LONDON (ShareCast) - (Sharecast News) - London markets ended Monday with little direction, as investors weighed a batch of UK data releases, with housebuilders in focus.

The FTSE 100 index rose 0.31% to close at 8,312.89 points, while the FTSE 250 edged down marginally by 0.01% to settle at 20,769.05 points.

In currency markets, sterling was last down 0.76% on the dollar to trade at $1.2638, while it ticked up 0.1% against the euro, changing hands at €1.2050.

"The FTSE 100 briefly surged to a one-month high today, but a dearth of major news meant that the gain could not be sustained," said IG chief market analyst Chris Beauchamp.

"It has been a day of diverging fortunes for European markets - the FTSE 100's flat session sits between an ebullient DAX, which hit a new record high and a CAC 40 that is being pulled first one way and then another by the growing political crisis in France."

Beauchamp described it as a "seesaw day" for European markets, particularly in France.

"Earlier signs of a climbdown by the Barnier government were cancelled out by the man himself, who decided to throw caution to the wind by pushing through his budget, bringing forth the inevitable censure proposals by both the left and right.

"The brewing political crisis in France looks set to burst out once more, weighing on risk appetite in a eurozone already struggling to create sustainable growth."

UK manufacturing activity contracts, high street sales slide

In economic news, UK manufacturing activity contracted sharply in November, hitting a nine-month low as businesses faced falling orders and heightened uncertainty.

The S&P Global manufacturing purchasing managers' index (PMI) dropped to 48.0 from October's 49.9, below both the flash estimate of 48.6 and the critical 50.0 threshold that separates growth from contraction.

Survey participants cited delayed investments, budget cuts linked to the UK Budget, and geopolitical tensions as key factors behind declining output and new orders.

"The headline PMI fell to a nine-month low as concerns surrounding the economic outlook, high costs and weak demand led to lower output, falling orders and cutbacks to purchasing, jobs and inventory holdings," said Rob Dobson, director at S&P Global Market Intelligence.

"The export climate also remained bleak, as weaker demand from the US, China and EU led to a further drop in new export business.

"While companies of all sizes are experiencing a downturn, small companies are the hardest hit, reporting especially marked drops in output, new orders and new export business."

Looking ahead, UK businesses were bracing for a challenging start to 2025, with the Confederation of British Industry's (CBI) latest growth indicator showing private sector firms expected activity to shrink in the three months to February, with a balance of -10.

That marked the first negative growth outlook this year.

Sentiment had been particularly weak in consumer services, which posted a balance of -33, compared to a more modest -7 in business services.

While manufacturers were slightly optimistic, anticipating modest growth with a balance of 9, the CBI noted that October's Budget had broadly dampened confidence across industries.

"As we head into 2025, expectations for growth have taken a decisive turn for the worse," said Alpesh Paleja, interim deputy chief economist at the CBI.

"Anticipated activity was already weakening heading into the Budget, and the chancellor's announcements have left businesses with even more tough choices to make.

"News that firms are planning to reduce headcount is a concern, with hiring intentions at their weakest since the tail-end of the pandemic."

Meanwhile, the UK's high street endured its worst sales decline in nearly four years, according to BDO's high street sales tracker.

November sales fell 5.8% year-on-year, with sharp declines in both in-store - down 5.5% - and online - 7.8% weaker.

Fashion retailers saw sales drop 8%, which BDO attributed partly to 'extreme weather conditions'.

Sophie Michael, head of retail and wholesale at BDO, said the industry was in for a "very rocky 2025", as businesses react to policy changes announced in October's Autumn Budget.

"These results are disastrous for the retail sector, with just one more month of the so-called 'golden quarter' left," she said.

"Despite the hype around events such as Black Friday and Cyber Monday, we've seen heavy and prolonged discounting throughout most of November, but this has failed to get consumers spending."

On the continent, manufacturing challenges intensified as the eurozone PMI fell to 45.2 in November from 46.0 in October, confirming a deeper contraction in the bloc's largest economies.

Sub-indices for factory orders, production, and inventories all showed further declines, signaling ongoing pressures across the sector.

On a brighter note, eurozone unemployment remained at a record low of 6.3% in October, according to Eurostat.

However, youth unemployment ticked up slightly, rising to 15.0% from 14.9%, with an additional 35,000 under-25s recorded as jobless.

Across the Atlantic, the US manufacturing sector showed tentative signs of stabilising.

The Institute for Supply Management's PMI rose to 48.4 in November, up from 46.5 in October and surpassing expectations of 47.5.

While activity remained in contraction territory, new orders increased for the first time in seven months, and price pressures eased, offering hope of a potential turnaround.

Housebuilders in the red, Supreme jumps on Typhoo acquisition

On London's equity markets, housebuilders faced notable declines after RBC Capital Markets issued downgrades for both Persimmon and Vistry Group, lowering their ratings to 'underperform' from 'sector perform.'

Persimmon shares dropped 1.31% as RBC flagged concerns over third-quarter commentary related to build costs and building regulation changes, which could weigh on embedded margins in its landbank by the full-year results.

Vistry Group plunged 3.89%, with RBC highlighting risks tied to unaudited provisions and cost calculations following two profit warnings in recent months.

Taylor Wimpey shares fell 2.1%, despite RBC maintaining an 'outperform' rating.

RBC reiterated its view that Taylor Wimpey was well-positioned to benefit from potential planning reforms, though that failed to lift investor sentiment.

On the upside, BAE Systems rose 1.65% after Citi reiterated its 'buy' recommendation.

The stock had fallen on Friday following a downgrade by Bank of America Merrill Lynch.

Shares in Spirent Communications surged 3.79% after the company announced regulatory approvals for its £1.2bn acquisition by Keysight Technologies from authorities in France, Germany, and the UK.

As part of the deal, Keysight would divest Spirent's high-speed ethernet and network security businesses, with a competitive auction process already underway.

Outside the FTSE 350, AIM-listed Supreme climbed 5.39% after it acquired Typhoo Tea out of administration for £10.2m in cash.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,312.89 0.31%
FTSE 250 (MCX) 20,769.05 -0.01%
techMARK (TASX) 4,696.45 0.30%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 573.00p 2.58%
Spirax Group (SPX) 7,340.00p 2.37%
BAE Systems (BA.) 1,255.00p 2.28%
Pershing Square Holdings Ltd NPV (PSH) 3,846.00p 2.23%
Beazley (BEZ) 793.00p 2.12%
Rentokil Initial (RTO) 402.10p 2.11%
Hiscox Limited (DI) (HSX) 1,070.00p 1.90%
Associated British Foods (ABF) 2,238.00p 1.82%
Scottish Mortgage Inv Trust (SMT) 959.80p 1.80%
Anglo American (AAL) 2,562.50p 1.67%

FTSE 100 - Fallers

Vistry Group (VTY) 630.50p -3.89%
B&M European Value Retail S.A. (DI) (BME) 337.80p -2.62%
Unite Group (UTG) 862.50p -2.21%
British Land Company (BLND) 381.40p -1.90%
DCC (CDI) (DCC) 5,625.00p -1.75%
Taylor Wimpey (TW.) 129.15p -1.41%
Land Securities Group (LAND) 594.50p -1.41%
LondonMetric Property (LMP) 191.30p -1.39%
Persimmon (PSN) 1,241.50p -1.31%
Croda International (CRDA) 3,410.00p -1.16%

FTSE 250 - Risers

Wood Group (John) (WG.) 56.70p 7.18%
Raspberry PI Holdings (RPI) 380.30p 4.54%
Carnival (CCL) 1,873.50p 4.05%
Auction Technology Group (ATG) 536.00p 3.88%
Crest Nicholson Holdings (CRST) 171.60p 3.81%
Spirent Communications (SPT) 177.80p 3.79%
IP Group (IPO) 45.60p 3.64%
Just Group (JUST) 148.00p 3.35%
Lancashire Holdings Limited (LRE) 656.00p 3.31%
Watches of Switzerland Group (WOSG) 480.00p 3.23%

FTSE 250 - Fallers

Close Brothers Group (CBG) 209.00p -6.61%
Dr. Martens (DOCS) 67.05p -2.83%
Great Portland Estates (GPE) 294.50p -2.48%
Foresight Group Holdings Limited NPV (FSG) 408.00p -2.39%
Safestore Holdings (SAFE) 727.00p -2.35%
OSB Group (OSB) 393.00p -2.34%
Coats Group (COA) 94.20p -2.18%
IntegraFin Holding (IHP) 385.50p -2.16%
Renishaw (RSW) 3,070.00p -1.92%
Kier Group (KIE) 143.40p -1.92%

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