FTSE 100 logs second weekly loss, despite homebuilders’ late boost

London’s primary equity indexes closed the week with a second consecutive decline, despite a modest rebound on Friday driven by robust performance in the homebuilder sector. Meanwhile, positive U.S. jobs data alleviated concerns over a potential recession in the world’s largest economy.

Editorial Team
August 12, 2024
2 minutes

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Investment Platforms
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London’s main equity indexes experienced a second week of declines, despite ending Friday on a positive note, supported by strong gains in homebuilder stocks. Positive U.S. jobs data released earlier in the week helped to soothe fears of an impending recession in the United States, the world’s largest economy.

On Friday, the FTSE 100 index, representing blue-chip stocks, rose by 0.3%, while the mid-cap FTSE 250 gained 0.6%. However, these gains were insufficient to offset the weekly losses, with the FTSE 250 declining by 1.5% over the course of the week.

The market responded positively to Thursday’s U.S. jobless claims data, which fell more sharply than anticipated. This data suggested that earlier concerns about a potential cooling in the U.S. labour market may have been overstated.

Global markets faced significant volatility throughout the week. Investor anxiety was heightened by fears of a U.S. recession following the release of July’s U.S. jobs data. Additionally, a surge in the yen, triggered by the Bank of Japan’s interest rate hike on July 31, led to the unwinding of yen carry trades, further contributing to market instability.

In London, the homebuilder sector was among the top performers, with stocks rising by 1.5%. Bellway, a prominent homebuilder, joined its peers in offering an optimistic outlook for the sector, bolstered by the Bank of England’s recent rate cut and the new Labour government’s proposed planning reforms. Rate-sensitive real estate investment trusts and the broader real estate sector index also climbed by 1% each.

Conversely, the personal care, pharmaceuticals, grocery, and luxury goods sectors faced declines, with each falling by 0.8%.

This week is expected to be crucial, as investors are set to scrutinise consumer price inflation data from both the United States and the United Kingdom, alongside Britain’s second-quarter gross domestic product figures.

“Next week looks to be significant in terms of economic announcements, with readings of U.S. inflation and retail sales, especially as concerns about the quantum of existing carry trades still linger,” said Russ Mould, Investment Director at AJ Bell.

In other notable moves, shares of Hargreaves Lansdown surged by 2.3% following the announcement that the investment platform had agreed to a £5.44 billion ($6.94 billion) takeover by an international consortium.