion from GBP1.33 billion.
Persimmon said it remains committed to building the new homes across the country that Britain needs, and said it "remains too soon to judge the effect that the result of the EU Referendum will have on the UK new homes market".
"We believe that market fundamentals remain strong, supported by long-term unfulfilled demand, and that the UK housing market will continue to provide good opportunities for those companies with the right strategic focus and the balance sheet strength to navigate future changes in trading conditions," the company added in a statement.
In Europe, the French CAC 40 and the German DAX 30 indices were both down 0.9%.
In Asian stock markets, the Hang Seng in Hong Kong is down 1.3%. The Shanghai Composite index ended up 0.6% and the Nikkei 225 index closed down 0.7%.
Provident Financial traded up 0.2%, one of the few gainers in the FTSE 100, after SocGen raised it to Buy from Hold. SocGen said that, even though the UK economic outlook is uncertain following the Brexit vote, it expects the lender's "carefully managed growth and tight credit quality" to deliver earnings growth between up to 2018.
FTSE 250 financial services companies were underperforming amid a series of downgrades by RBC Capital Markets. Shawbrook Group was down 4.6%, after RBC cut it to Underperform from Outperform. OneSavings Bank was down 4.6%, as RBC downgraded it to Sector Perform from Outperform.
Liberum issued a sector-wide note on general retailers, which included downgrades for Pets At Home Group, which traded down 8.7%, and Card Factory, down 5.6%, amongst others.
Parcels, mail and logistics company DX Group said the UK's Competition & Markets Authority is reviewing its acquisition of The Legal Post (Scotland) and First Post.
DX struck a deal to acquire the pair from First Scottish Group for GBP3.3 million in cash in May. Legal Post provides document exchange and postal services in Scotland, while First Post operates a mail service in Scotland competing with Royal Mail
DX said it is now engaged in a consultation with the CMA, the UK's competition regulator, and will make a further announcement in due course.
Shares in DX were down 16%, the worst performer in the AIM All-Share index.
Focus in the economic calendar will be on services data from Europe and the UK and on the Bank of England's financial stability report. There are Markit services and composite PMI readings from a number of countries. France is at 0850 BST, Germany at 0855 BST, the eurozone as a whole at 0900 BST, and the US at 1445 BST. UK services PMI is at 0930 BST.
The Bank of England's financial stability report is published at 1030 BST followed by a press conference with Governor Mark Carney at 1100 BST. Elsewhere, eurozone retail sales are at 1000 BST and US factory orders are at 1500 BST.
After the end of London equity trade, the results of the first round of the Conservative party's voting to choose their next leader and UK prime minister are expected at 1900 BST.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
Copyright 2016 Alliance News Limited. All Rights Reserved.
