MARKET REPORT: London stocks round off dismal week in the red

The London stock market ended a dismal week in the red on inflation fears and higher interest rates.

In another difficult session for investors, the FTSE 100 fell 0.3 percent, or 23.56 points, to 7256.94, while the FTSE 250 gained 0.5 percent, or 23.62 points, to 18,003.97.

The blue-chip Footsie has fallen every day this week, with losses totaling 3.7 percent, or about 270 points. It is now at its lowest level since November.

The selloff has been triggered by fears that a prolonged era of higher interest rates to bring inflation back under control will push the economy into recession.

The Bank of England has raised rates from 0.1% to 5% since December 2021, but inflation is at 8.7% – more than four times the 2% target.

According to financial market bets, there is now a 50 percent chance that interest rates will reach 6.5 percent by the end of the year. That would increase the cost of borrowing even higher for millions of households with mortgages, as well as for businesses and the government.

While Britain has so far avoided a recession, it is feared that interest rates at this level will push the economy in the opposite direction. Mortgage lender Halifax said yesterday that home prices fell at their fastest pace in 12 years.

Victoria Scholar, head of investment at Interactive Investor, said: “The mood music for markets has certainly soured.”

MJ Gleeson fell 0.5 percent, or 2 pence, to 383 pence as it became the latest homebuilder to warn that rising borrowing costs had hit demand.

The low-cost builder, whose homes start from around £116,000, sold fewer properties in the year to the end of June, reflecting the downturn in the wider economy and the immediate impact of higher mortgage rates on buyer confidence.

Energy giant Shell warned that its gas division’s trading in the past three months was “significantly lower” than in the previous quarter.

The London-listed oil and gas company said trading in Q2 2023 was affected by seasonal factors. Nevertheless, it stressed that gas operation performance would be in line with trading from Q2 2022 and 2021.

Shares rose 0.8 percent, or 18 pence, to 2,282.5 pence, while competitor BP rose 0.8 percent, or 3.6 pence, to 453.55 pence.

Auto dealership Pendragon said its chief operating officer Martin Casha was jumping to become chief executive of rival Marshall Motor Group.

Pendragon said Casha, who has been employed since 2001, will not be replaced. Shares rose 0.2 percent, or 0.04 pence, to 17.82 pence.

There was also a change of guard at Lord Cruddas’ spread betting group CMC Markets, with chief financial officer Euan Marshall leaving to take a similar job at Integrafin, an investment platform for financial advisors and their clients.

Marshall has been with CMC since 2011 and has held his current job for four years. CMC shares rose 0.1 percent, or 0.3 pence, to 149 pence, while Integrafin rose 0.4 percent, or 0.8 pence, to 231.8 pence.

AIM-listed self-storage chain Lok’n Store Group fell 8 percent, or 68 pence, to 780 pence after draining shareholders for £20.5 million by issuing nearly 2.7 million new shares at 765 each pence to fund expansion.

Specialist engineering group Rotork rose 3.4 percent, or 10 pence, to 296.4 pence after analysts at Jefferies upgraded its rating from “buy” to “hold” and raised its price target from 350p to 370p.

But Jefferies cut his target price for chemical group Elementis from 130 pence to 110 pence. JP Morgan, however, upgraded its rating for the stock from “neutral” to “overweight.” Elementis shares rose 4.6 percent, or 4.6 pence, to 104.6 pence.