London close: Stocks weaker as battered pound inches higher

The FTSE 100 ended the session down 0.52% at 6,984.59, and the FTSE 250 was off 2.36% at 17,304.11.

Sterling was in the green, meanwhile, last trading up 0.08% on the dollar at $1.0698, and strengthening 0.26% against the euro to change hands at €1.1154.

“Sentiment and the value of the pound has rallied slightly today, with the FTSE 100 enjoying the gentle buffeting of tailwinds from the other side of the Atlantic,” said AJ Bell financial analyst Danni Hewson.

“Sterling was given a boost by the Bank of England’s chief economist who made no bones about the need to raise interest rates in a significant way to steady the ship.

“Miners helped lift London’s blue chip as investors drew a steadying breath after yesterday’s bleak warnings about global growth forecasts from the OECD.”

But it was far from all good news, Hewson quipped, adding that the FTSE 250 - often seen as more representative of the UK economy - slid further into the doldrums despite a massive boost from waste management company Biffa.

Biffa saw its shares jump after it announced a £1.3bn takeover deal from US private equity.

“The deal is worth less than the figure on the table back in June which sounds alarm bells that this is a business that thinks it’s better to jump for the bird in hand rather than hold out for a better deal, and in the current climate that may be a long time coming.”

The Bank of England’s chief economist said earlier that it was likely to deliver a "significant policy response" to the swathe of tax cuts announced in chancellor Kwasi Kwarteng’s mini-Budget last week.

“We have all seen recent significant fiscal news in the past few days,” said Huw Pill, speaking at the CEPR Barclays Monetary Policy Forum.

He noted that this has had significant market consequences as well as significant implications for the macroeconomic outlook.

"It’s hard not to draw the conclusion that all this will require a significant monetary policy response," he said.

Pill went on to indicate the BoE should wait until its next scheduled meeting in early November rather than announce an emergency rate hike.

Elsewhere, energy suppliers were implored to do more to help customers in payment difficulties by the sector regulator Ofgem.

Publishing its market compliance review, Ofgem found that a number of suppliers had weaknesses in how they supported customers struggling to pay bills.

In particular, it singled out ScottishPower and Utilia for ‘severe’ weakness in the way they deal with struggling customers.

Ofgem issued provisional orders against the two utilities last week requiring specific and urgent actions.

Another five - E, Good, Green Energy, Outfox and Bulb - were found to have ‘moderate’ weaknesses, while eight had ‘minor’ issues, including EDF, E.ON and Ecotricity.

Only British Gas, owned by Centrica, was found to have no significant issues.

“This winter will be challenging, especially for those struggling to pay their energy bills,” said Jonathan Brearley, chief executive of Ofgem.

“Although the government’s package of support will provide some welcome relief, it’s critical that, going into this tough winter, energy companies prioritise the needs of vulnerable customers struggling to pay their bills.”

Across the pond, orders for goods made to last more than three years dipped last month in the United States, even as those for capital goods appeared to stage a rebound.

According to the Department of Commerce, total new orders for durable goods slipped at a month-on-month pace of 0.2% in seasonally adjusted terms during the month of August to reach $272.66bn, more than consensus expectations for a fall of 0.1%.

In year-on-year terms, meanwhile, they grew by 10.9%.

Staying stateside, US house price growth eased in July, according to the latest S&P CoreLogic/Case-Shiller national home price index.

The national home price index, which covers all nine US census divisions, rose 15.8% on the year, down from 18.1% a month earlier.

It marked the slowest pace of growth since April 2021.

Meanwhile, the 10-city index grew 14.9% on an annual basis in July, down from 17.4% growth in June.

The 20-city composite posted a 16.1% year-over-year gain, down from 18.7% a month earlier.

On the continent, Sweden and Denmark warned ships to avoid an area of the Baltic Sea after unexplained leaks were discovered in both Nord Stream pipelines.

Two leaks were discovered on Nord Stream 1, which carries gas from Russia to Europe, and one on the now-defunct Nord Stream 2.

Germany cancelled Nord Stream 2 in the build-up to Russia’s ongoing invasion of Ukraine, but it was filled with gas in anticipation of going live.

“Yesterday, a leak was discovered on one of the two gas pipelines between Russia and Denmark, Nord Stream 2,” said Denmark’s energy minister Dan Jorgenson, according to Reuters.

“The pipeline is not in operation, but contains natural gas, which is now leaking.

“Authorities have now been informed that there have been two more leaks on Nord Stream 1, which is also not operational but contains gas.”

Finally in global data, Chinese industrial profits fell in the year to August as Covid restrictions dented demand.

According to data from the National Bureau of Statistics, profits declined 2.1% from a year earlier, following a 1.1% fall in the January to July period.

The figures showed that manufacturing profits fell 13.4% in August, versus a 12.6% decline in July, while mining profits growth slowed to 88.1% from 105.3%.

On London’s equity markets, housebuilders were in the red with Barratt Developments down 6.46%, Taylor Wimpey off 7.22%, Persimmon losing 4.17% and Vistry Group falling 6.96% amid worries about the impact of further interest rate hikes.

Property marketing portal Rightmove was also a big loser, ending the day down 8.85%.

“With banks and building societies pulling mortgage deals and reassessing their product lines amid expectations of steeply higher interest rates, anxiety is rising that repayments may become unaffordable for great swathes of homeowners,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

“Forward order books for house builders have been pretty resilient but an increasing number of buyers are likely to baulk at taking on huge new loans if monthly payments shoot up by as much as feared.

“The financial markets are expecting that the Bank of England will be forced to raise the official bank rate to 6%, to counter the inflationary effect of the Treasury’s mammoth tax cuts.”

United Utilities Group slumped 5.67% after it warned on profits, as the water company grappled with lower consumption and higher costs.

JD Sports Fashion slipped 0.19% after it was fined along with the Glasgow Rangers football club and Elite Sports by the Competition and Markets Authority, being found guilty of price fixing on official merchandise.

Merchant bank Close Brothers Group slid 10.75% after it posted a decline in full-year operating profit, with the Winterflood business hit by a slowdown in trading activity.

Admiral Group shares were down 2.64% after Bloomberg reported an offering of 1.61 million shares in the insurance company.

The offering was priced at 2,011p, according to terms of the deal obtained by Bloomberg, to raise £32m.

Travel food concessionaire SSP Group reversed earlier gains to close down 1.09%, even after saying it still expected a return to pre-Covid levels of like-for-like revenue and core earnings by 2024.

Outside the FTSE 350, over-50s specialist Saga plunged 24.14% after a profit warning.

On the upside, British Airways and Iberia parent IAG was lifted 0.38% by an upgrade to ‘buy’ at Davy.

Waste management firm Biffa surged 27.75% after agreeing to be bought by private equity firm Energy Capital Partners for around £1.3bn.

Elsewhere, Antofagasta was up 2.29% and Glencore rose 3.28% as metals prices advanced.

Reporting by Josh White at Sharecast.com. Additional reporting by Michele Maatouk, Frank Prenesti, Abigail Townsend and Alexander Bueso.

Market Movers

FTSE 100 (UKX) 6,984.59 -0.52%
FTSE 250 (MCX) 17,304.11 -2.36%
techMARK (TASX) 4,159.24 -0.76%

FTSE 100 - Risers

Glencore (GLEN) 471.40p 3.28%
Hargreaves Lansdown (HL.) 896.00p 3.04%
Flutter Entertainment (CDI) (FLTR) 10,260.00p 2.40%
Antofagasta (ANTO) 1,074.00p 2.29%
Smurfit Kappa Group (CDI) (SKG) 2,657.00p 2.07%
Rio Tinto (RIO) 4,781.50p 1.78%
Airtel Africa (AAF) 141.10p 1.73%
Burberry Group (BRBY) 1,684.50p 1.66%
Anglo American (AAL) 2,642.50p 1.60%
InterContinental Hotels Group (IHG) 4,437.00p 1.53%

FTSE 100 - Fallers

Rightmove (RMV) 500.60p -8.85%
SSE (SSE) 1,549.00p -7.30%
Taylor Wimpey (TW.) 88.92p -7.22%
Unite Group (UTG) 818.00p -7.05%
Kingfisher (KGF) 218.60p -6.58%
Barratt Developments (BDEV) 360.30p -6.46%
SEGRO (SGRO) 694.00p -5.91%
United Utilities Group (UU.) 888.80p -5.67%
Land Securities Group (LAND) 485.30p -5.62%
British Land Company (BLND) 334.40p -5.00%

FTSE 250 - Risers

Biffa (BIFF) 406.00p 27.75%
Network International Holdings (NETW) 298.40p 4.63%
Clarkson (CKN) 2,630.00p 3.54%
HarbourVest Global Private Equity Limited A Shs (HVPE) 2,330.00p 3.10%
TP Icap Group (TCAP) 179.00p 2.64%
Hikma Pharmaceuticals (HIK) 1,241.00p 2.60%
Carnival (CCL) 740.80p 2.41%
Diversified Energy Company (DEC) 125.50p 2.28%
ICG Enterprise Trust (ICGT) 984.00p 1.87%
Syncona Limited NPV (SYNC) 163.80p 1.74%

FTSE 250 - Fallers

Close Brothers Group (CBG) 913.00p -10.75%
Warehouse Reit (WHR) 106.40p -9.83%
HICL Infrastructure (HICL) 151.20p -9.03%
Balanced Commercial Property Trust Limited (BCPT) 76.40p -7.84%
SDCL Energy Efficiency Income Trust (SEIT) 96.00p -7.69%
Target Healthcare Reit Ltd (THRL) 87.20p -7.63%
Hilton Food Group (HFG) 564.00p -7.54%
LXI Reit (LXI) 117.20p -7.42%
Assura (AGR) 49.86p -7.41%
Elementis (ELM) 92.05p -7.21%