Weak UK construction data and broker downgrades combined to drive down both the FTSE 100 and FTSE 250 today, putting a stop to the post-Brexit rally seen last week.
Having started the day on the front foot, the FTSE 100 closed down 0.8% at 6,522 points, while the FTSE 250 suffered heavier losses, closing down 2.1%. At 16,116 points, it is some 7% off its pre-Brexit high currently.
The latest Purchasing Managers Index for the UK’s construction sector had a particularly damaging impact on UK property names after revealing a huge downturn in activity in June, amid the run-up to the referendum.
The reading came in at 46.0 in June, down from 51.2 in May, with the adjusted Markit/CIPS UK construction PMI showing the weakest overall performance for seven years. Any score below 50 represents a contraction.
The survey noted residential construction had its worst reading since December 2012, with the largest housebuilders down sharply in reaction. Persimmon, Taylor Wimpey and Barratt Developments were all down between 6.6% and 6%.
Meanwhile, following a downgrade of the sector by analysts at Liberum Capital, property developers also suffered losses, with British Land – the UK’s second largest commercial property firm – down 7.2%. The falls came after the company warned in May that large companies had been delaying decisions over office expansions.
As well as falls for the UK’s largest companies, the FTSE 250 suffered a torrid session, with Crest Nicholson, the residential housebuilder, off 8.1%. Meanwhile integrated shipping company Clarkson was off 16.1% after a bleak update detailing a slowdown in activity thanks to sliding global growth.
It all made for grim reading but there were some bright spots, particularly among the precious metals miners. Top of the board among the blue chips were Fresnillo, Glencore and Randgold Resources – up between 7.7% and 4.3% – as precious metals demand continued to push up gold prices. Gold itself was up another 1.2% today, at $1,351.
Overseas markets were mixed, with the German DAX closing down 0.6%, but US shares firmer shortly after London closed, with the S&P 500 up 0.2%.