Market report

Wall St plunges | House prices slow | Virgin buyback


10pm: US stocks plunge

Wall Street

Wall Street closed sharply lower as the S&P 500 delivered its worst first first-half performance in more than half a century.

In the last six months, the benchmark index fell 20.6%, while other major US indexes also dropped sharply.

The Dow Jones Industrial Average is down by more than 15% in the first half of this year, the biggest drop for the first half period since 1962.

The Nasdaq Composite has lost almost 30%, marking its largest ever percentage drop for the first half

Stocks in the UK, mainland Europe and Asia have also suffered steep losses.

It comes as central banks around the world are trying to rein in soaring living costs, with prices of essential goods like food and fuel jumping.

London plunges

The FTSE 100 closed 143.04 points (1.96%) lower at 7,169.28 as investors responded negatively to interest rate and recession talk about world banks. The FTSE 250 has dropped by more than 20% this year.

Craig Erlam, market analyst at forex firm OANDA, said: “Stock markets have fallen heavily in June so it seems only fitting that they’re ending the month with big losses as reality continues to bite.

“There’s no getting away from recession chat and while the heads of the Fed, ECB and BoE didn’t exactly fuel that during their panel discussion on Wednesday, they didn’t do anything to dispel it either.

“They all know that there’s a strong likelihood of recession this year or next and investors are increasingly accepting that fate as well.”

Aston Martin linked to fundraising

Aston Martin DB11

Aston Martin Lagonda is said to be seeking to raise funds to safeguard its future as the luxury carmaker ramps up investment for its next-generation platforms and electric vehicle strategy.

Industry publication Autocar said the firm has £1.2 billion of outstanding bonds, bank drafts and loans on its books, meaning it is unlikely to be able to raise funds by taking on more debt, especially given the level of repayments currently required to service it.

The stock closed down 38.20p (8%) at 435p, among the worst performers in the FTSE 250 and having fallen to 385p earlier in the session. Full story here

Virgin Money buyback

In the FTSE 250 Virgin Money was the among the best performers, up 2.5%, after a Barclays upgrade and the launch of a share buyback programme, with an initial repurchase of up to £75m.

The buyback starts today and will end no later than 17 December.

Chief executive David Duffy said: “As Virgin Money continues to deliver against its strategic objectives and maintain a strong capital base, I am pleased to confirm the launch of our inaugural share buyback programme.

“Buybacks will play a significant role in the capital return policy we announced in May as the company targets profitable growth and distributes excess capital. Today’s announcement marks an important step in that journey.”

Virgin Money shares were up 3.8p (2.96%) at 132.3p.

House price growth slows

Persimmon homes

Nationwide Building Society’s house price index showed average house prices have increased for the eleventh consecutive month climbing to a record high of £271,613, though the rise was at a slower rate.

Prices grew by 10.7% in June compared to June 2021, a slowdown from annual growth of 11.2% in May. London continued to be the weakest performing UK region, with annual price growth slowing to 6%, from 7.4% in the previous quarter.

Brean Horne, personal finance expert at NerdWallet, said: “The pandemic could not curtail the upward march of house prices, but many expect that rising interest rates and inflation will. However, today’s figures show that this slowdown is yet to take effect.

“It’ll come as a blow to those hoping to take their first step onto the property ladder who are facing a triple-threat. Interest rates are rising, affecting the amount they can borrow; inflation has risen above 9% and could reach as high as 14% later this year, impacting the amount they can save; and if house prices also climb further, many properties will simply be out of reach.”

No change to GDP figure

The UK economy grew the same as previously thought in the first three months of the year, when the rise in inflation was still to have an impact.

Gross domestic product increased by 0.8% in the first quarter compared with the final three months of 2021, the Office for National Statistics said.

A preliminary estimate by the ONS had put economic growth in the January-March period at that rate.

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