London midday: Stocks stay down as housebuilders slump

London stocks were still lower by midday on Friday, with housebuilders under the cosh as investors continued to mull the impact of the latest interest rate hike.

The FTSE 100 was down 0.3% at 7,483.02.

Matt Britzman, equity analyst at Hargreaves Lansdown, said: "Yesterday's super-hike to UK interest rates, and the fact there's likely more to come, continue to play on investors' minds as they weigh up the impact on corporate earnings."

Investors were also mulling a survey out earlier which showed that the rate of growth in the private sector slowed in June.

The latest S&P Global/CIPS services PMI business activity index was 53.7 in June, a three-month low. Although above the neutral 50.0 level and indicating growth, it was below both May’s 55.2 and consensus for 54.8.

The manufacturing output index was unchanged, at 47.7, while the UK manufacturing PMI eased to a six-month low of 46.2, from 47.1 a month previously.

The flash UK PMI composite output index - a weighted average of the manufacturing and services indices - was 52.8, down on May’s 54.0. Consensus had been for 53.6.

Overall, private sector growth was the slowest since March, S&P Global noted, which it said reflected a "much softer" rise in new order intake as some clients curtailed spending.

The inflationary picture was also mixed. Respondents to the manufacturing survey signalled an outright reduction in factory gate charges for the first time in more than seven years.

But services providers recorded yet more steep rises in average prices charged, as staff costs continued to weigh heavily.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said: "June’s survey indicates that the UK has lost momentum again after a brief growth spurt in the spring, and looks set to weaken further in the months ahead.

"Most notably, consumer spending on services - a core growth driver in the spring - is now showing signs of faltering as the reality of higher interest rates, the increase cost of living and gloom about the outlook sets in."

The latest retail sales figures were also out. According to the Office for National Statistics, sales unexpectedly rose in May, by 0.3%, following a 0.5% increase in April. Analysts were expecting a 0.2% decline.

Non-store retailing sales volumes rose by 2.7%, mainly thanks to strong sales by online retailers selling outdoor-related goods and summer clothing. This was boosted by the warm weather in the second half of the month, the ONS said.

Ruth Gregory, deputy chief UK economist at Capital Economics, said: "The further rebound in retail sales volumes in May suggests the recent resilience in economic activity hasn’t yet faded. But we think it’s too soon to conclude the rebound in retail sales will be sustained and the economy will avoid a recession."

In addition, a survey out earlier showed that consumer confidence continued to push higher in June despite the ongoing cost-of-living squeeze.

The latest consumer confidence index from GfK showed a three-point rise in June to -24. While still in negative territory, the index is now well above the same month a year previously, when it was -41.

It is also the fifth consecutive increase, and the best showing for 17 months.

Within that, the personal financial situation measure for the coming year jumped seven points to -1, while the forward-looking general economic situation rose five points to -25.

The major purchase index, however, dipped a point to -25.

The survey was carried out before the Bank of England’s latest decision on interest rates, which saw the Monetary Policy Committee on Thursday up the cost of borrowing by a larger-than-expected 50 basis points, to 5%.

In equity markets Ocado was the worst performer on the FTSE 100, having surged on Thursday amid speculation it was a takeover target for Amazon.

Housebuilders were also under pressure as investors fretted about the impact of surging borrowing costs. Berkeley, Persimmon, Barratt, Taylor Wimpey, Redrow, Crest Nicholson and Bellway all slumped.

On the upside, GSK rallied after the pharmaceuticals group said that a Zantac trial that was due to begin next month in California was dismissed after a confidential settlement was agreed. Haleon also gained on the news.

Market Movers

FTSE 100 (UKX) 7,483.02 -0.25%
FTSE 250 (MCX) 18,174.72 -0.84%
techMARK (TASX) 4,495.65 0.28%

FTSE 100 - Risers

GSK (GSK) 1,437.60p 5.78%
British American Tobacco (BATS) 2,640.00p 1.95%
Croda International (CRDA) 5,542.00p 1.65%
Convatec Group (CTEC) 210.00p 1.55%
Pearson (PSON) 820.80p 1.21%
Vodafone Group (VOD) 72.76p 1.20%
National Grid (NG.) 1,047.50p 1.11%
United Utilities Group (UU.) 1,010.50p 0.95%
Severn Trent (SVT) 2,712.00p 0.89%
Associated British Foods (ABF) 1,953.00p 0.85%

FTSE 100 - Fallers

Ocado Group (OCDO) 521.00p -8.24%
JD Sports Fashion (JD.) 143.25p -4.34%
Persimmon (PSN) 1,061.50p -3.81%
Smith (DS) (SMDS) 270.80p -3.42%
Barratt Developments (BDEV) 406.90p -2.73%
International Consolidated Airlines Group SA (CDI) (IAG) 161.35p -2.71%
Berkeley Group Holdings (The) (BKG) 3,767.00p -2.71%
Taylor Wimpey (TW.) 100.20p -2.43%
Anglo American (AAL) 2,277.00p -2.32%
Glencore (GLEN) 437.20p -1.97%

FTSE 250 - Risers

Volution Group (FAN) 366.80p 2.80%
Synthomer (SYNT) 73.50p 2.51%
NCC Group (NCC) 92.00p 2.22%
HGCapital Trust (HGT) 365.50p 1.25%
PureTech Health (PRTC) 229.00p 1.10%
4Imprint Group (FOUR) 5,040.00p 1.10%
PZ Cussons (PZC) 176.80p 1.03%
IG Group Holdings (IGG) 681.00p 0.96%
The Renewables Infrastructure Group Limited (TRIG) 111.20p 0.72%
Me Group International (MEGP) 167.40p 0.72%

FTSE 250 - Fallers

Helios Towers (HTWS) 88.45p -3.91%
Vanquis Banking Group 20 (VANQ) 182.60p -3.89%
Mobico Group (MCG) 98.35p -3.77%
Redrow (RDW) 435.80p -3.75%
easyJet (EZJ) 477.80p -3.51%
IWG (IWG) 141.70p -3.34%
Crest Nicholson Holdings (CRST) 194.00p -3.29%
Vistry Group (VTY) 636.00p -3.27%
CLS Holdings (CLI) 130.20p -3.27%
Balanced Commercial Property Trust Limited (BCPT) 67.10p -3.17%