UK markets mixed as house prices fall and tech weakness spreads

​​​UK housing market shows signs of cooling

​UK house prices delivered an unexpected surprise in August, falling 0.1% against forecasts for modest growth. This decline represents a notable shift in the housing market trajectory, with annual growth slowing markedly to 2.1%.

​The drop comes despite the Bank of England's (BoE) recent interest rate cuts, which many expected would provide renewed support for property values. However, affordability constraints continue to weigh heavily on the market, with many potential buyers still priced out.

​Housing supply has been rising consistently for a full year, marking the longest streak of increased availability in two decades. This extended period of supply growth is partly attributed to landlords exiting the rental market ahead of incoming regulatory changes.

​The combination of falling prices and increased supply suggests the housing market may be entering a more balanced phase. This could provide opportunities for first-time buyers who have struggled with affordability in recent years.

​Sterling strength and mixed equity performance

​The British pound demonstrated resilience, pushing above $1.35 as gilt yields edged higher throughout the session. This strength reflects growing confidence in UK economic fundamentals despite mixed housing data signals.

​The FTSE 100 managed a modest 0.4% gain, outpacing its mid-cap counterpart. The FTSE 250 also posted positive territory with a 0.3% advance, though both indices remained well below recent peaks.

​Defensive sectors emerged as clear winners, with healthcare and consumer goods leading the charge. These traditionally stable sectors provided a safe haven as investors sought refuge from broader market uncertainty.

​The mixed performance across UK equities reflects the ongoing tension between domestic economic concerns and global market dynamics. Traders seeking exposure to UK markets might consider a demo account to test strategies without risk.

​Defence sector gains momentum from geopolitical developments

​Defence stocks surged on reports of potential European military deployments to Ukraine, highlighting the sector's sensitivity to geopolitical developments. This news provided a significant boost to companies with exposure to military contracts and equipment.

​The announcement of a substantial £10 billion UK frigate deal with Norway further energised defence-related shares. This massive contract underscores the ongoing commitment to military spending across European nations amid heightened security concerns.

​Rolls-Royce captured particular attention with news of exploring funding options for its small nuclear reactor division. The company is reportedly considering various alternatives, including a potential initial public offering for this innovative unit.

​Corporate developments shape individual stock movements

​Greencore's ambitious £1.2 billion takeover bid for Bakkavor faces regulatory scrutiny, with the Competition and Markets Authority launching a formal inquiry. The investigation timeline extends to 27 October, creating uncertainty for both companies' shareholders.

​Solgold announced plans to relocate its tax domicile to Switzerland whilst maintaining its London Stock Exchange (LSE) listing. The mining company is also exploring additional listing opportunities, potentially expanding its investor base and trading liquidity.

​Domino's provided mixed signals with a £20 million share buyback programme and reaffirmed guidance for the year ahead. However, management flagged concerns about higher debt levels and weakening demand from franchise partners.

​Asian markets suffer tech-driven decline

​Japan's Nikkei 225 index tumbled more than 2% to 41,849, marking a three-week low as chip-related stocks bore the brunt of selling pressure. The decline followed overnight weakness in US technology shares, demonstrating global market interconnectedness.

​Advantest, a key supplier to Nvidia and chip-testing equipment manufacturer, plummeted 9% in heavy trading. The stock's decline alone contributed over 280 points to the Nikkei's substantial 869-point slide.

​SoftBank Group, the AI-focused investment giant, shed 6% as investors retreated from technology exposure. Other chip-related names including Disco, Socionext and Furukawa Electric also suffered significant losses in the broad-based sell-off.

​The broader Topix index demonstrated greater resilience, falling just 0.8% compared to the Nikkei's steeper decline. This disparity highlighted how the technology sector's concentrated weighting in the Nikkei amplified the overall market impact.

​Global trading environment remains challenging

​Alibaba provided a rare bright spot, surging nearly 19% in Hong Kong trading on renewed optimism surrounding its cloud business and chip development initiatives. This dramatic rally fuelled further competitive concerns for established players like Nvidia.

​With US markets closed for Labour Day and European futures showing little movement, Asian technology weakness dominated global trading sentiment. The lack of Wall Street guidance left markets vulnerable to sector-specific selling pressure.