Stock prices in London were mixed at the start of the week, as housebuilders declined after the UK competition watchdog launched a probe into suspected anti-competitive behaviour.
The FTSE 100 index opened up 1.27 points at 7,707.55. The FTSE 250 was down 17.42 points, 0.1%< at 19,162.14, and the AIM All-Share was up 1.54 points, 0.2%, at 749.31.
The Cboe UK 100 was flat at 772.04, the Cboe UK 250 was down 0.2% at 16,550.35, and the Cboe Small Companies was down 0.1% at 14,395.57.
In the FTSE 350, housebuilders were under pressure in early trading, following news of an investigation by the UK competition regulator.
The Competition & Markets Authority said it is investigating Barratt, Bellway, Berkeley, Persimmon, Redrow, Taylor Wimpey, Vistry, as well as privately-held Bloor Homes. The CMA said the new investigation concerns ‘suspected sharing of commercially sensitive information’ among housebuilders, which could be influencing the build-out of sites and new home prices.
In the FTSE 100, Persimmon, Taylor Wimpey, Barratt and Berkeley fell 2.4%, 2.2%, 1.3% and 1.0% respectively. In the FTSE 250, Redrow, Bellway and Vistry fell 2.3%, 2.2%, and 1.8%.
The investigation comes as the CMA published its final report on the housebuilding market, ‘finding that the complex and unpredictable planning system, together with the limitations of speculative private development, is responsible for the persistent under delivery of new homes’. The CMA also noted concerns over estate management charges, as well as the quality of some new housing. CMA Chief Executive Sarah Cardell noted the need for ‘significant intervention’ within housebuilding to ensure the quality of homes.
The suspected sharing of information is not one of the ‘main drivers of the problems’ highlighted in the CMA’s report, Cardell said, adding: ‘it is important we tackle anti-competitive behaviour if we find it.’
Meanwhile, distribution firm Bunzl was the worst large-cap performer falling 4.7% following its annual results.
Bunzl said revenue in 2023 edged down 2.0% year-on-year to £11.80 billion from £12.04 billion, though remained ‘significantly ahead’ of 2019. Despite the weaker topline performance, pretax profit rose 10% to £698.6 million from £634.6 million, as its operating margin increased to 8.0% from 7.4%. Recommending a final dividend of 50.1 pence, the total dividend for 2023 increased by 8.9% to 68.3p from 2022’s 62.7p.
However, Bunzl cited a ‘slower than expected’ start to the year in North American, and now expects ‘slight revenue growth’ in 2024 to be driven by acquisitions, with operating margin to slip below 2023’s level. It had previously guided for ‘some revenue growth’ and operating margin to be ‘broadly in line’ with 2023.
Among London’s small-caps, Wincanton jumped 11% to 498.25 pence.
CEVA Logistics UK Rose said it has reached agreement with the board of logistics provider on the terms of an increased recommended cash offer, amid a potential rival bid. It is now offering 480p per share, a 6.7% increase from its original offer of 450p.
The planned takeover under the initial offer was announced last month. Wincanton said it has received an approach from a potential competing bidder, and is providing due diligence as the potential competing bidder evaluates a possible offer for the company. Its board continues to unanimously recommend the increased offer from CEVA.
International Personal Finance fell 8.9% upon delaying the release of its annual results to assess the impact of a change to how the credit card industry is regulated in Poland.
In European equities on Monday, the CAC 40 in Paris was down 0.2%, while the DAX 40 in Frankfurt was marginally lower.
On a macro level, following last week’s AI-fuelled market rally sparked by Nvidia’s results, investors are now shifting their attention to this week’s economic data. Some key US releases are set to inform expectations of the timing of potential interest rate cuts. According to CME’s FedWatch tool, the market now expects the Federal Reserve to enact its first rate cut in June. At the beginning of the year, the first 25 basis point cut was widely expected in March.
‘Due this week, the latest US [gross domestic product] update due Wednesday - is expected to confirm a 3.3% growth in Q4, with significantly lower price index. And on Thursday, the [personal consumption expenditures] data are expected to confirm relatively soft figures softer than the [consumer price index], most probably thanks to the different weights that the index attributes to different categories of goods and services,’ said Swissquote Bank senior analyst Ipek Ozkardeskaya.
Sterling was quoted at $1.2671 early Monday, slightly higher than $1.2667 at the London equities close on Friday. The euro was changing hands at $1.089, rising from $1.0818. Against the yen, the dollar was quoted at JP¥150.43, little changed versus JP¥150.44.
In Asia on Monday, the Nikkei 225 index in Tokyo closed up 0.4%. In China, the Shanghai Composite fell 0.9%, while the Hang Seng index in Hong Kong shed 0.5%, likely succumbing to profit-taking after a strong run last week. The S&P/ASX 200 in Sydney closed up 0.1%.
Gold was quoted at $2,035.95 an ounce early Monday, slightly higher than $2,033.76 on Friday.
Brent oil was trading at $81.04 a barrel, lower than $82.16, but remaining supported by the risk outlook in the Middle East.
‘At the beginning of the month, oil prices were going up, but now prices have stalled because of different factors affecting the oil market. On the one hand, tensions in the Middle East and less oil being produced by Opec+ countries have caused prices to go up. On the other hand, people in China are buying less oil, which capped the price rise,’ Andre Cilliers, currency strategist at TreasuryONE, noted.
More than half of UK export businesses have been affected by disruption to shipping in critical trade routes along the Red Sea, according to the British Chambers of Commerce. The BCC warned that pressure on businesses will start to build if the problems persist.
Some 53% of manufacturers and business-to-consumer service firms, which includes retailers and wholesalers, said they have been affected by turmoil in the Red Sea. The companies surveyed reported facing increased costs, with some seeing the cost of hiring containers tripling since the disruption. Others mentioned logistical delays adding up to three or four weeks to delivery times.
In the US on Friday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.2%, the S&P 500 marginally higher, and the Nasdaq Composite rose 0.3%.
A quiet economic calendar on Monday has new US home sales and the Dallas Fed manufacturing index at 1500 and 1530 GMT.
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