London close: Stocks slip on global data, UK house prices
By Josh White
Date: Wednesday 07 Jun 2023
(Sharecast News) - London's primary stock indices concluded Wednesday's session beneath the waterline, as investors remained vigilant over fresh data on global economic growth and UK housing prices.
The FTSE 100 shed 0.05% to close at 7,624.34, while the FTSE 250 was 0.34% weaker at 19,152.27.
In currency markets, sterling was last 0.19% stronger on the dollar to trade at $1.2448, while it advanced 0.09% against the euro to change hands at €1.1629.
"Risk appetite had looked wobbly earlier today following poor Chinese trade data and disappointing German industrial output numbers, but a second hawkish central bank in as many days has resulted in stocks turning lower once again," said IG chief market analyst Chris Beauchamp.
"In a week devoid of heavyweight events the decisions from the RBA and BoC have commanded more attention than usual, particularly since they act as a prelude to the big movers of the Fed, ECB and BoJ next week."
OECD reports better global outlook, UK house prices fall
In economic news, the Organisation for Economic Co-operation and Development (OECD) issued its latest economic forecast earlier, predicting an improved outlook for global economic growth, albeit moderate, alongside easing inflationary pressures.
However, it cautioned that a full-fledged recovery was still not imminent.
In its updated report, the Paris-based body has adjusted its global economic growth projection to 2.7%, a slight increase from its March forecast of 2.6%.
The adjustment reflected favourable upgrades for several major economies, including the United States, China, and the eurozone.
Predictions for the US and China were bumped up by a modest 0.1 percentage points, with the US now anticipated to grow at a rate of 1.6% and China at 5.4%.
The eurozone also saw a similar 0.1 point upgrade, with its growth now expected to hit 0.9%.
The UK economy received a significant revision - instead of a feared recession, the country is now projected to witness a marginal growth of 0.3%.
Meanwhile, Germany's outlook was revised downwards, with its growth forecast hitting a standstill at zero percent.
"The high interest burden on (UK) public debt and the recent drop in average debt maturity leave the public finances exposed to movements in bond yields," the OECD said in reference to Britain.
"Renewed increases in wholesale energy prices due to Russia's war of aggression against Ukraine would further squeeze real incomes given the United Kingdom's high dependence on natural gas. Faster-than-expected resolution of uncertainty regarding future trade relationships is an upside risk."
On the domestic front, the UK housing market experienced a shake-up as annual house prices recorded a fall in May for the first time since 2012.
That came in the wake of escalating mortgage costs, according to data unveiled by lender Halifax.
Year-on-year, house prices have declined by 1% following a meagre growth of 0.1% in April.
Month-on-month, prices remained stagnant in May after witnessing a 0.4% decrease in the preceding month.
The average house price in the UK now stood at £286,532.
Halifax noted that the southern regions of England were feeling the maximum impact, with house prices there facing the most substantial pressure.
That downturn in the housing market represents a crucial economic indicator to monitor in the upcoming months.
"As expected the brief upturn we saw in the housing market in the first quarter of this year has faded, with the impact of higher interest rates gradually feeding through to household budgets, and in particular those with fixed rate mortgage deals coming to an end," said Kim Kinnaird, director, Halifax Mortgages.
"With consumer price inflation remaining stubbornly high, markets are pricing in several more rate rises that would take Base Rate above 5% for the first time since the start of 2008.
"Those expectations have led fixed mortgage rates to start rising again across the market."
Retailers rally but housebuilders slip on data
On London's equity markets, retail giants Marks & Spencer and Associated British Foods, owner of Primark, gained 1.15% and 3.07% respectively.
Analysts attributed the rise to the 'read-across' effect stemming from the positive results announced by Zara owner Inditex, which influenced the broader retail sector.
Online gambling firm 888 Holdings, owner of William Hill, saw its shares surge by an extraordinary 25.62%.
That came on the back of news that investor group FS Gaming Investments had amassed a 6.6% stake in the company.
The group, which includes notable figures like former GVC - now Entain - chairman Lee Feldman and ex-CEO Kenny Alexander, disclosed their investment after the market closed on Tuesday.
Electronics manufacturer DiscoverIE Group saw its shares rally, climbing 14.55% after the company's announcement of a robust 70% increase in annual profits, driven by a strong order book.
Oil and gas company Harbour Energy saw a 2.63% uptick following reports that it is engaged in merger talks with Talos Energy, adding a potential element of corporate restructuring to its future.
On the downside, housebuilders Persimmon, Taylor Wimpey, and Berkeley Group all slipped, dropping 1.84%, 0.72%, and 0.97% respectively on the back of the Halifax data.
Reporting by Josh White for Sharecast.com.
Market Movers
FTSE 100 (UKX) 7,624.34 -0.05%
FTSE 250 (MCX) 19,152.27 -0.34%
techMARK (TASX) 4,587.42 -0.23%
FTSE 100 - Risers
BT Group (BT.A) 149.45p 3.75%
Ocado Group (OCDO) 370.70p 3.43%
Associated British Foods (ABF) 1,901.50p 3.34%
Melrose Industries (MRO) 519.80p 3.30%
Ashtead Group (AHT) 5,286.00p 2.52%
Vodafone Group (VOD) 78.48p 2.03%
Smiths Group (SMIN) 1,650.50p 1.76%
Glencore (GLEN) 438.00p 1.57%
International Consolidated Airlines Group SA (CDI) (IAG) 159.70p 1.46%
Weir Group (WEIR) 1,810.50p 1.37%
FTSE 100 - Fallers
Admiral Group (ADM) 2,321.00p -2.97%
SEGRO (SGRO) 811.00p -2.29%
Croda International (CRDA) 6,114.00p -2.02%
Entain (ENT) 1,279.00p -1.99%
Persimmon (PSN) 1,227.50p -1.84%
SSE (SSE) 1,847.50p -1.75%
Convatec Group (CTEC) 203.00p -1.74%
Abrdn (ABDN) 215.00p -1.60%
National Grid (NG.) 1,053.50p -1.31%
Whitbread (WTB) 3,314.00p -1.31%
FTSE 250 - Risers
Discoverie Group (DSCV) 913.00p 14.55%
Tullow Oil (TLW) 26.62p 4.31%
Digital 9 Infrastructure NPV (DGI9) 63.90p 3.23%
Harbour Energy (HBR) 245.90p 2.63%
Chemring Group (CHG) 300.00p 2.39%
Mitie Group (MTO) 96.40p 2.34%
Vanquis Banking Group 20 (VANQ) 230.00p 2.22%
QinetiQ Group (QQ.) 368.60p 2.22%
Carnival (CCL) 910.20p 2.18%
TUI AG Reg Shs (DI) (TUI) 550.00p 2.14%
FTSE 250 - Fallers
Jupiter Fund Management (JUP) 110.40p -4.08%
CLS Holdings (CLI) 133.20p -3.34%
Abrdn Private Equity Opportunities Trust (APEO) 438.50p -3.12%
AJ Bell (AJB) 314.00p -2.48%
PZ Cussons (PZC) 187.80p -2.39%
Wetherspoon (J.D.) (JDW) 728.50p -2.35%
Big Yellow Group (BYG) 1,168.00p -2.34%
Future (FUTR) 712.50p -2.33%
OSB Group (OSB) 524.50p -2.24%
Network International Holdings (NETW) 360.00p -2.23%
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