FTSE in green but higher gilt yields weigh on housebuilder shares
The FTSE 100 moved 0.11%, or 8.63 points, higher to finish at 7,601.85.
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Your support makes all the difference.London’s top index inched higher but struggled compared with its European peers as housebuilders were dragged by gilt yields.
The yield on gilts – UK government bonds – rose amid concerns that interest rates could remain high for a long period while analysts also suggested high oil prices could be partly to blame.
Meanwhile, resource companies such as miners had a stronger session due to positive commodity prices.
The FTSE 100 moved 0.11%, or 8.63 points, higher to finish at 7,601.85.
House builders and real estate stocks are bearing the brunt of the rise in yields, with Barratt Developments, Taylor Wimpey and Rightmove the worst performers on the UK benchmark
Michael Hewson, chief market analyst at CMC Markets, UK, said: “There’s been a slightly more positive bias for markets in Europe today although the FTSE 100 is underperforming a touch with housebuilders getting hit on the back of a surge in gilt yields across the board.
“It’s hard to explain why we’re seeing such a sharp rise in UK yields, perhaps the rise in oil prices and the weakness of the pound is prompting concerns about further rate hikes from the Bank of England or higher for longer inflation.
“Nonetheless, house builders and real estate stocks are bearing the brunt of the rise in yields, with Barratt Developments, Taylor Wimpey and Rightmove the worst performers on the UK benchmark.”
Across the Channel, Germany’s Dax index was 0.7% higher for the day and the Cac 40 closed up 0.63%.
In the US, the main markets had a tepid start after weekly jobless claims data showed only a modest increase.
Meanwhile, the pound was up O.52% at 1.222 US dollars and was 0.03% higher at 1.155 euros at market close in London.
In company news, gambling firm 888 slid after it warned over earnings and revenues due to an impact from sporting results that benefited customers and new gambling rules.
The group, which runs William Hill’s European business, said it expects revenue for the third quarter of the year to dip around 10% to somewhere close to £400 million.
Shares in 888 were down 12.8p to 97.7p as a result.
All Bar One and Toby Carvery owner Mitchells & Butlers made gains during the session after the hospitality group revealed resilient demand from pub goers in the face of cost-of-living pressures.
The group, which also owns chains including Harvester, posted a 9.7% rise in like-for-like sales in its fourth quarter to September 23, with growth of 9.1% over the 52 weeks of the year so far.
It saw shares finish up 9.2p at 223.8p.
Diageo shares floated marginally higher after the Guinness maker stuck by the company’s guidance for the year despite persistent cost pressures.
The firm, which also makes Gordons gin and Pimms, saw shares increase by 16p to 3,038p after bosses said the company was resilient and can navigate the headwinds caused by the economy.
The price of oil took a small step back after its recent rally had earlier taken it to a new 10-month high.
A barrel of Brent crude fell by 0.23% to 96.33 US dollars (£83.38) as markets were closing in London.
The biggest risers on the FTSE 100 were Smiths Group, up 52p to 1,622p, Anglo American, up 71p to 2,267p, Antofagasta, up 35.5p to 1,417.5p, Rentokil, up 14.4p to 600p, and Rio Tinto, up 112p to 5,186p.
The biggest fallers on the FTSE 100 were Barratt Developments, down 35.7p to 432.7p, Phoenix Group, down 35.4p to 472.4p, Ocado, down 34p to 581p, United Utilities, down 34.4p to 911p, and M&G, down 6.5p to 196.5p.