FTSE 100 Analysis: House prices see biggest drop in 12 years – Top UK stocks

FTSE 100 remains under pressure

The FTSE 100 is down 0.3% in early trade, on course to lose ground for a fifth consecutive session that has sent the index to its lowest level in eight months.

Global markets under pressure ahead of US NFPs

The headline event in the economic calendar is US non-farm payrolls, accompanied by the unemployment rate and average hourly earnings at 1330 BST. Global markets are approaching the major event under severe pressure as a spike in yields and hawkish central banks weigh on markets, which are waking up to the idea that the terminal rate could be higher than previously expected and growing more fearful about a potential recession.

Data out this week points toward a strong jobs report today. The poor reading from the ISM manufacturing PMI was countered by a much stronger reading from the ISM services PMI while the ADP employment report out yesterday trounced expectations after private businesses added 497,000 jobs in June. That marked a significant acceleration from the 278,000 jobs added in May and was the biggest jump in over 16 months! It was considerably more than the 228,000 additions forecast by economists and driven by service industries, supporting the ISM services PMI reading.

Economists believe headline jobs growth will rise 224,000 when the NFP data is released today causing the unemployment rate to drop back to 3.6% after it unexpectedly rose to 3.7% in the previous month. Average hourly earnings, a key measure of inflation, are expected to have risen by 0.3% month-over-month.

Markets over the Channel will be focused on a speech from European Central Bank vice president Luis de Guindos at 0930 BST and president Christine Lagarde later at 1745 BST.

FTSE 100 analysis: Where next for the UK 100?

The UK 100, which tracks the performance of the FTSE 100, is under further pressure today following the almighty fall we saw yesterday, when it suffered its heaviest daily fall in almost four months and sank below the 2023-closing low. It is now at levels not seen in seven months!

The next level of potential support could be as low as 7,180, which emerged as a low enough floor to attract buyers in on multiple occasions since late 2021.

However, the sharp fall seen this week has pushed the RSI into oversold territory to suggest we are getting toward the trough and signalling that a rebound is on the cards. Reclaiming the previous 2023-low is now the immediate job before looking to climb back above 7,450 and test the falling trendline.

Top UK stock news

Housebuilders like Persimmon, Barratt Developments, Taylor Wimpey and Bellway are down 0.1% to 0.6% in early trade after the Halifax house price index showed UK house prices fell 0.1% in June from May. Prices were some 0.3% higher in the second quarter versus the first. Still, the average house is still worth 2.6% less today than this time last year – marking the largest drop we have seen since 2011!

Airlines including IAG and easyJet are down 0.1% to 0.5% today after The Times reported that around one-third of European flights could suffer from strike action by air traffic controllers that are part of Eurocontrol.

Shell is trading marginally higher this morning after it provided an update this morning on what to expect from its second quarter results. The company warned seasonal shifts in the market and ‘fewer optimisation opportunities’ will see earnings from natural gas trading fall in the second quarter, while oil and gas production could also fall compared to what we saw in the first three months of 2023. Earnings from its integrated gas division will be ‘significantly lower’ than the first quarter while production of oil and gas has been hit by planned maintenance work. That comes hot on the heels of a similar warning from US rival Exxon Mobil as oil stocks struggle to impress following the record results we saw last year. Still, RBC said Shell’s expectation for a significant working capital benefit of $2 billion to $6 billion should help debt decline and build confidence about its commitment to return at least $5 billion in the second half of 2023, predicting it will dish out closer to $6 billion.

Coca-Cola HBC is up 3.9% after raising its outlook after a stronger than expected finish to the first half. The bottling giant said it now expects to deliver organic Ebit growth of 9% to 12% in 2023. That marks a significant upgrade considering it was before guiding to hit the top-end of its guidance range for a 3% fall to a 3% increase this year. It left its 2024 guidance unchanged. Interim results will be published on August 9.

YouGov is down 1.1% at 945p after completing a placing that has raised gross proceeds of £51.2 million, which will be used to help fund its acquisition of GfK’s consumer panel business. It issued 5.57 million shares at a price of 920p per share, which represents a discount to its closing share price yesterday.

JD Sports is up 0.2% after announcing it plans to buy the 49.98% stake in Iberian Sports Retail Group that it doesn’t already own from owners Balaiko Firaja Invest and Sonae Holdings for EUR500.1 million. That will allow it to take full ownership of the retailer, which operates over 460 stores across Europe under different brands, including JD in Iberia, Sprinter in Spain, Sport Zone in Portugal and Aktiesport and Perry Sport in the Netherlands. It also owns over half of an online business and a fitness equipment operation. Iberian Sports Retail Group generated over EUR1.2 billion of sales in 2023 and a pretax profit of EUR96.6 million.

Kingfisher said it has launched the fifth tranche of its share buyback programme today, which will see it repurchase up to £50 million worth of stock before September 13. The company is up 1.1% this morning.

BHP Group has been downgraded to Hold from Buy by Berenberg and had its price target cut to 2,400p from 2,800p. The mining behemoth is down 1.1% today at 2,244.75p.

Rotork has been upgraded to Buy at Jefferies, which said the stock looks ‘attractive’ following a recent slump. It raised it price target to 370p. The oil and gas valve maker is up 2.5% at 299.20p.

Elementis has been upgraded to Overweight by JPMorgan, which says the earnings backdrop is improving as it set its price target on the stock to 144p. The coatings specialist is up 1.6% today at 101.6p.

ConvaTec has been upgraded to Hold from Reduce by HSBC, which set a price target of 200p. The medical device firm is flat at 200.8p this morning.

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