London open: Stocks slip as trade fears resurface; housebuilders hit by RICS survey
By Michele Maatouk
Date: Thursday 17 Jan 2019
(Sharecast News) - London stocks edged lower in early trade on Thursday amid fresh concerns about Sino-US trade relations, with housebuilders under the cosh on the back of a downbeat assessment of the UK housing market.
At 0830 GMT, the FTSE 100 was off 0.3% at 6,840.69, while the pound was down 0.3% against the dollar and the euro at 1.2847 and 1.1282, respectively.
Trade war fears dented sentiment following reports that the US is investigating Chinese tech giant Huawei for stealing trade secrets from US business partners.
"The move comes as US-Sino relations were improving amid a 90-day truce," said London Capital Group analyst Jasper Lawler. "It goes right to the heart of the unresolved IP issues with China. China is unlikely to shrug this off which is creating a risk-off environment. Signs of retaliation from China could see stocks sink further."
On home turf, Theresa May survived the no-confidence vote in her government overnight so attention will now turn to her Brexit 'Plan B', which she has until 21 January to put forward.
"Given the extent of the division in Parliament it's difficult to see how anything other than extending Article 50 or a second referendum will help towards ending the deadlock," said Lawler.
Housebuilders were under pressure, with Taylor Wimpey, Berkeley Group and Barratt Developments all lower as the latest survey from the Royal Institution of Chartered Surveyors showed the outlook for the housing market over the next three months was the worst on record in December as uncertainty over Brexit took its toll.
The net balance of surveyors expecting sales to drop came in at -28, marking the worst reading since the series began in 1999.
Meanwhile, the net balance of surveyors reporting that house prices have risen over the last three months fell to -19 in December from -11 the month before. This was the fourth consecutive negative reading and fell short of analysts' expectations for a reading of -13.
Looking ahead, the outlook for prices over the next 12 months was broadly flat. With the exception of London and the South East, prices were anticipated to either rise or hold steady across the other UK regions over this time horizon.
RICS chief economist Simon Rubinsohn said: "It is hardly a surprise with ongoing uncertainty about the path to Brexit dominating the news agenda, that even allowing for the normal patterns around the Christmas holidays, buyer interest in purchasing property in December was subdued. This is also very clearly reflected in a worsening trend in near term sales expectations. Looking a little further out, there is some comfort provided by the suggestion that transactions nationally should stabilise as some of the fog lifts, but that moment feels a way off for many respondents to the survey."
Elsewhere, Whitbread lost ground as it confirmed that profits are likely to remain flat for the next year but said it will begin buying back £500m worth of shares after completing the sale of Costa Coffee earlier than expected. UK like-for-like sales in the third quarter were down 0.2% at its Premier Inns chain, slowing growth for the year to date to 2.5%.
Technology group Sage surged after it reiterated full-year guidance as it said first-quarter guidance organic revenue increased by 7.6% to £465m.
Primark owner Associated British Foods also racked up strong gains as it maintained full-year guidance and reported revenue growth in the Christmas period in all of its businesses apart from sugar.
Ladbrokes owner GVC rose as it said it expects underlying core earnings to come in above market expectations, while Experian pushed up as it posted a 9% jump in third-quarter revenue with particularly strong growth in North America, and backed its full-year guidance.
Workspace, SSP and Tritax Big Box were higher but Ibstock fell, all after trading updates.
Just Eat rallied after an upgrade to 'overweight' at Morgan Stanley, while William Hill was boosted by an upgrade to 'buy' at Berenberg, but ITV was hit by a downgrade to 'underperform' at Bank of America Merill Lynch.
Ashtead, Compass Group, SSE, CYBG and Shaftesbury were among the companies whose stock went ex-dividend.
Market Movers
FTSE 100 (UKX) 6,840.69 -0.32%
FTSE 250 (MCX) 18,429.14 -0.31%
techMARK (TASX) 3,345.49 -0.10%
FTSE 100 - Risers
Sage Group (SGE) 636.80p 7.39%
Associated British Foods (ABF) 2,300.00p 5.60%
GVC Holdings (GVC) 695.00p 3.27%
Experian (EXPN) 1,906.50p 1.71%
United Utilities Group (UU.) 799.60p 0.73%
NMC Health (NMC) 2,812.00p 0.72%
British American Tobacco (BATS) 2,488.50p 0.67%
Diageo (DGE) 2,734.50p 0.59%
Rentokil Initial (RTO) 347.40p 0.58%
Unilever (ULVR) 4,020.50p 0.54%
FTSE 100 - Fallers
ITV (ITV) 130.08p -5.23%
Whitbread (WTB) 4,559.00p -4.48%
SSE (SSE) 1,127.50p -3.18%
easyJet (EZJ) 1,164.50p -2.39%
Taylor Wimpey (TW.) 160.65p -2.04%
Berkeley Group Holdings (The) (BKG) 3,732.00p -1.79%
Marks & Spencer Group (MKS) 281.90p -1.78%
Ashtead Group (AHT) 1,875.00p -1.73%
Fresnillo (FRES) 877.58p -1.64%
Barratt Developments (BDEV) 509.80p -1.58%
FTSE 250 - Risers
Just Eat (JE.) 673.40p 6.62%
Hastings Group Holdings (HSTG) 197.70p 1.33%
Just Group (JUST) 92.70p 1.31%
Sirius Minerals (SXX) 22.11p 1.23%
Bank of Georgia Group (BGEO) 1,585.00p 1.01%
IP Group (IPO) 111.00p 0.91%
Tritax Big Box Reit (BBOX) 138.60p 0.87%
Petrofac Ltd. (PFC) 544.00p 0.85%
William Hill (WMH) 172.00p 0.79%
SSP Group (SSPG) 684.40p 0.75%
FTSE 250 - Fallers
Acacia Mining (ACA) 185.80p -3.13%
Paragon Banking Group (PAG) 404.20p -2.60%
Countryside Properties (CSP) 310.80p -2.33%
McCarthy & Stone (MCS) 136.50p -2.08%
Softcat (SCT) 666.00p -2.06%
Charter Court Financial Services Group (CCFS) 267.00p -2.05%
Ibstock (IBST) 231.20p -2.03%
Entertainment One Limited (ETO) 359.80p -2.02%
IWG (IWG) 221.66p -1.96%
Computacenter (CCC) 988.52p -1.93%
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