12th Jun 2018 17:03
LONDON (Alliance News) - Stocks in London ended lower on Tuesday with housebuilders among the fallers, as investors showed an understated reaction to the historic US-North Korea summit.Attention now swiftly shifts to the conclusion of the US Federal Reserve's monetary policy meeting on Wednesday. The FTSE 100 index closed down 0.4%, or 33.62 points at 7,703.81. The FTSE 250 ended down 0.4%, or 77.13 points, at 21,241.64, and the AIM All-Share closed flat at 1,100.83.The Cboe UK 100 closed down 0.5% at 13,073.70, the Cboe UK 250 closed down 0.4% at 19,409.50, and the Cboe UK Small Companies closed up 0.1% at 12,930.21."Stock markets are mixed today as traders had a muted reaction to the historic meeting between Donald Trump and Kim Jong-un. The summit is, however, a step in the right direction for global politics. Reports about the timeline of North Korea scaling back its nuclear programme have been vague though, with the long-term goal of complete denuclearisation on the Korean peninsula," said David Madden, market analyst at CMC Markets.The agreement reached between US President Donald Trump and North Korean leader Kim Jong Un at a historic summit meeting in Singapore evoked mixed response in US political circles.Vice President Mike Pence praised Trump for his steadfast leadership on the world."With the success of the #SingaporeSummit, the world is one step closer to peace on the Korean Peninsula," Pence said on Twitter.In turn, Democrats turned heavily on the president over the engagement with the Korean leader as House Minority Leader Nancy Pelosi released a highly critical statement."Apparently, the President handed Kim Jong-un concessions in exchange for vague promises that do not approach a clear and comprehensive pathway towards the goal of nuclear non-proliferation," Pelosi said. On the London Stock Exchange, Centrica ended as the second best blue chip performer up 3.4% after Jefferies upgraded the British Gas parent to Buy from Hold.Jefferies analysts suggested that the upcoming energy price cap in the UK won't be highly punitive and can be managed by the 'Big Six' energy supplier.Conversely, large cap housebuilders ended in the red with Barratt Developments down 3.1%, Berkeley Group down 2.6%, Persimmon down 2.3% and Taylor Wimpey down 1.7% in the wake of ill-received results from mid-cap peer Crest Nicholson. In the FTSE 250, Crest Nicholson ended down 4.3% after the housebuilder reported a 2% drop in pretax profit for the six months ended April 30 to GBP74.8 million from GBP76.2 million year-on-year. Headline gross margins for the period were at 23.6%, down from 26.3% the prior year due to flat pricing amid a backdrop of build cost inflation at 3% to 4%.Crest Nicholson said it expects operating margins for the full year at around 18%, lower compared to last year at 20.3%. This is at the bottom range of Crest Nicholson's guidance range of 18% to 20%.The housebuilder also said it would be closing its central London office and re-opening a South-East Division, based in Kent - as it shifts focus away from London where "where conditions or returns are not attractive"."With Crest Nicholson exiting the central London within the next 18-months, the sector is clearly operating in challenging conditions that are unlikely to go away anytime soon. Much of the issue lies with the premium nature of the central London market, with many of the more expensive new homes remaining unsold as they price out the first time buyers who prop up demand for cheaper new homes via the 'right to buy' scheme," said IG chief market analyst Chris Beauchamp.Mid-cap rivals Redrow, Bellway and Bovis Homes closed down 4.2%, 3.6% and 3.4% respectively.Domino's Pizza ended as the worst FTSE 250 performer down 6.2% after the pizza chain announced the departure of its Chief Financial Officer Rachel Osborne.The pound was marginally lower against the dollar quoted at USD1.3354 at the London equities close, compared to USD1.3382 at the close Monday. Earlier in the session, sterling hovered around the USD1.34 mark in the wake of positive UK unemployment data but eased in afternoon trade.The UK unemployment rate remained unchanged at the lowest level since 1975, the Office for National Statistics reported. The ILO jobless rate remained at 4.2% in the three months ended April, but down from 4.6% a year ago. This was the joint lowest since 1975. There were 1.42 million unemployed people, 38,000 fewer than for November 2017 to January 2018 and 115,000 fewer than for a year earlier. At the same time, the employment rate was 75.6%, higher than for a year earlier and the joint highest since comparable records began in 1971. Average earnings of employees including bonuses increased 2.5% from last year, while earnings excluding bonuses advanced 2.8% in three months to April.In Paris the CAC 40 ended down 0.4%, while the DAX 30 in Frankfurt ended flat. The euro was marginally lower at USD1.1783 at the European equities close, against USD1.1803 late Monday. Stocks in New York were mixed at the London equities close. The DJIA was down 0.1%, the S&P 500 index up 0.1% and the Nasdaq Composite up 0.3%.In economic news, a report released by the Labor Department showed another modest increase in consumer prices in the US in the month of May.The Labor Department said its consumer price index rose by 0.2% in May, matching the increase seen in April as well as economist estimates.The annual rate of consumer price growth accelerated to 2.8% in May from 2.5% in April, reaching its highest level since February 2012. Core consumer price growth also edged up to a fifteen-year high of 2.2% in May from 2.1% in the previous month.Senior US Economist at Capital Economics Michael Pearce said the consumer price growth will keep the Federal Reserve on course to raise interest rates on Wednesday.The Federal Open Market Committee will conclude its two-day policy meeting on Wednesday and announce its decision at 1900 BST. This will be followed by a press conference with Fed Chair Jerome Powell, who will provide fresh economic projections.Analysts agree that an interest-rate increase from the US central bank appears to be a certainty, but noted the dot plot forecasts will be under close scrutiny to determine how many additional rate hikes will occur this year. "Today's [inflation] data would suggest that another rate hike is likely, and indeed this outcome is priced by the futures markets," said Thomas Wells, manager of the Smith & Williams Global Inflation-Linked Bond Fund.Brent oil was flat at USD76.53 a barrel at the London equities close from USD76.49 at the close Monday."There is talk that Russia and Saudi Arabia will increase output, and this has scared away the bulls. The oil market reached a multi-year high last month, but volatility has dropped off since. It appears that traders are playing the wait-and-see game," noted Madden. Gold was a touch lower quoted at USD1,298.62 an ounce at the London equities close against USD1,301.25 late Monday.The economic events calendar on Wednesday there are China new loans at 0300 BST, UK inflation readings at 0930 BST, eurozone industrial production data at 1000 BST and US producer prices at 1330 BST.The UK corporate calendar on Wednesday has full year results from luxury fashion brand Mulberry Group, wealth manager Charles Stanley and waste management provider Biffa.Related Shares:
DominosCrest NicholsonBovis HomesBellwayCentricaBarratt DevelopmentsPersimmonRDW.LTaylor Wimpey