Monday, February 26, 2024 9:04am
London’s FTSE 100 index was firm on Monday morning, with housebuilders weighing on the index after the competition watchdog found “fundamental concerns” in the market.
Both major London markets were essentially flat, with the FTSE 100 index rising slightly to 7,709.72, while the FTSE 250 index, which is more closely tracked by the health of the domestic economy, fell to 19,177.31.
The biggest news this morning was the Competition and Markets Authority (CMA) announcing that it had found “fundamental concerns” in the housebuilding market.
The report found that around 60% of all housing built in 2021-2022 will be delivered through “speculative private development” and that the country’s reliance on this model means that “what the market will deliver and what communities will need will be delivered”. “The gap between what they do and what they do is widening significantly.” ”
The CMA also launched an investigation into the potential sharing of information between developers, warning that it could reduce competition in the market.
Sophie Land-Yates, principal equity analyst at Hargreaves Lansdown, said: “Accusations of poor manufacturing quality and anti-competitive practices will be of greater importance in the near term, as the findings into either strike could lead to lower profit margins in the short term, but this is no guarantee. Far from it.”
In the FTSE 100, Persimmon fell 1.5% and Taylor Wimpey fell 1.2%. Barratt and Berkeley were both down about half a cent.
Bundzl was the worst performer on the FTSE 100 index, falling 5.3% despite a solid result.
The outsourcing company increased its dividend and announced two more acquisitions, although its revenue was flat year over year.
Matt Blitzman, equity analyst at Hargreaves Lansdown, said the relative earnings weakness was related to “lower volumes and price normalization in some regions”. .
“Volumes should return, but weaker prices are a potential headwind into the new year,” he said.
It’s been a fairly quiet week for the markets, with the main news coming on Thursday when the Federal Reserve’s preferred measure of inflation, personal consumption expenditures (PCE), is released.
Markets expect inflation to accelerate month-on-month, but the annual rate will still decline.