LONDON MARKET OPEN: Housebuilders slide as house market starts to slow

(Alliance News) - Stock prices in London opened sharply lower on Thursday amid fears that the interest rate hikes required to rein in inflation will spark a global recession, while housebuilders fell after UK house price growth slowed.

The FTSE 100 index was down 135.23 points, or 1.9%, at 7,177.27. The FTSE 250 index was down 334.90 points, or 1.8%, at 18,702.54. The AIM All-Share index was down 9.27 points, or 1.0%, at 884.05.

The Cboe UK 100 index was down 1.6% at 715.41. The Cboe 250 was down 1.7% at 16,353.25, and the Cboe Small Companies was down 0.1% at 13,453.87.

In mainland Europe, the CAC 40 stock index in Paris was down 2.4%, while the DAX 40 in Frankfurt was down 2.6%.

In the FTSE 100, Bunzl was the only stock in the green, up 1.0%. The distribution firm said it expects to deliver "very strong" growth over the six period to June 30, reflecting the "resilience and strength" its business model.

Bunzl said revenue in the first half is expected to increase year-on-year by 16% at actual exchange rates and by 12% to 13% at constant exchange rates, with inflation continuing to drive underlying revenue growth and acquisitions further supplementing growth. Adjusted operating margin for the first half is expected to be slightly higher than historical annual levels, it noted.

Bunzl upgraded its guidance for the year on the basis of the strong revenue growth to date and announced acquisitions, though no actual figures were provided.

At constant exchange rates, Bunzl now expects "very good" revenue growth in 2022, driven by good organic revenue growth and the positive contribution of acquisitions announced over the past year.

Conversely, housebuilders were tumbling amid signs of a slowdown in the housing market, shown in price figures from Nationwide. Persimmon was down 4.5%, Barratt Developments down 4.1%, Berkeley down 3.0% and Taylor Wimpey down 2.3%.

On an annual basis, the Nationwide house price index rose by 10.7% in June, slowing from the 11.2% climb in May. The print also was just shy of the market forecast of 10.8%.

House prices grew 0.3% monthly in June, easing from 0.9% growth in May and missed the 0.5% consensus estimate.

The average price for a UK home climbed to a new record high at GBP271,613 in June, up from GBP269,914 in May, Nationwide said.

"There are tentative signs of a slowdown, with the number of mortgages approved for house purchases falling back towards pre-pandemic levels in April and surveyors reporting some softening in new buyer enquiries," said Nationwide economist Robert Gardner.

In the FTSE 250, Virgin Money was the best performer, up 2.5%, after Barclays upgraded the high street bank to 'overweight' from 'equal weight'.

The pound was quoted at USD1.2141 early Thursday, up from USD1.2126 at the London equities close Wednesday.

The euro was priced at USD1.0425, down from USD1.0470. Against the yen, the dollar was trading at JPY136.07, lower against JPY136.69.

Brent oil was quoted at USD115.25 a barrel Thursday morning, down sharply from USD118.78 late Wednesday. Gold stood at USD1,817.15 an ounce, slightly higher against USD1,816.73.

In Asia on Thursday, the Nikkei 225 index in Tokyo closed down 1.5%. In China, the Shanghai Composite closed up 1.1%, while the Hang Seng index in Hong Kong was down 0.7%. The S&P/ASX 200 in Sydney ended down 2.0%.

Thursday's economic calendar has eurozone unemployment at 1000 BST, before US jobless claims at 1330 BST.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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