London close: FTSE edges up as housebuilders recover; pound steadies

The FTSE 100 closed up 0.2% at 6,893.81, while the pound was steady against the dollar at 1.1121. Sterling fell below the $1.11 level last week, hitting its weakest level since Britain went decimal in 1971, after chancellor Kwasi Kwarteng announced a swathe of tax cuts in his so-called mini-budget.

Following a meeting with prime minister Liz Truss and Kwarteng, the Office for Budget Responsibility confirmed it will deliver an initial forecast to the chancellor on 7 October.

"The forecast will, as always, be based on our independent judgment about economic and fiscal prospects and the impact of the government’s policies," the OBR said.

On the macro front, data released earlier by the Office for National Statistics showed that the economy nudged higher in the last quarter, reversing an earlier estimate for a small decline.

The ONS said UK GDP was estimated to have increased by 0.2% in the second quarter, after it revised its first estimate for a 0.1% contraction.

It noted that there continued to be weakness in the wholesale and retail trade, and in health industries. But services output was estimated to have increased by 0.2%, reflecting "an easing" in information and communication, and professional, scientific and technical activities output.

The ONS had previously estimated that services output had fallen by 0.4%, reflecting a reduction in Covid-19 activities.

Joshua Mahony, senior market analyst at IG, said: "The FTSE 100 is lagging on a day that has once again shone the limelight on the UK a week on from the chancellors highly contentious mini-budget. Soaring mortgage offers have grabbed the headlines, with lenders reacting to recent market turmoil by hiking their borrowing rates in anticipation of greater instability and a reactive Bank of England. Nonetheless, we have seen homebuilders enjoy a relatively upbeat session, with the OBR now expected to provide their initial budget forecasts on 7 October.

"The Truss/Kwarteng double act will be back in the limelight this coming weekend as the Conservative Party Conference kicks off on Sunday, but there are precious few signals that the controversial tax hike for top earners will be withdrawn. From a market perspective, the pound has managed to recoup the entirety of the budget sell-off against the euro and dollar, but the gilt markets tell us another story. Fortunately, the surprise 0.2% GDP reading for Q2 helped alleviate fears that the UK was in recession as claimed by the Bank of England, but pressures are sure to ramp up as we move towards a difficult second half of the year."

Other figures released on Friday showed that mortgage approvals spiked in August as homebuyers scrambled to secure loans amid rising interest rates.

Investors were also digesting the latest data from mortgage lender Nationwide, which revealed that house prices were steady on the month in September following a 0.7% increase in August, and versus expectations of a 0.3% jump.

In equity markets, housebuilders were on the rise, having taken a beating recently due to concerns about the impact of higher interest rates. Barratt, Persimmon and Taylor Wimpey were all higher.

Synthomer was the top performer on the FTSE 250, having tanked on Thursday after it warned on profits.

Barclays nudged lower as the bank agreed with the US Securities and Exchange Commission to pay $361m after control failures led it to sell $17.7bn of securities it was not allowed to issue.

Carnival slid after the cruise operator said it was expecting to report a loss for the fourth quarter. Travel company Tui also fell sharply.

Cineworld slumped as it posted a narrowing of its interim losses but cautioned that third-quarter admissions have been below expectations and are expected to remain below pre-pandemic levels over the next two years.

Market Movers

FTSE 100 (UKX) 6,893.81 0.18%
FTSE 250 (MCX) 17,151.40 2.15%
techMARK (TASX) 4,117.74 0.36%

FTSE 100 - Risers

Barratt Developments (BDEV) 342.20p 5.81%
Unite Group (UTG) 858.50p 5.40%
Persimmon (PSN) 1,237.50p 5.32%
SEGRO (SGRO) 753.00p 5.02%
Burberry Group (BRBY) 1,808.00p 4.27%
Berkeley Group Holdings (The) (BKG) 3,297.00p 4.17%
St James's Place (STJ) 1,036.00p 4.14%
M&G (MNG) 166.55p 4.13%
Dechra Pharmaceuticals (DPH) 2,626.00p 4.04%
Auto Trader Group (AUTO) 515.00p 4.02%

FTSE 100 - Fallers

BAE Systems (BA.) 789.80p -4.27%
Unilever (ULVR) 3,969.00p -2.73%
Reckitt Benckiser Group (RKT) 5,976.00p -2.42%
Centrica (CNA) 70.84p -1.91%
Glencore (GLEN) 478.15p -1.77%
British American Tobacco (BATS) 3,226.50p -1.32%
Imperial Brands (IMB) 1,855.00p -1.17%
Entain (ENT) 1,086.00p -1.00%
Anglo American (AAL) 2,735.50p -0.89%
Admiral Group (ADM) 1,914.50p -0.88%

FTSE 250 - Risers

Synthomer (SYNT) 106.50p 18.27%
Molten Ventures (GROW) 303.60p 11.54%
Petershill Partners (PHLL) 184.20p 9.25%
TP Icap Group (TCAP) 196.00p 9.01%
Balanced Commercial Property Trust Limited (BCPT) 80.20p 8.67%
Hochschild Mining (HOC) 59.00p 8.46%
UK Commercial Property Reit Limited (UKCM) 60.50p 8.23%
Bluefield Solar Income Fund Limited (BSIF) 139.00p 7.75%
Genuit Group (GEN) 291.50p 7.56%
Home Reit (HOME) 90.80p 7.46%

FTSE 250 - Fallers

Carnival (CCL) 581.80p -21.25%
TUI AG Reg Shs (DI) (TUI) 108.15p -10.10%
Aston Martin Lagonda Global Holdings (AML) 119.50p -4.74%
ASOS (ASC) 567.50p -4.62%
HarbourVest Global Private Equity Limited A Shs (HVPE) 2,100.00p -3.00%
Ascential (ASCL) 205.60p -2.65%
SSP Group (SSPG) 189.85p -2.34%
Lancashire Holdings Limited (LRE) 497.00p -1.68%
Darktrace (DARK) 295.10p -1.30%
Dr. Martens (DOCS) 222.20p -1.24%