27th Sep 2013 09:30
LONDON (Alliance News) - London's main equity markets are mixed mid-morning Friday as traders await next week's US budget decision deadline. In the meantime, shares of UK house builders have been hit by threatened changes to government policy.
Market sentiment remains cautious as investors enter wait-and-see mode due to the budget deadlock between US President Barack Obama and Congress. Neither Democrats nor Republicans are willing to budge on their stance towards spending, specifically Obama's healthcare law, as Tuesday's October 1 deadline approaches. Unless an agreement is reached imminently, the US government will run of funds to operate, causing a shut-down of its operations.
Alongside this, Obama is no closer to securing a necessary increase in the debt ceiling. Congress has been warned by US Treasury Secretary Jack Lew that the Treasury will have exhausted all emergency borrowing measures by October 17 at the very latest.
FTSE 100-listed Persimmon, down 2.8%, is one of the biggest losers on the blue-chip index after UK Chancellor of the Exchequer George Osborne announced plans to address concerns about a possible house-price bubble.
Osborne has given the Bank of England more control. The central bank will now review the government's controversial Help-to-Buy programme annually, rather than the originally agreed three-yearly review. The BoE also will be able to recommend that Osborne lowers the GBP600,000 cap currently in place, meaning the scheme will benefit fewer home buyers.
Unsurprisingly, a large proportion of the biggest fallers in the FTSE 250 is made up of house-builder stocks. Bellway is down 1.6%, Bovis Homes Group down 1.3%, and Barratt Development down 1.3%.
The FTSE 100 is 0.3% lower, at 6,546.09, the FTSE 250 is flat at 15,014.5, whilst the AIM All-Share index is up 0.2% at 794.17.
Still to come in the data calendar is German CPI figures at 1300 BST. US personal spending, personal consumption expenditure and personal income data will be released at 1330 BST. Michigan consumer sentiment is scheduled for 1455 BST.
By James Kemp; [email protected]
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Related Shares:
Bovis HomesBellwayBarratt DevelopmentsPersimmon