London close: Property stocks drag FTSE 100 into the red

European indices dropped on Monday as rising oil prices and nervousness ahead of a number of key central bank policy meetings later this week hit investors' nerves, with London's FTSE 100 retreating from a four-month high.

In the UK in particular, property stocks were weighing heavily on markets on expectations of another hike in interest rates, which have so far this year hammered housebuilders' profits and dented developers' property valuations. Data on Monday showing a drop in house prices will have also dampened the mood.

After registering mild losses for most of the session, the FTSE 100 fell further into the red by the close to finish down 0.8% at 7,653. The index rose over 3% last week to finish at 7,711.38 on Friday – its highest close since 23 May.

Brent crude rose a further 0.6% to $94.53 a barrel by the close in London, having touched an intraday high of $94.95 as it continues to flirt with yearly highs.

“Everyone is worried about oil prices, and what they will mean for inflation figures heading into the end of the year," said Chris Beauchamp, analyst at IG.

Central bank action

It's set to be a busy week, with policy decisions due from the Federal Reserve (Wednesday), the Bank of England (Thursday) and a host of other central banks elsewhere, including Japan, Brazil and Turkey.

The Fed is widely expected to hold rates steady following a recent barrage of economic data showing the US economy to have cooled slightly in August. Though analysts are holding out the possibility of one further rate hike to 5.50-5.75% later this year.

Meanwhile, the Bank of England is set to hike its benchmark interest rate by 25 basis points to 5.5%, according to economists, but it is hoped that this will be the peak for rates in the current cycle, before it begins to loosen monetary policy in 2024.

However, the UK consumer price index, due out Wednesday before the BoE decision, could draw a dramatic reaction from markets if it surprises to the upside.

Ocado delivers gains, housing stocks sink

Ocado shares jumped ahead of an expected nine-month trading update tomorrow, with the stock being helped by a broker upgrade. Jefferies hiked its target price for the online grocery group from 550p to 750p, as it lifted its medium-term profit margin forecasts for its retail arm, Ocado Retail.

Joint venture partner Marks & Spencer, which owns half of Ocado Retail, was also in demand in afternoon trade.

Housing and property-related stocks were all out of favour, including Land Securities, Rightmove, CRH, Berkeley Group and Barratt Development as markets awaited the BoE decision.

Meanwhile, in more gloomy news for the housing sector, the Rightmove House Price Index out Monday showed the annual change in prices was -0.4%, worse than August’s 0.1% decline and the biggest annual dip since March 2019.

Paper and packaging group Mondi rose after selling its last remaining facility in Russia to Sezar Invest for €775m. Western companies have exited Russia after sanctions were imposed in response to Moscow's unprovoked invasion on neighbouring Ukraine.

Savings and retirement group Phoenix started the session off well but fell into the red by the close despite smashing forecasts with cash generation in the first half.

Market Movers

FTSE 100 (UKX) 7,652.94 -0.76%
FTSE 250 (MCX) 18,449.27 -1.81%
techMARK (TASX) 4,357.71 -1.25%

FTSE 100 - Risers

Mondi (MNDI) 1,380.50p 3.25%
Ocado Group (OCDO) 787.00p 3.06%
Hikma Pharmaceuticals (HIK) 2,100.00p 1.79%
Marks & Spencer Group (MKS) 222.50p 1.27%
Reckitt Benckiser Group (RKT) 5,830.00p 1.18%
BT Group (BT.A) 118.20p 1.03%
Glencore (GLEN) 459.65p 0.71%
London Stock Exchange Group (LSEG) 8,390.00p 0.58%
Bunzl (BNZL) 2,873.00p 0.52%
Ashtead Group (AHT) 5,232.00p 0.50%

FTSE 100 - Fallers

RS Group (RS1) 711.80p -4.33%
Airtel Africa (AAF) 124.90p -3.63%
Entain (ENT) 1,114.50p -3.38%
St James's Place (STJ) 835.60p -3.29%
Land Securities Group (LAND) 574.60p -3.07%
Beazley (BEZ) 572.00p -3.05%
Auto Trader Group (AUTO) 600.60p -3.04%
Rightmove (RMV) 544.80p -2.99%
CRH (CDI) (CRH) 4,290.00p -2.99%
Berkeley Group Holdings (The) (BKG) 4,085.00p -2.95%

FTSE 250 - Risers

Drax Group (DRX) 516.40p 3.78%
Foresight Group Holdings Limited NPV (FSG) 455.00p 3.41%
Essentra (ESNT) 149.00p 2.48%
Helios Towers (HTWS) 83.15p 2.28%
International Distributions Services (IDS) 262.70p 1.94%
Target Healthcare Reit Ltd (THRL) 77.90p 1.70%
Vesuvius (VSVS) 440.40p 1.66%
Hipgnosis Songs Fund Limited NPV (SONG) 82.00p 1.36%
IP Group (IPO) 59.80p 1.18%
Me Group International (MEGP) 161.00p 1.13%

FTSE 250 - Fallers

Aston Martin Lagonda Global Holdings (AML) 296.40p -9.02%
Ferrexpo (FXPO) 77.55p -7.40%
Future (FUTR) 736.50p -6.95%
Ascential (ASCL) 192.80p -6.23%
Mobico Group (MCG) 82.55p -5.60%
Ceres Power Holdings (CWR) 340.20p -5.50%
Diversified Energy Company (DEC) 83.05p -5.41%
Games Workshop Group (GAW) 10,930.00p -4.87%
Oxford Instruments (OXIG) 2,185.00p -4.79%
Greggs (GRG) 2,422.00p -4.65%