London stocks managed a positive finish on Monday despite a grim consumer confidence survey, with the top-flight index underpinned by solid gains in the housebuilding sector.
The FTSE 100 ended the session up 0.28% at 7,558.92, and the FTSE 250 was ahead 0.53% at 21,329.89.
Sterling was in positive territory as well, last rising 0.04% on the dollar to trade at $1.3119, and strengthening 0.5% against the euro to change hands at €1.1934.
“The second quarter has got off to a good start, continuing the rebound that began in the final month of the first quarter,” said IG chief market analyst Chris Beauchamp.
“The issues that dogged markets throughout the end of 2021 and into 2022 remain with us, but once again stocks have demonstrated their remarkable ability to come storming back.”
Beauchamp said even the threat of fresh sanctions over Russia’s ongoing invasion of Ukraine was having little effect, as market participants looked past the immediate hit to earnings.
“The strength of Friday’s US payrolls report remains a motivating factor too, even if it has also emboldened Fed policy makers to think more seriously about a 50 basis point hike next time they meet.”
On the economic front, UK consumer confidence suffered its biggest fall in March since the financial crisis of 2008 as worries about inflation and disposable income took their toll.
PwC’s consumer sentiment index declined to -20 after peaking at +10 in June last year.
The 30-point drop in nine months marked the biggest sustained fall since the financial crisis, although the index remained higher than it was at the start of the pandemic, when it stood at -26.
This time last year, the index stood at +8 amid the prospect of lockdown easing.
The survey showed that spending expectations on going out and eating out have dropped significantly, with both categories now the lowest.
Holidays and fashion spending, meanwhile, also saw substantial falls since last spring.
Grocery shopping was the only category where people were expecting to spend more, rather than less, in the next 12 months, although that was likely to be driven almost exclusively by inflation, rather than specifically-heightened consumer demand.
The survey also found that sentiment had fallen in almost every age group, but the gap between the most and least optimistic was wider than ever.
“It’s clear that consumers are having to deal with a significant change in their spending priorities compared to even a year ago, where the index measured a record level of positive sentiment coupled with spending intentions ramping up in more discretionary categories such as leisure and fashion,” said Lisa Hooker, consumer markets leader at PwC.
“With the latest research, we see consumer spending expectations move almost exclusively toward more vital and essential areas such as grocery shopping, children and babies.”
Hooker described the shift in sentiment as both significant, and sudden.
“Whilst there is still some post-Covid recovery, spending expectations on eating out and going out have plummeted as consumers look to tighten their belt as they face up to cost of living pressures.
“Even after the extensive travel disruption over the last two years, holiday spending is not immune and will consumers prioritise their main holiday over other breaks, like we saw during the global financial crisis?”
Across the channel, investor sentiment in the eurozone fell to its lowest level in almost two years in a survey released earlier, with inflation and the war in Ukraine indicating the start of a recession in the second quarter of 2022.
The Sentix index for the common currency area fell to -18.0 in April from -7.0 the previous month – the lowest level since July 2020.
“The eurozone economy is thus being pushed into recession by the Ukraine conflict and accompanying sanctions and uncertainties,” Sentix said.
“For capital markets, this is likely to have considerable consequences in the coming weeks.”
Still in Europe, German imports and exports rose more than expected in February, but the impact of the Ukraine conflict is yet to be felt.
Official data released earlier showed exports pushing up 6.4% on the month, coming in well ahead of expectations for a 1.5% jump, while imports were up 4.5% versus expectations for a 1.4% rise.
Trade with Russia was a different story, however, with exports down 6.3% and imports 7.3% lower on the month.
“Trade with Russia was not restricted until late February 2022 as a result of Russia’s attack on Ukraine and the sanctions imposed as a consequence,” said Germany’s federal statistics office, Destatis.
“It is expected that, as of reference month March, foreign trade figures will show in detail how far the sanctions, further measures to restrict exports and unsanctioned behaviour of market participants will further impact German trade with the Russian Federation.”
In equity markets at home, housebuilders surged following a report the government was dropping its demand for them to contribute towards a £4bn cladding remediation fund.
Barratt Developments was up 2.97%, Persimmon added 2.89%, Taylor Wimpey was ahead 2.7%, Redrow advanced 3.68%, Crest Nicholson rose 2.6%, Bellway grew 2.29%, and Vistry Group was 2.65% higher.
Endeavour Mining rose 2.35% after saying it was set to start construction of the $290m expansion of its Sabodala-Massawa gold project in Senegal.
B&Q owner Kingfisher was boosted 0.81% by an upgrade to ‘buy’ from ‘hold’ at Deutsche Bank, while Just Group jumped 5.82% after an upgrade to ‘overweight’ at Barclays.
Airlines were mixed at the close, with BA and Iberia owner IAG managing gains of 0.44% while budget airline easyJet descended 0.22%.
Both were in the red earlier, after saying they had been forced to cancel dozens of flights due to Covid-related staff absences.
“If the current disruption continues into the Easter weekend, we could easily see airlines like easyJet have to downgrade their earnings forecasts,” said AJ Bell investment director Russ Mould.
“Making matters worse is the fact that oil prices remain stubbornly high which is putting pressure on fuel costs.
“Ryanair is clearly concerned about the situation given how it has announced increased fuel hedging.”
On the downside, NatWest was 1.24% weaker following a Sky News report over the weekend that it was considering a £3bn takeover bid for wealth manager Tilney Smith & Williamson.
Aviva was in the red by 1.48% after a downgrade to ‘equalweight’ at Barclays, and following its appointment of Charlotte Jones as chief financial officer, with effect from 5 September.
Market Movers
FTSE 100 (UKX) 7,558.92 0.28%
FTSE 250 (MCX) 21,329.89 0.53%
techMARK (TASX) 4,370.68 1.05%
FTSE 100 – Risers
Aveva Group (AVV) 2,535.00p 4.02%
Flutter Entertainment (CDI) (FLTR) 9,088.00p 3.93%
JD Sports Fashion (JD.) 156.05p 3.52%
Rightmove (RMV) 657.00p 3.46%
Hargreaves Lansdown (HL.) 1,018.50p 3.38%
Berkeley Group Holdings (The) (BKG) 3,841.00p 3.22%
Barratt Developments (BDEV) 536.60p 2.97%
Persimmon (PSN) 2,210.00p 2.89%
Taylor Wimpey (TW.) 134.80p 2.70%
Ocado Group (OCDO) 1,209.00p 2.67%
FTSE 100 – Fallers
Standard Chartered (STAN) 501.20p -1.69%
Rio Tinto (RIO) 6,132.00p -1.49%
Aviva (AV.) 438.00p -1.48%
M&G (MNG) 219.70p -1.30%
NATWEST GROUP PLC ORD 100P (NWG) 215.20p -1.24%
Croda International (CRDA) 7,766.00p -1.20%
Tesco (TSCO) 275.90p -1.11%
Lloyds Banking Group (LLOY) 46.89p -1.06%
British Land Company (BLND) 519.80p -0.99%
DCC (CDI) (DCC) 5,912.00p -0.84%
FTSE 250 – Risers
Polymetal International (POLY) 348.00p 10.62%
888 Holdings (888) 207.20p 6.69%
Trainline (TRN) 271.00p 6.18%
Just Group (JUST) 95.40p 5.82%
Auction Technology Group (ATG) 1,060.00p 4.98%
PureTech Health (PRTC) 214.00p 4.14%
FDM Group (Holdings) (FDM) 1,108.00p 3.94%
Drax Group (DRX) 805.50p 3.87%
Redrow (RDW) 536.00p 3.68%
Petershill Partners (PHLL) 262.50p 3.35%
FTSE 250 – Fallers
Bridgepoint Group (Reg S) (BPT) 350.00p -4.11%
Ferrexpo (FXPO) 187.80p -3.84%
Clarkson (CKN) 3,585.00p -3.11%
Coats Group (COA) 75.30p -2.59%
Pets at Home Group (PETS) 355.60p -2.09%
Capital & Counties Properties (CAPC) 169.00p -2.09%
Lancashire Holdings Limited (LRE) 432.60p -2.08%
Wood Group (John) (WG.) 158.55p -2.07%
Shaftesbury (SHB) 601.00p -1.80%
Liontrust Asset Management (LIO) 1,286.00p -1.68%
