The FTSE 100 was slightly lower on Monday as global equities looked set to take a break from the rip-roaring rally that has pushed US, Japanese and European equities to record highs.
London’s leading index was down 0.3%, while stocks across Europe were mixed.
“This of course follows record trading last week, so the slow down signals a pause for breath rather than anything more sinister,” said Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown.
“Investors are looking ahead to the monthly personal consumption expenditures price index reading, which is the Federal Reserve’s preferred measure of inflation, on Thursday.”
Last week was a week for the corporates to drive equity performance. With a raft of economic data coming in the next two weeks, one would expect the focus to shift back onto the macro picture and interest rates in the coming days.
Investors should note that while Nvidia almost single-handedly drove US stocks to fresh record highs, the US small caps did not join the rally which signifies underlying weakness in the breadth of investor confidence in the rally.
Housebuilders
The FTSE 100 was fighting to offset weakness in the housebuilders on Monday following the launch of a Competition and Markets Authority investigation into information sharing that may have impacted the pricing and availability of housing in some areas of the UK.
Barratt Developments, Bellway, Berkeley, Persimmon, Redrow, Taylor Wimpey, and Vistry were named by the CMA as companies they would look into amid concerns about anti-competitive practices.
“A regulatory probe is the last thing the sector needs. It is just finding its feet again after a tricky period for the property market as demand dried up thanks to higher borrowing costs.
“Housebuilders may also argue the proposed introduction of more red tape, including the establishment of a New Homes Ombudsman, will clip the sector’s wings. However, previous issues around build quality and treatment of customers means they are reaping what they have sown.”
Taylor Wimpey and Persimmon were the most heavily hit FTSE 100 homebuilders with declines of over 3%.
Ocado was the FTSE 100’s top faller ahead of full-year results due to be released on Thursday.
After a storming session on Friday, Standard Chartered was again the best performer adding 2.8%. The Asia-focused bank recorded strong profit growth in the last quarter, and Berenberg and JP Morgan have increased their price targets as a result.