Published : 1 month ago, on 08/11/2024

By Sruthi Shankar

(Reuters) – The UK’s FTSE 100 fell to a three-month low on Friday, dragged down by a profit warning from homebuilder Vistry and lackluster stimulus measures from China weighed on investor sentiment.

The blue-chip FTSE 100 dropped 0.8%, having fallen about 1% earlier to its weakest level since August 8. The index was on track for its third straight weekly decline.

Shares in Vistry plummeted by nearly 19%—the steepest drop among FTSE 100 components—after issuing its second profit warning in a month, citing ongoing cost pressures in its South Division.

This dragged the FTSE 350 housebuilder index to a near one-year low. Peer Persimmon recently flagged concerns over escalating costs for 2025 projects.

“Vistry’s latest update offered further evidence that build cost inflation is back with a vengeance for the construction sector,” said AJ Bell investment director Russ Mould.

“Vistry will have to work hard to rebuild market confidence and unfortunately it seems to be doing so at time when the foundations underpinning the industry as a whole look a bit more shaky.”

Meanwhile, stocks exposed to China’s market, such as luxury goods company Burberry and miners Antofagasta, Rio Tinto, and Glencore, also saw declines.

China on Friday announced a support package which was intended to alleviate debt burdens on local governments but failed to meet market expectations of a more substantial fiscal boost.

China-focused financial firms, including HSBC and Prudential, also dropped 2.5% and 2.8%, respectively, amid ongoing concerns over China’s economic recovery.

The developments in China capped a volatile week that included a surge on Wall Street following Republican Donald Trump’s return to the U.S. presidency, alongside interest rate cuts by both the Federal Reserve and the Bank of Englandon Thursday.

The midcap FTSE 250 index slipped 0.6% on Friday but was on track for mild weekly gains.

British Airways owner IAG jumped 6.3% after its third-quarter operating profit beat forecasts, as growth on its lucrative transatlantic routes helped it outperform rival airlines.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Tasim Zahid)