FTSE 100 close: Mixed messages from China and housing rout sends London markets into the red
London’s FTSE indexes fell amid a housing sell-off and a limited policy intervention from the Chinese central bank to boost its creaking economy.
The FTSE 100 index slipped into the red to trade at 7,258.03 while the midcap FTSE 250 index fell 0.87 per cent to 17,938.91. Indexes in Paris and Frankfurt saw gains however.
Investors have been keeping a close eye on events in China, where a series of negative data releases have sparked worries that the world’s second largest economy may be facing a prolonged slowdown.
In a bid to boost the economy, the Chinese central bank cut the key one-year loan prime rate (LPR). However, economists had predicted the central bank would also cut the five year LPR, which was kept constant, sending mixed signals to the market.
Experts suggested China’s weak currency prevented the People’s Bank of China from making more aggressive interventions.
“There is still some expectation that Chinese authorities will step in with a more generous boost, but it appears the weakness of the yen appears to be stemming more immediate action,” Susannah Streeter, head of money and markets, Hargreaves Lansdown said.
Nevertheless, the move helped to support oil prices, leading to strong gains for oil giants BP and Shell, which rose 1.1 per cent and 0.4 per cent respectively.
In the UK, concerns continued to grow around the housing market. House prices fell by 1.9 per cent in August, the biggest August dip since 2018, according to figures from Rightmove.
Falling prices were not enough to entice new buyers however, with the number of sales falling 15 per cent compared to the same period pre-covid. The data reinforces the picture of a stumbling housing market.
On the FTSE 250 housebuilder Crest Nicholson fell around 8 per cent after it lowered its guidance amid the market turbulence.
Persistently high inflation and rising rates have dampened demand in the housing market, leading to a 60 per cent fall in pretax profit.
The FTSE 100’s housebuilders also dropped. Taylor Wimpey fell 4.1 per cent, Berkeley 3.1 per cent, Persimmon 3.1 per cent, and Barratt 2.4 per cent.