- FTSE closes down 65.26 points at 6,777.85
- Oil stocks continue higher, housing stocks sink
- Q1 UK construction data revised higher
techMARK 2,815.10 -1.11%
FTSE 100 6,777.85 -0.95%
FTSE 250 15,814.81 -1.93%
UK stocks ended the weak on a decidedly negative note, although London's Blue Chips regained some of the morning's losses to end 65.26 points lower at 6,777.85.
The notable decliners of the day were housing stocks, which offset the more modest gains seen amongst oil stocks, which tracked recent strong gains in both Brent and Crude amid growing concerns about developments in Iraq.
Chris Beauchamp, Market Analyst at IG, said: "There have been scarier Friday the 13ths in markets, but for the FTSE a drop of 1% has been rather unnerving. Crucially the index tested the 6,770 level around midday, but as expected, buyers were found. Disappointingly however, any bounce from here will run straight back into the 6,870 region that has been a real barrier so far this year.
"The real damage from Mr Carney's speech has been wrought in housebuilders, which have been shown to be extremely vulnerable to greater speculation about rate hikes. Crucially, Mr Carney stressed that increases would be gradual. In a sense, the UK is going through its own 'taper tantrum'. Ben Bernanke's careful hints about a reduction in QE set the cat among the pigeons, but when the taper did arrive markets were much calmer. Mark Carney is presumably aiming for a similar effect. Such is the magic of central banking."
Oil prices eased back today, having surged in recent days amid growing fears about the situation in Iraq, a major oil producer. Several of the country's major cities have been taken control of by Sunni Islamists militants. With reports suggesting the insurgents are planning to continue to move further south, concerns have grown about the effect the conflict will have on oil supplies.
In Beauchamp's view, the events look set to be significantly more disruptive than the crisis in Ukraine.
Also firmly in focus today was the increased possibility of a rate hike before the end of the year following Mark Carney's speech at Mansion House last night, where he said "the first rise in interest rates ...could happen sooner than markets currently expect".
Capital Economics said that although this offered "a pretty plain signal" that tighter monetary policy is not too far away, it believes "rates will rise at a historically slow pace".
Explaining further, it said: "With inflation and pay growth low, more labour market slack than the unemployment rate suggests and the housing market already showing signs of cooling, our assumption is that Bank Rate reaches only 1.5% by the end of 2016."
UK construction data for first quarter revised sharply higher
In other UK news out today, data released by the Office for National Statistics (ONS) showed that the construction sector increased by 1.2% during April, as new work grew by 0.9% and repair and maintenance activity increased by 1.6%. The consensus estimate had been for a gain of 1.5%.
The previous month's gain was been revised to show a decrease of just 0.2% over the month versus the preliminary estimate of -1%.
Oil stocks gain as housing stocks dive
Oil and gas stocks were among the handful of names making gains today as share prices
tracked oil prices
higher, with Shell, BG Group and BP on the rise.
United Utilities was one of the strongest risers after Deutsche Bank increased its target price from 900p to 980p and reiterated its 'buy' recommendation.
Miner Petra Diamonds rocketed on the news it has recovered an "exceptional" 122.52-carat blue diamond at its Cullinan mine in South Africa. RBC Capital upped its target price from 180p to 200p, retaining an outperform rating.
Meanwhile, housebuilders Persimmon, Barratt Developments, Taylor Wimpey, Bovis Homes and Berkeley were all trading with heavy losses as investors reacted to the prospect of higher interest rates and a potential cooling of the UK housing market.
Property firms such as Land Securities and British Land were also out of favour.
FTSE 100 - Risers
Fresnillo (FRES) 807.00p +1.13%
Admiral Group (ADM) 1,551.00p +1.04%
G4S (GFS) 257.00p +0.82%
United Utilities Group (UU.) 893.00p +0.73%
Petrofac Ltd. (PFC) 1,257.00p +0.72%
SSE (SSE) 1,569.00p +0.64%
Coca-Cola HBC AG (CDI) (CCH) 1,409.00p +0.64%
Royal Bank of Scotland Group (RBS) 342.20p +0.56%
BG Group (BG.) 1,266.50p +0.12%
Severn Trent (SVT) 1,974.00p +0.05%
FTSE 100 - Fallers
Persimmon (PSN) 1,211.00p -6.99%
Barratt Developments (BDEV) 346.30p -6.30%
Sports Direct International (SPD) 779.00p -4.77%
Land Securities Group (LAND) 1,028.00p -4.37%
British Land Co (BLND) 686.00p -4.32%
Kingfisher (KGF) 369.00p -3.96%
Hammerson (HMSO) 577.50p -3.43%
Ashtead Group (AHT) 887.00p -3.38%
International Consolidated Airlines Group SA (CDI) (IAG) 379.00p -3.12%
easyJet (EZJ) 1,457.00p -2.93%
FTSE 250 - Risers
Petra Diamonds Ltd.(DI) (PDL) 180.00p +7.72%
Wood Group (John) (WG.) 809.00p +2.41%
Ophir Energy (OPHR) 240.10p +1.78%
Cairn Energy (CNE) 204.90p +1.69%
Alent (ALNT) 345.80p +0.90%
Evraz (EVR) 97.05p +0.83%
BH Macro Ltd. USD Shares (BHMU) 18.9 +0.80%
Atkins (WS) (ATK) 1,328.00p +0.76%
African Barrick Gold (ABG) 218.40p +0.60%
IG Group Holdings (IGG) 578.00p +0.52%
FTSE 250 - Fallers
Bwin.party Digital Entertainment (BPTY) 105.60p -7.37%
Howden Joinery Group (HWDN) 307.60p -6.73%
Thomas Cook Group (TCG) 140.00p -6.48%
Taylor Wimpey (TW.) 104.00p -6.31%
PayPoint (PAY) 1,093.00p -6.26%
888 Holdings (888) 117.50p -6.00%
Supergroup (SGP) 1,000.00p -5.93%
Restaurant Group (RTN) 579.50p -5.85%
Big Yellow Group (BYG) 486.90p -5.55%
Foxtons Group (FOXT) 297.00p -4.99%