Sector movers: Home construction stocks pace losses

Home construction stocks paced losses on the FSTE 350 on Tuesday after a closely-followed survey revealed a smaller-than-expected gain in house prices for July.

Nationwide's house price index edged up at a month-on-month pace of 0.1%, buoying the annual rate of growth in home prices from 10.7% for June to 11.0% in July (consensus: 11.6%).

According to Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, the data "suggested" that buyer demand was holding its own despite surging mortgage rates, although the figures were not clear-cut.

But her forecast called for further cooling in buyer demand as the fixed-rate mortgage rate with 75% LTV reached around 3.1% by the end of 2022, versus 1.57% last December and 2.88% at present - for its fastest six-month rise since at least 1995.

That outcome was conditional on market pricing for hikes in Bank Rate being proved correct.

"But with consumers’ confidence very low and budgets already being squeezed by sharp increases in the prices of essential goods, we think many would-be buyers will wait.

"We continue to judge, therefore, that house prices will drop by about 2% in the second half of this year."

Industrial Metals were also under the cosh as the Greenback bounced back.

Nevertheless, analysts at SP Angel noted how copper prices, for instance, were coming off a one-month high, having climbed by $1,000 per metric tonne over recent weeks.

Going the other way, defensives areas of the market including Gas and Water utilities, Electricity and Tobacco stocks were wanted.

Aerospace and Defence also caught a bid, with BAE Systems's shares climbing following a target price upgrade out of analysts at Berenberg from 850.0p to 900.0p.

They argued that the stock's "sizeable" 30% discount versus its US peers in terms of its EV/EBITDA multiple should reduce further.

The reasons for that view were the BAE's maturing capital returns strategy, the removal of its pension overhang and the more favourable medium-term backdrop for European defence budgets relative to those in the US.

Top performing sectors so far today

Gas, Water & Multiutilities 6,378.62 +2.40%

Oil, Gas and Coal 7,359.47 +1.51%

Tobacco 34,711.46 +1.30%

Electricity 11,327.92 +0.89%

Aerospace and Defence 4,894.11 +0.86%

Bottom performing sectors so far today

Household Goods & Home Construction 12,401.80 -4.68%

Leisure Goods 18,743.72 -3.34%

Personal Goods 28,695.99 -2.67%

Industrial Metals & Mining 6,396.46 -2.46%

Automobiles & Parts 1,815.57 -2.37%