Housebuilders’ shares sank as concerns about whether or not the UK and Brussels could hammer out a Brexit deal rippled through the City.
After being boosted for several weeks by Covid vaccine news and Joe Biden’s win in the US presidential election, the prospect of crashing out of the EU without a deal took centre stage on the market as talks hung on a knife edge during trading hours.
Morgan Sindall (down 5.2 per cent, or 78p, to 1414p), Bovis-owner Vistry (down 5.2 per cent, or 47.5p, to 867p), Balfour Beatty (down 4.9 per cent, or 13.6p, to 265p) and Travis Perkins (down 4.9 per cent, or 66.5p, to 1300p) were among the top fallers on the FTSE 250, as traders fretted that a No Deal Brexit could pile more pressure onto the UK’s already fragile economy. Building and other property stocks – such as construction suppliers and estate agents – are seen as a key bellwether of economic health.
Brexit jitters: Housebuilders Morgan Sindall, Bovis-owner Vistry, Balfour Beatty and Travis Perkins were among the top fallers on the FTSE 250
The slump came even as Halifax data showed house prices rose another 1.2 per cent in November. The FTSE 250 as a whole notched up its worst session in six weeks, falling 1.3 per cent, or 252.96 points, to 19929.73 by the close.
Housebuilders and other bellwethers such as banks were also on the back foot on the FTSE 100. Berkeley Group (down 7.2 per cent, or 343p, to 4421p), Persimmon (down 5.3 per cent, or 152p, to 2716p), Lloyds Bank (down 4.3 per cent, or 1.69p, to 37.34p) and Whitbread (down 4.1 per cent, or 134p, to 3171p) all suffered bruising losses.
Property group Land Securities shed 2.7 per cent, or 19.8p, to 705.8p, as investors questioned whether now was the right time to spend £87million buying an office building in the City.
Stock Watch – Pure Gold
Shares in Pure Gold shone after the miner found more high-grade gold at a site in Canada.
It had been hoping to find more areas containing the yellow metal at the Red Lake Mine, Ontario, which it is planning to expand over time.
Main market-listed Pure Gold has seen shares rocket by around 250 per cent this year as stock market turbulence during the pandemic sent investors flocking to the safe haven.
Pure Gold’s stock rose 9.6 per cent, or 13.5p, to 154p last night.
But the FTSE 100 managed to close virtually flat as the Brexit impasse triggered a fall in the value of the pound.
This boosted big exporters such as British American Tobacco (up 4.7 per cent, or 128p, to 2849p) and Imperial Brands (up 3.4 per cent, or 50.5p, to 1517.5p), and helped the blue-chip index edge up 0.1 per cent, or 5.16 points, to 6555.39.
A broker note from Goldman Sachs analysts put a rocket under software group Micro Focus’s shares.
It was the top riser on the FTSE 250, adding 13.9 per cent, or 59.7p, to 490.3p, after Goldman raised the rating on its stock from ‘neutral’ to ‘buy’ and nudged its target price from 335p to 650p.
Vodafone (up 1.6 per cent, or 2.06p, to 132.22p) also got a double-whammy boost from brokers.
Goldman raised the group’s price target to 165p, while Redburn upped its rating from ‘neutral’ to ‘buy’ as it said the company’s German arm could help it avoid the ‘highly inconsistent’ earnings that have damaged its rivals.
The recent spate of deal making ramped up again as Rolls-Royce launched a sale and Energean lined up a takeover.
Rolls signed an agreement to sell a civil nuclear business to French group Framatome as part of its plans to raise £2billion by flogging various parts of the company.
Rolls, which rose 0.5 per cent, or 0.6p, to 130.85p, did not say how much the deal was worth.
And Energean (down 1.8 per cent, or 14.4p, to 785.1p) said it was in talks to buy Kerogen Capital’s 30 per cent stake in Energean Israel.
It also declined to put a price on the deal – but said it would be able to fund it without having to sell new shares.
On AIM, advertising group M&C Saatchi rallied 42.9 per cent, or 24.6p, to 82p after it resumed trading following a ten-week suspension from the market. Its return came after it published its annual report, which contained no nasty surprises for investors.
Many had been braced for the worst following an accounting scandal that led to three of the company’s remaining founders stepping down last month.