Homebuilders suffer as FTSE tumbles

The FTSE has turned lower once more this morning, continuing the largely rangebound trading that has been in place over the past month. 

A building with scaffolding
Source: Bloomberg

Chief amongst the losers on the day has been Standard Chartered, which has tumbled circa 6% following disappointing earnings and job losses. As we move into the week, the influence of economic events will no doubt become more prominent for traders and today it is the turn of the UK construction PMI reading.

Given the role that construction played in the recent demise of the Q3 UK GDP figure, it is no surprise that markets were very keen to understand where the sector stood in November. The fact that today’s early trade saw homebuilders Persimmon, Taylor Wimpey and Barratt drag the FTSE 100 lower perhaps was a nod to bearish expectations for the PMI reading. In fact, those fears were well founded, with the reading falling 1.1 to 58.8, yet remaining firmly in expansion territory.

Standard Chartered shares tumbled heavily this morning, as investors suffered the indignity of seeing their second-half dividend scrapped and share price diluted through a £3.3 billion rights issue, on top of a surprise $139 million loss for the firm. As Bill Winters attempts to arrest the decline of the firm, it is clear that this restructuring could take some time. With staples such as the dividend being junked, this will no doubt drop off the investment list for many looking for consistent returns.

Ahead of the open, we expect the Dow Jones to open 36 points lower, at 17,792.

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