On Wednesday, the FTSE 100 was firmly in the red as concerns about the UK and Chinese property markets dragged on the index. Sharp declines for St James’s Place and Reckitt Benckiser compounded negative sentiment.
The FTSE 100 was down 0.65% at the time of writing.
“Housing woes are front and centre today as investors reflect on the difficulties of UK housebuilders and a deepening property crisis in China. The FTSE 100 has been on the back foot in early trade, with little to ignite a wave of buying, as investors also await a key inflation report stateside,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown
“Housebuilder Taylor Wimpey has underlined the pressure high borrowing costs have put on sales rates, while inflationary winds have whipped up costs. Shares fell in early trade as investors digested the 49% plunge in annual profits but also the prospect of clouds staying low over the housing sector in the coming months. The outlook has disappointed with the company expecting a further fall in completed home sales and the squeeze on profit margins continuing.”
Taylor Wimpey shares were down 2.2%, dragging Persimmon 1.4% lower with them.
However, the major weight on the index was China’s property market. Miners fell as further bad news from the world’s second-largest economy cast doubt over the demand for natural resources.
“China’s property house of cards has wobbled again as the woes of another huge real estate developer Country Garden come into sharp focus. A liquidation petition has been filed against it in Hong Kong by one of its creditors, Ever Credit Limited. The development threatens to reignite concerns about the fragility of the sector and cast doubt on efforts made by authorities to shore it up and stop contagion,” Streeter said.
Anglo American was down 2% and Rio Tinto dropped 0.8%.
St James’s Place and Reckitt Benckiser
Following the release of full-year results, St James’s Place and Reckitt Benckiser were the biggest fallers on Wednesday.
St James’s Place cut its dividend after recording a £426m provision for increasing complaints. The wealth manager’s assets under management grew, but investors were clearly distraught with the dividend slashing. St James’s Place shares were down 28% at the time of writing.
Reckitt Benckiser shares fell 11% after announcing revenue that missed expectations. Higher costs and lower sales resulted in materially lower operating margins. Volumes fell as customers shunned the group’s premium brands in favour of budget options amid the cost of living crisis.