FTSE 100 higher despite underwhelming Chinese policy actions, housing market under pressures as Crest Nicholson issue profit warning

“The FTSE 100 ticked higher on Monday despite an initially lukewarm reaction to Chinese policy measures aimed at righting a listing economy,” says AJ Bell Investment Director Russ Mould.

“Rate cuts did not go as far as anticipated but nonetheless oil and gas stocks were among the risers in London on the potential implications for demand of easier monetary policy in China.

“Later this week a flood of PMI data from Europe, the UK and US should provide some insight into the current economic trajectory in the West and serve as an hors d'oeuvre to the main course provided by the Jackson Hole symposium which starts at the end of the week.

“This meeting of finance ministers and central bankers will provide some insight into the thinking of the Bank of England, Federal Reserve and European Central Bank ahead of their next set of meetings this autumn.”

Crest Nicholson/Housebuilders

“Weak house price data is hardly a surprise. Economic uncertainty is elevated, mortgage costs have gone through the roof and the Help to Buy scheme has come to an end. However, Crest Nicholson’s profit warning has laid bare the scale of the impact of a housing slowdown on the housebuilding sector.

“Sales of new homes have plunged alarmingly and, while not all developers in the space are created equal, the news, allied to Rightmove’s latest reading on the property market, has had a knock-on effect on share prices in the rest of the sector this morning.

“The £7,000 drop in the average asking price observed by Rightmove in the last month, allied to a big drop in transaction volumes, is the kind of statistic to make estate agents distinctly uneasy.

“The scale of Crest Nicholson’s warning may come as a shock to investors given it reported its first half results just a couple of months ago and this hints at the speed and scale of the deterioration in the market.

“The one compensation for shareholders is Crest Nicholson is at least sticking with its planned full year dividend payment for now. However, its gloomy update will have set the market on alert for further warnings from its industry peers.”

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