FTSE 100 close: Housebuilders drag London’s premier index into the red after CMA warning
London’s FTSE 100 slipped into the red on Monday, with housebuilders dragging the index lower after the competition watchdog found “fundamental concerns” with the market
Both of London’s main markets fell into the red, with the FTSE 100 falling 0.29 per cent to 7,684.30 while the FTSE 250 index, which is more aligned with the health of the domestic economy, fell by 0.27 per cent to 19,126.92.
The biggest news of the morning was the Competition and Markets Authority’s (CMA) announcement that it had found “fundamental concerns” with the housebuilding market.
The report said around 60 per cent of all houses built in the years 2021 to 2022 were delivered by “speculative private development” and the country’s reliance on this model had “seen the gap widen considerably between what the market will deliver and what communities need.”
The CMA also opened an investigation into potential information sharing between developers, which it warned may weaken competition in the market.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: “The accusations of poor build quality and anti-competitive practice will be of more immediate importance, as findings against either strike could lead to margin degradation in the short term, but this is far from guaranteed”.
On the FTSE 100, Persimmon lost 2.3 per cent and Taylor Wimpey 3.1 per cent. Barratt fell 1.2 per cent while Berkeley dropped 0.7 cent.
The FTSE 100’s largest faller was Ocado which dropped 5.9 per cent. Shares fell after reports last week its partner Marks & Spencer was not going to pay fees to the online retailer after it failed to meet performance targets.
Bunzl was another weak performer, dropping 3.5 per cent despite a solid set of results.
The outsourcing fimr upped its dividend and announced two more acquisitions, although revenue remained flat year-on-year.
Matt Britzman, equity analyst at Hargreaves Lansdown, said the relative weakness on revenue related to “volumes coming down in some geographies and normalising prices”.
“Volumes should come back but the pricing weakness is a potential headwind for the new year,” he said.
This week will be a fairly quiet week for markets, with the main news coming on Thursday when the Fed’s preferred gauge of inflation, personal consumption expenditure (PCE), will be released.
Markets expect an acceleration in inflation month-on-month, but the annual rate will still fall.