By Patrick Munnelly, Market Strategist, Tickmill
The UK’s FTSE 100 index was left hugging the flatline as the London session came to a close.
In recent days interest rates have become a prominent topic in the public discourse in the UK, as the nation prepares for a potential tightening in mortgage availability. The combination of robust wages and persistent inflation has led investors to increase their expectations of future interest rate hikes by the Bank of England. Even before the release of today’s inflation data, UK mortgage lenders had already started withdrawing cheaper mortgage deals, raising concerns about a potential downturn in the housing market. Following the release of the data, an index measuring the performance of UK homebuilders dropped by as much as 3%, reflecting the impact of the news on market sentiment.
FTSE 100 biggest movers
Barratt LON:BDEV and Persimmon LON:PSN, two prominent housebuilders, experienced significant declines in their share prices on the FTSE 100, both falling by around 4%. Similarly, Taylor Wimpey LON:TW. and Berkeley LON:BKG, rival housebuilders, also saw their shares decline by around 3.5% and 1.6% respectively. This exodus from the housebuilding sector is a result of market participants now anticipating the Bank of England to announce a rate hike tomorrow, increasing the interest rate from 4.5% to 4.75%. Moreover, there is an expectation that rates could reach 6% by the end of the year.
However, the biggest losers on the session were Smurfit Kappa [LON:SKG] shedding 5.46% and Smith DS LON:SMDS losing 5.96%.
On the positive side of the ledger Shell LON:SHEL and BP LON:BP. emerged as top gainers, with both companies experiencing a rise of 1.8% and 2.2% respectively. This positive movement can be attributed to the recent increase in prices of Crude and Brent Crude within the last 24 hours.
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