FTSE 100 analysis: UK house prices suffer first annual fall since 2012

FTSE 100 dips

The FTSE 100 is down 0.3% this morning.

That is following on from a largely positive session in Asia, apart from a sharp drop in Japan, as weak trade data out of China fueled speculation that the country could introduce fresh economic stimulus in response to the slow recovery since abandoning its fight against Covid-19.

Quick look at the economic calendar today. Several members of the European Central Bank will be speaking at numerous events, including Luis de Guindos, Fabio Panetta and Edouard Fernandez-Bollo, with markets on the lookout for any insight ahead of the ECB meeting next week. The OECD will provide an update to its global economic outlook. Meanwhile, over the Atlantic, we will have April data for US trade and consumer credit as well as the Bank of Canada’s policy decision.

FTSE 100 analysis: Where next for the UK 100?

The UK 100, which tracks the FTSE 100, managed to recover back above 7,622 yesterday but has slipped back below here in early trade today after sliding in early trade. We could see the index continue to fall toward the June-trough of 7,452 if it remains under pressure.

The index has unsuccessfully test 7,650 five times in the past two weeks, suggesting this is now the immediate upside target that needs to be claimed. A move above here would allow it to target 7,710, marking the supportive floor that held throughout most of May.

Top UK stock news

Housebuilders such as Persimmon, Barratt Developments, Crest Nicholson, Redrow, Taylor Wimpey and Vistry Group are mixed in early trade today after the Halifax house price index revealed house prices remained flat in May compared to April. However, house prices were 1% lower than in May 2022, marking the first year-on-year drop since December 2012! ‘As expected the brief upturn we saw in the housing market in the first quarter of this year has faded, with the impact of higher interest rates gradually feeding through to household budgets, and in particular those with fixed rate mortgage deals coming to an end,’ said Halifax mortgages director Kim Kinnaird, who warned confidence will continue to be tested as interest rates continue to rise.

Lloyds Banking Group is up 0.4% and preparing to launch a £600 million auction for the Telegraph newspapers and Spectator magazine within the coming days, according to Sky News. Reports suggest Lloyds has threatened the owners of the media titles with receivership due to unpaid debt owed by the company controlled by the Barclay family.

A consortium is pushing for change at William Hill-owner 888 Holdings, according to Bloomberg, sending the stock up over 14% this morning. A group of gambling industry veterans, including the former chairman of GVC Holdings Lee Feldman and a number of former executives at Entain, has built a 6.6% stake in the company and put forward proposals to boost 888’s value. ‘We think these are great assets that are currently undervalued,’ Feldman said in an interview.

Shell is down 0.4% after it said it plans to exit its business that supplies energy to households in the UK, Germany and the Netherlands due to poor returns, the oil giant said yesterday. A sales process is now underway with the hope of striking a deal with a potential buyer ‘in the coming months’. Reuters has previously reported that Octopus Energy, Ovo and British Gas-owner Centrica are interested parties. That comes as oil prices continue to fall, dragging down oil giants this morning.

UK North Sea oil producer Harbour Energy is up 4.5% on news it is in talks about merging with US peer Talos Energy, according to Reuters. Harbour Energy has decided to pullback on spending its North Sea operations and is hoping that a combination with Talos will pave the way for a US listing. On-and-off talks have been held for around six months.

Diageo is down over 1% after it said CEO Ivan Menezes has passed away following a brief illness. He has been CEO of Diageo since 2013. That comes just two days after Diageo appointed Debra Crew as interim CEO after Menezes suffered a setback in hospital. Menezes was due to retire at the end of this month and Crew will take over as permanent CEO at the start of July.

GSK is down 0.4% after it revealed that the European Commission has given the green light for Arexvy to be used to immunize adults over the age of 60 from lower respiratory tract disease caused by RSV. The pharmaceutical giant said this is the first RSV vaccine to be approved in Europe for older patients. That is just in time before the RSV season starts in the autumn.

Kingfisher is up 0.4% after it said it has now returned £250 million of its £300 million share buyback programme after completing the fourth tranche. It said it will release details about the fifth tranche in due course.

LXi REIT is up 0.8% after it said earnings per share rose 36.1% in the year to the end of March to 8.3p thanks to savings booked from the merger with Secure Income REIT. That helped underpin its dividend, which was raised 5% to 6.3p. The merger also saw the value of its portfolio more than double to £3.35 billion, although this fell 9.6% on a like-for-like basis. LXi REIT’s portfolio of around 350 properties has rents linked to inflation and fully occupied. It said more benefits from the merger are to come.

DiscoverIE Group is up over 3% after it said revenue rose 18% in the year to the end of March to £448.9 million and said underlying pretax profit increased 23% to £46.3 million. The company, which designs and manufactures electronics for other businesses, reported growth across the board and better margins. Free cashflow jumped 51% and it raised its dividend by 6% to 11.45p. The firm said its order book is larger than it expected and provides good visibility going forward.

Croda International has been cut to Neutral from Buy by Goldman Sachs, which has a price target of 7,200p on the chemicals company. The stock is down 3% today at 6,054p.

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