30th Sep 2013 12:51
LONDON (Alliance News) - Having dropped significantly lower at the open, London and Europe's major stock markets have continued to bump along close to the day's lows, as investors wait for developments on the budget stalemate in Washington.
Leading into the US open, futures trading indicates the DJIA, S&P 500 and Nasdaq Composite indices all will open about 0.8% lower.
At 1330 BST, the FTSE 100 is down 0.9% at 6,455.50, the FTSE 250 is down 0.7% at 14,825.70 and the AIM All-Share is down 0.8% at 790.05. In Europe, major markets also are recording losses, with the CAC 40 in France down 1.3% and the DAX in Germany down 1%.
The most notable gainers in UK equity markets are house builders, benefiting from Prime Minister David Cameron's weekend announcement that the second phase of the government's Help-to-Buy scheme will be brought forward by three months. Stage Two of the scheme, which provides a government guarantee for 15% of the value of a house to lenders offering buyers a 95% mortgage, had been expected to begin at the end of the year. House buyers now will be able to apply for the scheme from the week beginning October 7.
The move comes as data shows a rise in UK house prices of 0.5% in September, the eighth straight month of gains. The review of the housing market by Hometrack showed an increase in demand for houses in September of 1.4%, against an increase in demand of just 0.3%.
The announcement of the early start to Help-to-Buy has boosted house builders. Persimmon is up more than 2% at 1,803p, leading the gainers on the FTSE 100. On the FTSE 250, the top three gainers are Bellway, up 4.2%, Barratt Developments, up 3.6% and Taylor Wimpey, up 3.4%.
Mining and metal stocks lead the fallers by Monday afternoon, as the gold price takes an afternoon dip. Gold currently trades at USD1,332.3 per ounce.
The biggest effect from the gold price, which has fallen by 25% over the past year, is being felt by AIM-listed pawnbrokers Albemarle & Bond. A&B warned Monday that it may breach its banking covenants, as profits have been hit by the weak gold price.
Monday is the last day of the month and of the third quarter. With many indices hitting record highs in September and QE tapering expected in the US later in the year, some market participants suggest it's not a surprise to see profit taking at this stage. But leading into the US open, the sell-off seems heavier than merely profit taking.
Analysts say it remains likely that nothing will be agreed by tonight in Washington, which will lead to a blow to the US economy, as some government employees are put on unpaid leave and non-essential services are closed.
Still to come this afternoon, the Chicago Purchasing Managers' Index at 1445BST. The previous reading was 53 and the consensus expectation for this month is 54.
By Jon Darby; [email protected]; @jondarby100
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