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London open: FTSE 100 falls as property stocks subside
London stocks opened lower on Wednesday as the housebuilding and property rally ran out of steam and attention turns firmly towards the changing of Britain’s leadership and the Bank of England’s looming policy tinkering.
After almost half an hour of trading, the FTSE 100 was down 0.27% to 6,662.42, while the FTSE 250 was only just in positive territory at 16,814.33.
The blue chip index was in the red despite a positive Asian and US sessions, noted market analyst Naeem Aslam at Think Markets, as having erased global losses from the initial Brexit shock, investors now wanted to lock some profit after the rebound.
“Generally speaking they are poised to take on risk, however caution remains the main theme among traders in Europe. There have been some impressive gains over in Asia and US, therefore you could say risk mode is gathering steam as a result of this and this is why the US treasury yield had the biggest two days of gains since the 2011,” he said.
The pound was up agains the dollar at 1.326 and regained the 1.2 mark against the euro for the first time this month.
CMC Markets’ Michael Hewson pointed out that the pound had it best day in weeks on Tuesday as markets cheered the prospect of some form of certainty at the top of government.
“This new found stability may also have tempered some of the prospect of an imminent rate cut at tomorrow’s Bank of England rate meeting, given that credit conditions are significantly easier than they were three weeks ago, due to the relaxing of banks capital buffer requirements and the up to £250bn of available extra liquidity that can be called upon if required at the various liquidity auctions.”
On the data front, the Bank of England credit conditions survey is at 0930 BST, eurozone industrial production is at 1000 BST and the US import price index is at 1330 BST.
Topping the FTSE 100 was Burberry as, despite declines across all three of its regions leading to a 3% like-for-like drop in retail sales in the first quarter, this was better than the 5% fall that had been forecast by market. The luxury retailer warned that its markets remain challenging and that its wholesale outlook has become more cautious for both the first and second halves but said underlying revenue was flat and that it still expected low single-digit percentage growth in total retail revenue for the full year, as well as a £90m benefit from currency rates if they remain at current levels.
Housebuilder Barratt Developments was one of the big fallers, caught up in a sector-wide retreat, even though it said full year profit before tax was to increase by around 20% to £680m, in line with market expectations.
Total completions, including joint ventures, increased by 5.3% to 17,319, as a result of strong consumer demand during the financial year. It added that was too early to say what the impact of the uncertainty facing the UK economy will be post the Brexit vote.
Pharmaceutical giant AstraZeneca was up slightly after entering into an agreement with Sandoz and its affiliates to resolve litigation relating to fulvestrant product, Faslodex, which Sandoz has been seeking FDA approval for a generic version.
Astra said: “On 12 July 2016, the United States District Court for the District of New Jersey entered a consent judgment filed by AstraZeneca and Sandoz, which includes an injunction preventing Sandoz from launching a generic fulvestrant product until 25 March 2019, or earlier in some circumstances.”
