The barest hint that the recent remarkable rise in UK house prices is slowing down was enough to send housebuilder stocks tumbling on Thursday, with distribution firm Bunzl the only riser in a FTSE 100 that was reflecting growing concern about global recession.
London's large-cap 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 £271,613 in June, up from £269,914 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.
Meanwhile, the UK economy grew at the same pace as previously estimated in the first quarter, data from the Office of National Statistics showed, as the Bank of England cautioned over rising levels of inflation.
On an annual basis, UK gross domestic product expanded an unrevised 8.7% in the first quarter, picking up pace from 6.6% growth in the final quarter of 2021.
On a quarterly basis, the UK economy grew an unrevised 0.8% in the first quarter, slowing from a 1.3% expansion in the fourth quarter.
Soaring inflation will hit Britain harder than any other major economy during the current energy crisis, the Bank of England has warned.
Governor Andrew Bailey on Wednesday said the UK economy would likely weaken earlier and be more intense than others as a result of the energy price shock that all European economies face.
The pound was quoted at $1.2141 early Thursday, up from $1.2126 at the London equities close Wednesday.
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 euro was priced at $1.0425, down from $1.0470. Against the yen, the dollar was trading at JP¥136.07, lower against JP¥136.69.
Brent oil was quoted at $115.25 a barrel Thursday morning, down sharply from $118.78 late Wednesday. Gold stood at $1,817.15 an ounce, slightly higher against $1,816.73.
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%.
New York ended mixed on Wednesday, with the Dow Jones Industrial Average up 0.3%, S&P 500 down 0.1% and Nasdaq Composite flat.
Thursday's economic calendar has eurozone unemployment at 1000 BST, before US jobless claims at 1330 BST.
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