The FTSE 100’s housebuilders were a major drag on the index on Tuesday as investors positioned for the Bank of England’s interest rate decision this Thursday.
The Bank of England are expected to hike by 50 basis points to 2.25% at a time the Uk housing market is starting to show signs of slowing. A hike in rates will make mortgages more expensive while households are facing inflationary pressures across the board.
Persimmon, Barratt Developments, Taylor Wimpey and Berkeley Group were all down more than 3% at the time of writing.
Despite the sharp downside in housebuilders, the FTSE 100 was down only 0.3% with oil companies and banks helping provide support for the index.
As a beneficiary of rising rates, Lloyds shares were 1% higher and at the highest levels since April.
A stronger dollar played its part once more with providing the FTSE 100 with some support ahead of a Fed meeting tomorrow from which the market will attempt to gauge the trajectory of interest rates.
Ocado was among the FTSE 100s faller after the group was cut to reduce by analysts at HSBC. The retailer said in a recent update they expect costs to hit profitability in the short term.
Kingfisher was another consumer-facing casualty as the DIY specialist slipped 2% as it said sales slowed further.
“The number of amateur builders, painters and carpenters hanging up their tool kits is growing as homeowners scramble around for savings, intently focused on finding ways to cut their energy bills,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.
“Although the purchase of outdoor bigger ticket items have remained resilient, it’s a far cry from the boom last year when people spent lockdown savings doing up their homes and gardens. Kingfisher’s numbers paint a picture of the waning DIY craze, with sales dropping by 4.1% to £6.8 billion from the £7.1 billion reported the same time last year.”