London’s FTSE 100 held steady on Monday morning, with housebuilders weighing on the index after the competition watchdog found “fundamental concerns” with the market
Both of London’s main markets were essentially flat, with the FTSE 100 rising slightly to 7,709.72 while the FTSE 250 index, which is more aligned with the health of the domestic economy, slipped to 19,177.31.
The biggest news of the morning was the Competition and Markets Authority’s (CMA) announcement that it had found “fundamental concerns” with the housebuilding market.
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Regulator finds ‘fundamental concerns’ in housebuilding market after year-long investigation
The report said around 60 per cent of all houses built in the years 2021 to 2022 were delivered by “speculative private development” and the country’s reliance on this model had “seen the gap widen considerably between what the market will deliver and what communities need.”
The CMA also opened an investigation into potential information sharing between developers, which it warned may weaken competition in the market.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: “The accusations of poor build quality and anti-competitive practice will be of more immediate importance, as findings against either strike could lead to margin degradation in the short term, but this is far from guaranteed”.
On the FTSE 100, Persimmon lost 1.5 per cent and Taylor Wimpey 1.2 per cent. Both Barratt and Berkeley lost around 0.5 cent.
Bunzl was the weakest performer on the FTSE 100, dropping 5.3 per cent despite a solid set of results.
The outsourcing fimr upped its dividend and announced two more acquisitions, although revenue remained flat year-on-year.
Matt Britzman, equity analyst at Hargreaves Lansdown, said the relative weakness on revenue related to “volumes coming down in some geographies and normalising prices”.
“Volumes should come back but the pricing weakness is a potential headwind for the new year,” he said.
This week will be a fairly quiet week for markets, with the main news coming on Thursday when the Fed’s preferred gauge of inflation, personal consumption expenditure (PCE), will be released.
Markets expect an acceleration in inflation month-on-month, but the annual rate will still fall.