London open: Stocks edge up but housebuilders slump on Crest Nicholson warning

London stocks edged higher in early trade on Monday as investors mulled the latest rate cut by the People’s Bank of China, but housebuilders were under the cosh after a profit warning from Crest Nicholson.

At 0825 BST, the FTSE 100 was up 0.2% at 7,274.84.

Earlier, the PBoC cut the one-year loan prime rate by 10 basis points to 3.45%, versus consensus expectations of a 15 basis points cut.

Meanwhile, the five-year loan prime rate - which affects mortgage prices - was unexpectedly left unchanged at 4.20%. Analysts had been expecting a 15bps cut, especially after the medium-term loan rate was reduced last week.

Capital Economics said: "The underwhelming LPR announcement strengthens our view that the PBOC is unlikely to embrace the much larger rates cuts that would be required to revive credit demand.

"Hopes for a stimulus-led turnaround in economic activity largely depend on the prospect of greater fiscal support."

Danske Bank said the decision to leave the five-year LPR on hold "probably reflects concerns about a weaker yuan, which has had a tough year".

On home shores, meanwhile, the latest data from property portal Rightmove showed that house prices fell by 1.9% in August - the biggest decline this year as higher mortgage rates weighed on demand for houses.

CMC Markets analyst Michael Hewson said: "The prospect of another rate hike next month is also likely to be affecting confidence, although the fact we are in August, and in the middle of the school holidays probably also has a part to play."

Looking ahead to the rest of the week, the focus will be on the Jackson Hole Symposium in Wyoming.

Richard Hunter, head of markets at Interactive Investor, said it "should provide an update from Federal Reserve Chair Powell on the latest state of play, although with readings on retail sales, non-farm payrolls and inflation all to come before the next Fed meeting in September, any comments could well be short-lived".

In equity markets, housebuilder Crest Nicholson tumbled as it lowered annual profit forecasts after a worsening of the housing market amid rising inflation and interest rates.

The company said it expected annual profits to be around £50m in a "challenging" market, down from prior forecasts of £73m, but predicted a fall in interest and inflation rates over the medium term.

Other housebuilders followed suit, with Taylor Wimpey, Persimmon, Barratt Developments, Berkeley and Redrow all sharply lower.

On the upside, addiction treatment specialist Indivior rallied as it announced that its US division has settled claims made by the end payor class in the Suboxone antitrust litigation. The company said it expected to pay $30m, which would be deducted from a reserved $188m for the litigation.

Market Movers

FTSE 100 (UKX) 7,274.84 0.17%
FTSE 250 (MCX) 18,072.82 -0.13%
techMARK (TASX) 4,207.68 0.11%

FTSE 100 - Risers

Tesco (TSCO) 252.20p 1.00%
Pershing Square Holdings Ltd NPV (PSH) 2,922.00p 0.83%
BP (BP.) 477.25p 0.80%
Shell (SHEL) 2,374.00p 0.59%
B&M European Value Retail S.A. (DI) (BME) 569.00p 0.53%
BT Group (BT.A) 113.00p 0.49%
Beazley (BEZ) 538.00p 0.47%
Abrdn (ABDN) 162.65p 0.46%
Convatec Group (CTEC) 219.40p 0.46%
Smurfit Kappa Group (CDI) (SKG) 3,056.00p 0.39%

FTSE 100 - Fallers

Taylor Wimpey (TW.) 107.70p -4.35%
Persimmon (PSN) 988.00p -3.33%
Barratt Developments (BDEV) 423.00p -2.44%
Berkeley Group Holdings (The) (BKG) 3,920.00p -1.78%
Rightmove (RMV) 540.00p -1.42%
Prudential (PRU) 935.20p -1.25%
Unite Group (UTG) 893.00p -1.16%
SEGRO (SGRO) 696.60p -0.91%
DCC (CDI) (DCC) 4,233.00p -0.73%
United Utilities Group (UU.) 906.80p -0.72%

FTSE 250 - Risers

Indivior (INDV) 1,814.00p 3.13%
Renishaw (RSW) 3,676.00p 2.11%
Darktrace (DARK) 343.60p 2.11%
BlackRock World Mining Trust (BRWM) 570.00p 1.97%
NextEnergy Solar Fund Limited Red (NESF) 87.95p 1.79%
Computacenter (CCC) 2,062.00p 1.78%
Hill and Smith (HILS) 1,790.00p 1.59%
Synthomer (SYNT) 70.40p 1.51%
Harbour Energy (HBR) 243.50p 1.50%
Direct Line Insurance Group (DLG) 160.65p 1.36%

FTSE 250 - Fallers

Crest Nicholson Holdings (CRST) 171.30p -11.70%
Travis Perkins (TPK) 810.40p -2.38%
Helios Towers (HTWS) 82.85p -2.36%
OSB Group (OSB) 362.20p -2.16%
Mitchells & Butlers (MAB) 217.80p -2.16%
Lancashire Holdings Limited (LRE) 547.50p -2.14%
Vistry Group (VTY) 706.50p -2.08%
Vesuvius (VSVS) 417.20p -1.97%
LXI Reit (LXI) 86.50p -1.93%
Redrow (RDW) 456.80p -1.89%