London close: Stocks slip on GDP revision, Middle East tensions

London stocks closed in the red on Monday, with heightened geopolitical tensions in the Middle East weighing on investor sentiment.

The FTSE 100 index fell 1.01% to 8,236.95 points, while the FTSE 250 declined 0.88% to 21,053.19 points.

In currency markets, sterling was last up 0.22% on the dollar to trade at $1.3403, as it gained 0.37% against the euro, changing hands at €1.2025.

“Stocks have shed some ground so far in the final session of September, with last week’s Chinese stimulus measures failing to turbocharge indices in the US and Europe,” said IG chief market analyst Chris Beauchamp.

“Today’s speech from Jerome Powell and the job reports this week may well keep risk appetite in check, and with the US election still on a knife edge investors aren’t short of reasons to stay cautious.”

Beauchamp added that looking ahead, UK investors would be keen to see what Tesco’s numbers looked like.

“October will see the first budget from a Labour government in 14 years, and UK consumers remain concerned about the near-term outlook.”

UK economy grows less than expected, house prices continue to grow

In economic news, the UK economy grew less than initially reported in the second quarter, with revised figures from the Office for National Statistics (ONS) showing GDP expanding 0.5%, down from the prior estimate of 0.6%.

While the services sector experienced widespread growth at 0.6%, that was offset by declines in both the production and construction sectors.

However, for the full 2023 year, GDP growth was revised up to 0.3%, from the earlier estimate of 0.1%, following updated income data.

“Today’s updated GDP figures for 2023 and 2024 include new annual survey data, VAT returns and updated information about the relative size of each industry for the first time,” said ONS director of economic statistics Liz McKeown.

“However, after taking on these improvements, the quarterly growth path across the last 18 months is virtually unchanged.

“Our latest data show that household savings continue to increase and are now at the highest rate since the Covid-19 lockdowns.”

In the housing market, UK house prices surged at their fastest pace in nearly two years, with Nationwide’s house price index showing a 0.7% rise in September compared to August, bringing the average house price to £266,094.

Annual growth reached 3.2%, the highest rate since November 2022.

“Income growth has continued to outstrip house price growth in recent months while borrowing costs have edged lower amid expectations that the Bank of England will continue to lower interest rates in the coming quarters,” said Nationwide chief economist Robert Gardner.

“These trends have helped to improve affordability for prospective buyers and underpinned a modest increase in activity and house prices, though both remain subdued by historic standards.”

Mortgage approval data also saw a boost in August, climbing to 62,500, the highest level in two years, according to the Bank of England.

Remortgaging approvals rose to 27,200, while consumer borrowing exceeded expectations, with mortgage debt increasing by £2.9bn.

“This resurgence in the housing market follows a series of rate cuts for fixed-rate mortgages by high-street lenders, however, we’re not out of the woods yet,” noted Aaron Milburn, UK managing director at credit intelligence provider Pepper Advantage.

“Borrowers are still grappling with higher rates than previous and there remains a lack of available housing.

“While welcomed, this influx of new mortgage holders will increase pressure on the existing housing supply and push prices even higher.”

On the continent, inflation showed signs of easing, as Germany's inflation rate fell to 1.8% in September, down from 2% in August, driven by lower energy and goods prices.

Italy’s inflation dropped below 1% for the first time this year, while Spain and France reported inflation rates below 2%.

In China, manufacturing activity remained weak in September, as demand for new orders continued to fall.

The official purchasing managers’ index (PMI) edged up slightly to 49.8, but still signalled contraction.

At the same time, the private Caixin PMI, which focuses on smaller firms, fell to 49.3, its lowest level since July 2023.

China’s property market meanwhile saw new stimulus measures, with three major cities relaxing home-buying restrictions, while the central bank urged lenders to cut mortgage rates in an effort to support the struggling sector.

Rightmove falls after rejecting another offer, Mulberry jumps on takeover bid

On London’s equity markets, shares in Rightmove slid 7.66% after the company rejected a £6.2bn takeover bid from Rupert Murdoch’s REA Group, stating that the offer undervalued the property portal.

It marked the fourth bid by REA that Rightmove had turned down.

3i Group fell 2.6% amid news that short-seller ShadowFall Capital and Research had taken a significant short position against the investment trust.

ShadowFall raised concerns over the valuation of 3i’s largest holding, Action, a European discount retailer, which it believed was overvalued.

Aston Martin Lagonda saw a sharp drop, sinking 24.51%, as the luxury carmaker warned that full-year profits would decline.

The company cited supply chain disruptions and weakening demand in China, prompting a reduction in its wholesale volume guidance.

Airline stocks also faced pressure, with IAG, easyJet, and Wizz Air down 3.2%, 3.37%, and 4.2% respectively.

The sector appeared to be affected by rising geopolitical tensions in the Middle East, which could disrupt travel demand.

On the upside, Fidelity China Special Situations climbed 3.27% after China announced new measures to support its economy.

Outside the FTSE 350, Mulberry surged 5.53% after Mike Ashley’s Frasers Group launched an £83m takeover bid for the luxury handbag maker.

Frasers criticised Mulberry for not informing it of plans to raise £10m, adding fuel to takeover speculation.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,236.95 -1.01%
FTSE 250 (MCX) 21,053.19 -0.88%
techMARK (TASX) 4,834.62 -0.67%

FTSE 100 - Risers

BP (BP.) 391.70p 0.91%
Hikma Pharmaceuticals (HIK) 1,911.00p 0.79%
Associated British Foods (ABF) 2,333.00p 0.43%
Rolls-Royce Holdings (RR.) 527.20p 0.42%
Next (NXT) 9,782.00p 0.41%
Glencore (GLEN) 427.70p 0.15%
Darktrace (DARK) 576.80p 0.07%
Shell (SHEL) 2,425.00p 0.04%
Experian (EXPN) 3,931.00p 0.03%
RELX FINANCE BV 3.375% GTD NTS 20/03/33 (BW73) 99.72p 0.00%

FTSE 100 - Fallers

Rightmove (RMV) 617.40p -7.66%
Smiths Group (SMIN) 1,677.00p -4.77%
Intermediate Capital Group (ICG) 2,228.00p -4.46%
easyJet (EZJ) 520.00p -3.74%
IMI (IMI) 1,812.00p -3.62%
Rentokil Initial (RTO) 364.40p -3.39%
Melrose Industries (MRO) 455.70p -3.29%
International Consolidated Airlines Group SA (CDI) (IAG) 205.40p -3.25%
Frasers Group (FRAS) 839.00p -3.23%
Entain (ENT) 763.20p -3.22%

FTSE 250 - Risers

Fidelity China Special Situations (FCSS) 221.00p 3.27%
Currys (CURY) 89.45p 3.11%
AO World (AO.) 112.40p 2.37%
Ithaca Energy (ITH) 108.80p 2.26%
North Atlantic Smaller Companies Inv Trust (NAS) 3,990.00p 1.79%
NextEnergy Solar Fund Limited Red (NESF) 80.30p 1.77%
W.A.G Payment Solutions (WPS) 84.80p 1.68%
Baltic Classifieds Group (BCG) 301.50p 1.51%
Greencoat UK Wind (UKW) 140.90p 1.15%
HarbourVest Global Private Equity Limited A Shs (HVPE) 2,430.00p 1.04%

FTSE 250 - Fallers

Aston Martin Lagonda Global Holdings (AML) 120.40p -24.51%
PureTech Health (PRTC) 146.80p -4.92%
Wizz Air Holdings (WIZZ) 1,450.00p -4.79%
Carnival (CCL) 1,218.00p -4.21%
Centamin (DI) (CEY) 145.80p -3.98%
Close Brothers Group (CBG) 411.60p -3.92%
Endeavour Mining (EDV) 1,760.00p -3.61%
RS Group (RS1) 810.00p -3.57%
Kainos Group (KNOS) 883.00p -3.50%
Kier Group (KIE) 137.80p -2.82%