London midday: Stocks fall further on hawkish Fed, UK construction data

(Sharecast News) - London stocks had fallen further by midday on Thursday as investors mulled the latest minutes from the US Federal Reserve, which suggested that more rate hikes were on the cards, and following the release of disappointing UK construction data. The FTSE 100 was down 1.4% at 7,341.81.

Victoria Scholar, head of investment at Interactive Investor, said: "After three sessions of declines for the FTSE 100, the UK blue chip index has opened in the red again, breaking below support at 7,400.

"Treasury yields and the US dollar made gains after minutes from the Fed's June meeting suggested further tightening is to come from. The FOMC minutes were largely interpreted as hawkish by the markets, even though the pace of tightening is likely to slow, and rates were left unchanged last month. The central bank said the economy faces 'headwinds from tighter credit conditions'."

On home shores, a survey showed that construction output fell sharply in June as higher mortgage rates hit house building.

The S&P Global/CIPS construction purchasing managers' index came in at 48.9 in June, down from 51.6 in May and below consensus, for 51.0. It was the first time the index had registered below the neutral 50 threshold in five months.

A reading above 50 indicates growth while one below it suggests contraction.

Respondents pointed to a "steep and accelerated downturn" in house building, alongside the first reduction in new orders since January.

Civil engineering was the best performing segment, at 53.1, while commercial building was 53. But residential work tumbled at the fastest rate since May 2020, to 39.6 from 42.7 a month earlier.

The employment index, meanwhile, fell to 50.4 from 52.6 in May.

Tim Moore, economics director at S&P Global Market Intelligence, said: "Weaker housing marketing conditions in the wake of higher borrowing costs acted as a major constraint on UK construction output in June.

"Aside from the lockdown-related fall in house building, the rate of decline was the fastest for just over 14 years. Survey respondents widely commented on cutbacks to new residential building projects and more caution among clients in response to rising interest rates."

In equity markets, online supermarket Ocado was under the cosh after Morgan Stanley cut its price target on the shares to 390p from 430p ahead of its first-half results.

Electrical retailer Currys tanked after it pulled its final dividend, citing an uncertain outlook as annual profits fell due to its poorly-performing Nordics division but came in at the top end of guidance.

Office provider Workspace was in the red despite reporting reported a rise in first-quarter rents, driven by resilient demand, as it traded without entitlement to the dividend.

Next and JD Sports were also ex-dividend.

On the upside, Man Group gained after agreeing to buy a controlling interest in Varagon, a US middle market private credit manager, in a $183m deal.

In other broker note action, RBC Capital Markets upgraded Smiths Group to 'sector perform' from 'underperform'.

JPMorgan upgraded Smurfit Kappa and Mondi to 'overweight' from 'neutral'.

Market Movers

FTSE 100 (UKX) 7,341.81 -1.35% FTSE 250 (MCX) 18,163.49 -1.25% techMARK (TASX) 4,335.81 -1.14%

FTSE 100 - Risers

United Utilities Group (UU.) 949.80p 1.82% Centrica (CNA) 123.60p 0.45% Severn Trent (SVT) 2,456.00p 0.24% BAE Systems (BA.) 912.20p 0.15% Tesco (TSCO) 248.60p -0.08% Sage Group (SGE) 907.60p -0.09% National Grid (NG.) 1,026.50p -0.10% Lloyds Banking Group (LLOY) 43.77p -0.14% SSE (SSE) 1,783.00p -0.36% Sainsbury (J) (SBRY) 268.90p -0.41%

FTSE 100 - Fallers

Flutter Entertainment (CDI) (FLTR) 14,790.00p -3.55% Glencore (GLEN) 441.95p -3.49% Fresnillo (FRES) 601.00p -3.38% Antofagasta (ANTO) 1,421.50p -3.30% Land Securities Group (LAND) 578.20p -3.25% Next (NXT) 6,730.00p -3.22% Frasers Group (FRAS) 680.50p -3.20% Ocado Group (OCDO) 555.40p -3.14% Abrdn (ABDN) 213.30p -2.91% Kingfisher (KGF) 221.20p -2.90%

FTSE 250 - Risers

Man Group (EMG) 224.30p 2.89% Lancashire Holdings Limited (LRE) 578.00p 1.67% Drax Group (DRX) 581.40p 1.15% BH Macro Ltd. GBP Shares (BHMG) 369.50p 1.09% Domino's Pizza Group (DOM) 278.40p 1.09% Apax Global Alpha Limited (APAX) 185.40p 0.98% Just Group (JUST) 77.10p 0.92% C&C Group (CDI) (CCR) 133.00p 0.91% Victrex plc (VCT) 1,430.00p 0.56% Discoverie Group (DSCV) 839.00p 0.48%

FTSE 250 - Fallers

Currys (CURY) 47.16p -11.77% Primary Health Properties (PHP) 93.30p -4.45% Ferrexpo (FXPO) 90.00p -4.36% Big Yellow Group (BYG) 1,045.00p -4.04% IWG (IWG) 133.20p -3.69% Workspace Group (WKP) 477.00p -3.64% Wizz Air Holdings (WIZZ) 2,679.00p -3.49% Molten Ventures (GROW) 257.20p -3.31% Essentra (ESNT) 159.20p -3.28% Me Group International (MEGP) 162.60p -3.21%