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FTSE 100 stocks slide as builders hit by competition probe, Bunzl warning

Published 26/02/2024, 11:16
Updated 26/02/2024, 11:16
© Reuters.  FTSE 100 live: stocks slide as builders hit by competition probe, Bunzl warning

Proactive Investors -

  • FTSE 100 down 20 points at 7,686
  • Bunzl (LON:BNZL) sees sluggish revenues
  • Housebuilders to probed over illegal tactics

Looking at the airline sector, Ryanair (LON:0RYA) boss Michael O’Leary has warned of higher fares and possible flight cancellations due to delays in Boeing (NYSE:BA) aircraft deliveries.

This stems from production issues and hold-ups that have led to Ryanair expecting to receive fewer aircraft than initially planned between October and December, with the US aircraft manufacturer having been in crisis mode since the Alaska Airlines mid-air blowout in January.

Loose bolts were subsequently found in other 737 Max 9 planes used by United Airlines, causing mass groundings and an FAA investigation.

O'Leary told reporters that "we don't really know how many aircraft we're going to get" from Boeing, but if it is "only get 40 by the end of March we will have to announce some minor schedule cuts".

The famously outspoken CEO said "there's a shitshow going on in Seattle. They keep giving us optimistic, broken promises. And then a week or two weeks later... it turns out that reality is worse."

Meanwhile, shares in British Airways (LON:ICAG) owner IAG are among the top risers on the FTSE, up 1.6%, ahead of results later this week.

Full-year results on Thursday are expected to include a record €29.4 billion of sales and a record €3.5 billion underlying operating profit, topping a previous peak from 2018.

EasyJet PLC shares are also flying higher, up 2.2%. The budget airline is likely to rejoin the FTSE 100 in the upcoming quarterly review.

Commodities prices drag

Several miners are among the bigger fallers this morning, including Rio Tinto (LON:RIO) and Anglo American (JO:AGLJ) down 2.5% and Fresnillo (LON:FRES) 2% lower.

These moves reflect declines in copper prices, which traders say is on the back of a rise in the US dollar and higher inventories in China.

Elsewhere in commodities, the oil price has faltered, with Brent crude down 0.5% to $81.2 a barrel.

"There are real concerns that higher-for-longer interest rates is going to become a reality, which could dent demand for the black stuff," said analyst Sophie Lund-Yates at HL.

"The demand outlook in major importer China also remains highly uncertain, which comes despite efforts from authorities to boost consumption."

Housebuilders subside on CMA probe

The FTSE has tumbled back into the red, with miners and housebuilders weighing on the index.

Most of the big housebuilding companies have been named in a new investigation by the UK competition watchdog, which also published a report detailing its concerns about the sector and "significant intervention" needed.

The Competition & Markets Authority said it suspected that big housebuilders are sharing commercially sensitive information with their competitors, "which could be influencing the build-out of sites and the prices of new homes".

A new probe under the Competition Act 1998 has been launched into listed companies Barratt Developments PLC (LON:BDEV), Bellway PLC (LON:BWY), Berkeley Group Holdings PLC (LON:BKGH), Persimmon PLC (LON:PSN), Redrow PLC (LON:RDW), Taylor Wimpey PLC (LON:TW.) and Vistry Group (LON:VTYV), as well as privately owned Bloor Homes.

Also, following a year-long investigation into the sector, the CMA published a report identifying several factors that it believes have led to the "persistent under delivery of new homes", with several recommendations for national and local governments, including a streamlining of the planning process, reforms to estate management charges, and the formation of a New Homes Ombudsman with a unified consumer code.

The FTSE is not alone in the red this morning, with most of Europe's major indices also lower, apart from Germany's DAX.

Analysts at Saxo Bank say: "After last week’s Nvidia (NASDAQ:NVDA) and AI bonanza it is worth reflecting this week whether equity markets are getting dangerously high.

"We are the most worried about US equities and investors should begin thinking about reducing equity exposure to technology stocks or outright reduce equity exposure while increasing diversification through bonds."

FTSE breaks even

The FTSE 100 has recouped its early losses though again it is struggling to match the record-breaking performances seen on other markets last week.

Wall Street, Frankfurt and Paris have all hit new records recently while in Tokyo overnight the Nikkei was closing in on the landmark 40,000 level for the first time as its rally continued.

London’s blue-chip index is now up 2 points at 7,708 as it recovered from a nasty early surprise from Bunzl. The distribution giant is down more than 5% on a downbeat outlook statement with its annual results.

For 2024, the disposables specialist said it sees: “Underlying revenue, which is organic revenue adjusted for trading days, declining slightly".

Best of the early rises were Endeavour Mining, up 2.3%, and Standard Chartered (LON:STAN), up 2.1%, following its surge on Friday after its results.

Elsewhere, one-time Footsie property group Hammerson has sold the Union Square (NYSE:SQ) shopping centre in Aberdeen for £111 million as its spate of disposals continues.

Hammerson said the sale marked the completion of a £500 million “non-core disposal programme” first outlined in early 2022.

This initiative was aimed at reducing balance sheet risk and debt. Shares rose 1.3% to 26p.

Ryanair meanwhile warned that delays to its expected Boeing deliveries might mean price hikes and flight cancellations.

"We don't really know how many aircraft we're going to get from Boeing," chief executive Michael O'Leary told the press.

"We're pretty sure we're going to get 30 to 40. We're reasonably confident we're between 40 and 45. And now we are far less confident we're going to get between 45 and 50."

Fares at the budget carrier could be up to 10% more expensive, he said.

"If we only get 40, by the end of March we will have to announce some minor schedule cuts," he added.

Ryanair is listed in Dublin now, but the comments lifted the share prices of all the London-listed carriers.

British Airways owner IAG was up 1.7%, easyJet (LON:EZJ) 2.9% and Wizz Air (LON:WIZZ) 1.7%.

Read more on Proactive Investors UK

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