Market Close
UK stocks managed to pare most of its losses on the day, having spent most of it in the red, on the back of increased support for housebuilders.
UK house prices enjoyed their best August in eight years, falling only 0.8% in a typically weak month. Commentators say a shortage of homes in the UK could be propping up prices.
The number of homes for sale has fallen short of demand since the general election, creating one of the widest gaps between buyers and sellers since at least the start of the financial crisis.
Joshua Mahony, market analyst at IG said: “This will no doubt act as a further incentive for investors in homebuilders like Persimmon and Barratt Developments who are expected to enjoy yet another buoyant year.”
Persimmon (LON:PSN), which has interims out tomorrow, was 16p higher at 2,121p while Barratt (LON:BDEV) was flat at 653p.
The FTSE 100, which had been 20 points lower at lunch, ended half a point lower at 6,550.
Not all were higher, however. Bovis Homes (LON:BVS) posted a record number of home deals and a 10% rise in average sale prices on private completions to £264,200 against a year ago.
First half profits rose 9% to £53.8mln but despite the good results, shares dropped 3.855 to 1,154p.
Elsewhere, Shipping broker Clarkson (LON:CKN) sank 195p to 2,555p as it reported a fall in pre-tax profit in the first half on higher expenses and the acquisition of rival shipping broker RS Patou ASA, adding that results would be weighted to the second half.
In small caps, African Potash (LON:AFPO) up 32.8% to 1.5p was one of the biggest gainers at lunch although it has had no news out since last Wednesday.
Shares have been on the march since it signed a deal with Comesa – a free trade union of twenty African countries - to provide 500,000 tonnes of fertiliser over three years.
Conversely, Red Emperor Resources (LON:RMP) was the biggest faller as it failed to find commercial oil at its Hawkeye Well.
Having spent US$25mln (£15.9mln) on the project, the company has £5.66mln left to identify new opportunities. Shares plummeted 61% to 1.27p.
Elsewhere, Cellcast (Lon:CLTV) the operator of interactive TV broadcaster Babestation, denied speculation that it was in talks with Google.
Having traded as high as 1.92p in early deals, Cellcast shares have been volatile all day and were trading at 1.55p at lunch, up 40% for the day.
Hostel operator Safestay (LON:SSTY) has agreed to buy a 615 bed/132 room hostel in Edinburgh for £14.9mln.
The hostel chain owner will issue 15mln shares at 62p per share to raise up to £9.34mln to contribute to the deal and has secured an £8.5mln debt facility to fund it, with the balance to be used for working capital.Shares were 12% lower to 60.7p.
Lunchtime Report
London’s blue chip stocks remained lower at lunch as the lower commodity prices, particularly oil and copper, weighed on the FTSE 100.
The index dropped 20 points to 6,530 as the price of a barrel of US light crude slipped almost 1.5% to US$41.89. A barrel of Brent declined 0.3% to US$49.
Connor Campbell at spread-betting firm Spreadex said: “With Brent Crude attempting to break US$50 per barrel and copper struggling to escape its recent lows the commodity situation remains an energy-sapping annoyance for the FTSE.”
Heavyweights BP (LON:BP.) and Royal Dutch Shell (LON:RDSB) dragged the market lower, falling 2.5p to 376p and 6.5p to 1,807p respectively.
Away from the index, Ophir Energy (LON:OPHR) lost 6.8% to 101p while Premier Oil (LON:PMO) eased 4% to 103p.
In Europe, the continued calls from Germany for the IMF to get involved with the third bailout highlighted the difficult prospect Merkel has of trying convince her more sceptical MPs that a deal should be approved.
“Still the deal should pass, even if it does spell trouble for the German chancellor down the road; not that investors seem to care” Campbell said.
Given the market-moving power of Greece in the first half of 2015, investors clearly aren’t as fussed about the issue as they once were he added.
In Europe, the Dax was 16 points lower to 10,968 while the Paris-based Cac40 managed a 9 point gain to 4,965.
Back in the UK, Bovis Homes (LON:BVS) reported a record number of first-half home deals.
Bovis increased pre-tax profit by 9% to £53.8mln against a year earlier on a 9% rise in revenue to £350.7mln.
The company warned, however, that the rising cost of tradesmen and a shortage of skilled workers meant overall cost inflation was 7% this year. Shares dropped 4.9% to 1,142p.
Shipping broker Clarkson (LON:CKN) sank 161p to 2,589p as it posted higher profits and dividends but said results would be weighted to the second half.
In small caps, African Potash (LON:AFPO) up 32.8% to 1.5p was one of the biggest gainers at lunch although it has had no news out since last Wednesday.
Shares have been on the march since it signed a deal with Comesa – a free trade union of twenty African countries - to provide 500,000 tonnes of fertiliser over three years.
Meanwhile, Cellcast (Lon:CLTV) the operator of interactive TV broadcaster Babestation, denied speculation that it was in talks with Google.
Having traded as high as 1.92p in early deals, Cellcast shares have been volatile all day and were trading at 1.55p at lunch, up 40% for the day.
Conversely, Red Emperor Resources (LON:RMP) was the biggest faller as it failed to find commercial oil at its Hawkeye Well.
Having spent US$25mln (£15.9mln) on the project, the company has £5.66mln left to identify new opportunities. Shares plummeted 61% to 1.27p.
LONDON OPEN
Plummeting oil prices eclipsed upbeat developments in Greece, putting the skids under London shares on Monday.
The FTSE 100 index dropped 14.21 points to 6536 as the price of a barrel of US light crude slipped more than 2% to $41.64. A barrel of Brent declined 1.5% to $48.45.
Heavyweights BP (LON:BP.) and Royal Dutch Shell (LON:RDSB) dragged the market lower, falling 2p to 377.25p and 7.5p to 1806.5p respectively. BG Group (LON:BG.) deflated a penny to 1071p.
Augustin Eden at Accendo Markets said: "A generally gloomy outlook remains planted firmly over the market as supply increases with a drop in demand from key consumer China seen as a major headwind for the price."
Indices in Frankfurt and Paris were up on Friday's news that the Eurogroup of eurozone finance ministers had agreed a third Greek bailout.
Germany's Chancellor Angela Merkel sought to reassure the International Monetary Fund by indicating that she was willing to consider debt relief as part of a deal.
Wednesday will provide the acid test as German lawmakers vote on the latest package.
Japan's Q2 preliminary GDP contracted less than expected, beating consensus while nonetheless remaining in the red and sparking talk of further stimulus measures.
The Nikkei rose 0.4% on the news while Australia’s ASX index added 0.37%.
The yuan was fixed at close to where it finished Friday. This left the Shanghai Composite little changed, though in Hong Kong the Hang Seng was off by almost 1%.
Bovis Homes (LON:BVS) provided the main corporate interest, falling 29p to 1172p despite news of record home completions and higher profits and dividends.
Supermarket group Morrisons (LON:MRW) was off 1.2p at 176.6p following weekend press speculation that it could sell off its M Local convenience store chain.
Troubled insurance claims contractor Quindell (LON:QPP) rose 2.5p to 95.5p as it appointed a new chief executive.
Shipping broker Clarkson (LON:CKN) sank 125p to 2625p as it posted higher profits and dividends but said results would be weighted to the second half.
Elswewhere, E-Therapeutics (LON:ETX) jumped 1.5p to 39p as it said it had launched discovery activities in the promising area of cancer immunotherapy.
MARKET PREVIEW
The FTSE 100 is expected to open the week in positive territory later amid growing optimism over the formal ratification of a Greek bailout deal.
The blue-chip index is expected to rise 25 points to 6,575.74, according to the spread-betting firm IG.
The markets in Asia were subdued Monday following the turbulence last week caused by China’s round of competitive devaluation.
The yuan was fixed at close to where it finished Friday. This left Shanghai Composite little changed, though in Hong Kong the Hang Seng was off by almost 1%.
Elsewhere in the region, the Nikkei rose 0.4% as Japan’s economic contraction was less severe than anticipated, while Australia’s ASX index added 0.37%.
In Europe, sentiment is likely to be driven by the will-they-won’t-they saga of the Greek bailout.
A draft deal was agreed Friday, but Wednesday will provide the acid test as this is when German lawmakers vote on the latest package.
We are very definitely in the summer doldrums for corporate news with the builders Bovis and Persimmon near the top of the pile, with oiler Cairn Energy expected to update on its exploration plans.
Imperial Tobacco, meanwhile, is probably the largest company set to report this week.