LONDON MARKETS: FTSE 100 Set For First Loss In 3 Sessions As Homebuilders, HSBC Fall

By Carla Mozee, MarketWatch Features Dow Jones Newswires

U.K. stocks fell for the first time in three sessions on Monday, with homebuilders under pressure and HSBC PLC moving lower following the lender's quarterly earnings report.

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What markets are doing: The FTSE 100 index fell 0.3% to 7,485.47, with the consumer goods and basic materials groups losing the most. The benchmark on Friday rose 0.3% (http://www.marketwatch.com/story/ftse-100-steps-higher-as-pound-slips-again-2017-10-27), trimming its weekly fall to 0.2%.

Meanwhile, the pound traded at $1.3162, up from $1.3127 late Friday in New York.

What's moving markets: The major event this week will be Thursday's Bank of England meeting, at which Governor Mark Carney and his colleagues may raise the key rate by a quarter percentage point to 0.5%.

Meanwhile, Monday's session got under way with news of ratings downgrades in the housing sector at Barclays.

What strategists are saying: "No action [at the Bank of England] would be an unpleasant surprise for the market, after the U.K.'s headline inflation hit 3% level in September. It is important to keep in mind that a 25bp hike is extensively priced in, therefore the BOE's tone will matter the most. A dovish hike (one-off action) could send cable below the 1.30 support, even if the BOE raises rates on Thursday," said Ipek Ozkardeskaya, senior market analyst at London Capital Group, in a note.

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Corporates: Shares of homebuilders suffered at the bottom of the index following ratings downgrades issued by Barclays including a cut of Berkeley Group Holdings PLC (BKG.LN) to an underweight rating. Berkeley shares slumped 3.5%, Barratt Developments PLC (BDEV.LN) fell 1.8%, and Persimmon PLC (PSN.LN) and Taylor Wimpey PLC (TW.LN) both lost 1.8%.

"Whilst Barclays is downbeat on labor shortages there remain strong fundamentals in the housing market for builders and dividends remain attractive. With pressure to fix the housing supply shortage mounting, the [U.K.] Chancellor [Philip Hammond] may well have something up his sleeve in the Budget for home buyers that could be a big boost for the sector," said Neil Wilson, senior market analyst at ETX Capital.

HSBC (HSBA.LN) (HSBA.LN) was down 1% even as the banking heavyweight swung to a third-quarter profit of $3.24 billion (http://www.marketwatch.com/story/hsbc-swings-to-324b-profit-as-asia-bet-pays-off-2017-10-30) as revenue in Asia rose from increased customer borrowing and a growing deposit base.

EasyJet PLC (EZJ.LN) rose 1.3% after the budget carrier late Friday said it's buying assets from now defunct Air Berlin PLC. (http://www.marketwatch.com/story/easyjet-to-buy-assets-from-air-berlin-2017-10-28-124852653)

Other developments: The Institute for Fiscal Studies said in report published Monday (https://www.ifs.org.uk/publications/10010)that it would be prudent for the U.K. government to drop its commitment to running a budget surplus from the mid 2020s onwards as Britain faces the prospect of a widening budget deficit.

(END) Dow Jones Newswires

October 30, 2017 05:20 ET (09:20 GMT)