London midday: Stocks stay down after construction data
By Michele Maatouk
Date: Tuesday 07 Jan 2025
(Sharecast News) - London stocks were off lows but still in the red by midday on Tuesday as investors mulled the first dip in UK house prices since March and a slowdown in construction sector growth.
The FTSE 100 was down 0.2% at 8,236.11.
A survey out earlier showed that growth across the construction sector slowed as 2024 came to an end, dragged lower by house building.
The latest S&P Global UK construction purchasing managers' index came in at 53.3 in December, above the neutral 50.0 benchmark.
A reading above 50.0 indicates growth, while one below it suggests contraction.
However, December's print was down on November's 55.2. Analysts had forecast a fall, but most had pencilled in a smaller drop, to 54.4.
Respondents said subdued demand, higher borrowing costs and weak consumer confidence had weighed on activity during December.
Within individual sub-sectors, the PMIs for commercial activity and civil engineering were 55.0 and 52.9 respectively, although both saw a slowdown when compared to November's robust performance.
However, the biggest drag was residential work. It remained in overall decline, at 47.6, marginally down on November's 47.9.
Tim Moore, economics director at S&P Global Market Intelligence, said there had been a "loss of momentum" across the sector.
He continued: "The slowdown in overall construction output growth reflected more subdued demand conditions in recent months, as illustrated by a further moderation in new order growth during December.
"Survey respondents commented on headwinds from elevated borrowing costs and the impact of fragile consumer confidence."
Market participants were also digesting the latest house price data from Halifax, which revealed a 0.2% decline on the month in December following five consecutive monthly increases, and 1.2% growth in November.
On an annual basis, prices were up 3.3%, down from 4.7% growth in November and leaving the average price of a home at £297,166.
Amanda Bryden, head of mortgages at Halifax, said: "The housing market was broadly steady at the start of 2024, with house price growth taking off from the summer onwards. In the latter half of the year, house prices grew in response to the falls in mortgage rates, alongside income growth, both leading to financial pressures somewhat easing for buyers.
"Impending changes to Stamp Duty thresholds have also given prospective first-time buyers even greater motivation to get on the housing ladder and bring any home-buying plans forward. Together, these elements meant mortgage demand picked up, hitting the highest level in over two years and back to levels seen pre-pandemic.
"In many areas across the country, house prices were also buoyed by demand outstripping supply, possibly further amplified by homeowners holding off putting their property on the market - perhaps in anticipation of mortgage rates reducing further."
She said that while the housing market has been supported in recent months by falling mortgage rates, income growth and the announcement on upcoming Stamp Duty policy changes, mortgage affordability will remain a challenge, especially as the Bank Rate is likely to come down more slowly than previously predicted.
"However, providing employment conditions don't deteriorate markedly from a more recent softening, buyer demand should hold up relatively well and, taking all this into account, we're continuing to anticipate modest house price growth this year."
In equity markets, JD Sports was the top gainer on the FTSE 100 after Bank of America Merrill Lynch reinstated coverage of the stock at 'buy'.
Next was also a high riser as the clothing retailer lifted full-year guidance after better-than-expected December sales but warned UK growth is likely to slow, as employer tax increases, and their potential impact on prices and employment, begin to filter through into the economy.
Full-year guidance for the 12 months to January was lifted by £5m to £1.01bn after underlying full-price sales rose by 5.7% against expectations of a 3.5% increase. For 2026, Next anticipates full-price sales growth of 3.5% and profit before tax of £1.046bn, up 3.6%.
3i Group advanced after Citi opened an "upside catalyst watch" on the buy-rated shares, but AJ Bell fell after the bank cut its rating to 'sell', citing risks from cash balances and competitor pricing.
Raspberry Pi slid after a downgrade to 'reduce' at HSBC, while Pennon was knocked lower by a downgrade to 'sell' at Deutsche Bank and Mondi lost ground after a downgrade to 'neutral' at BNPP Exane.
Housebuilder Taylor Wimpey was in the red after a downgrade to 'equalweight' at Barclays.
Coats Group retreated as the industrial thread maker said that chief financial officer Jackie Callaway has mutually agreed with the board that she will step down from her role at the conclusion of the annual meeting on 21 May.
Market Movers
FTSE 100 (UKX) 8,236.11 -0.16%
FTSE 250 (MCX) 20,520.73 -0.45%
techMARK (TASX) 4,622.93 -0.21%
FTSE 100 - Risers
JD Sports Fashion (JD.) 103.25p 5.42%
Next (NXT) 9,936.00p 4.00%
Entain (ENT) 711.60p 2.71%
3i Group (III) 3,675.00p 1.46%
Shell (SHEL) 2,609.50p 1.24%
Diageo (DGE) 2,533.50p 1.20%
British Land Company (BLND) 365.20p 1.05%
BAE Systems (BA.) 1,157.50p 1.05%
Sage Group (SGE) 1,304.50p 1.05%
LondonMetric Property (LMP) 179.80p 1.01%
FTSE 100 - Fallers
WPP (WPP) 766.40p -3.04%
Sainsbury (J) (SBRY) 269.20p -2.89%
Taylor Wimpey (TW.) 116.50p -2.88%
NATWEST GROUP (NWG) 401.60p -1.98%
Compass Group (CPG) 2,593.00p -1.89%
Associated British Foods (ABF) 2,016.00p -1.85%
Phoenix Group Holdings (PHNX) 509.50p -1.45%
HSBC Holdings (HSBA) 773.30p -1.43%
Pershing Square Holdings Ltd NPV (PSH) 4,052.00p -1.41%
Standard Chartered (STAN) 990.00p -1.39%
FTSE 250 - Risers
Oxford Nanopore Technologies (ONT) 138.00p 3.53%
Burberry Group (BRBY) 979.20p 2.68%
Tritax Big Box Reit (BBOX) 135.30p 1.81%
Chemring Group (CHG) 332.00p 1.53%
Ithaca Energy (ITH) 126.20p 1.45%
4Imprint Group (FOUR) 4,795.00p 1.37%
Babcock International Group (BAB) 498.60p 1.26%
Foresight Solar Fund Limited (FSFL) 76.10p 1.20%
Aston Martin Lagonda Global Holdings (AML) 106.50p 1.14%
Bridgepoint Group (Reg S) (BPT) 358.00p 1.13%
FTSE 250 - Fallers
Ferrexpo (FXPO) 100.00p -7.06%
Raspberry PI Holdings (RPI) 566.00p -6.91%
AJ Bell (AJB) 429.50p -4.98%
Coats Group (COA) 90.00p -3.43%
Pennon Group (PNN) 561.50p -2.94%
Carnival (CCL) 1,731.00p -2.89%
XPS Pensions Group (XPS) 333.00p -2.63%
Ibstock (IBST) 171.80p -2.28%
Vistry Group (VTY) 559.00p -2.27%
Just Group (JUST) 158.80p -2.22%
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