UK Stock Market Update: FTSE 100 Performance and Key Market Movements

Market trends in the United States often influence the UK stock market, and recent American inflation data aligned with projections. This development has triggered expectations for potential interest rate cuts by the US Federal Reserve in September, subsequently leading to a decline in UK government bond yields and a positive shift for commercial real estate stocks.

The anticipation of lower borrowing costs positively impacted commercial property shares, making them some of the top performers on the FTSE 100. Notable gains were seen in Land Securities, which rose by 12½p (2%) to 629½p; Segro, Europe’s largest warehouse operator, increased by 11p (1.3%) to 871p; and Unite Group, specializing in student accommodations, climbed by 12½p (1.3%) to 957½p.

At the close, the FTSE 100 experienced a marginal drop of 3.01 points, ending the day at 8,376.63. Despite this, the index recorded a weekly gain of 0.6% and a slight increase of 0.1% throughout August, marking its second consecutive monthly rise.

The decrease in bond yields also benefited utility stocks. Severn Trent surged by 39p (1.5%) to £25.71, while Pennon, a company in the FTSE 250 focused on water services, gained 13p (2.2%) to 603½p.

Additionally, Nationwide’s report of a 2.4% annual rise in house prices spurred interest in residential developers and property firms. Vistry, a prominent housebuilder, saw an increase of 14p (1%) to £13.59; Savills, a real estate agent, rose by 10p (0.9%) to £11.74; and Barratt Developments, another construction firm, boosted by 5p (1%) to 507p.

In the commodities sector, rising copper prices led to a gain for shares in Antofagasta, the Chilean mining company, which closed up 23p (1.3%) at £18.53. Conversely, a strengthening US dollar caused gold prices to drop, negatively impacting Fresnillo, the Mexican miner, whose shares fell by 13p (2.3%) to 541½p.

On the other hand, shares of BP and Shell declined following reports that the Opec+ coalition of oil-producing nations is expected to increase output starting in October. BP shares decreased by 5½p (1.2%) to 429½p, while Shell fell by 30p (1.1%) to £26.81.

Burberry’s shares also dropped by 8p (1.2%) to 667p as investors were cautious ahead of the company’s anticipated removal from the FTSE 100, a decision expected to be confirmed next week.

In the mid-cap sector, the FTSE 250 rose by 55.46 points (0.3%), closing at 21,086.54. Despite this positive movement, the mid-cap index ended the week down by 0.5% and recorded a monthly decline of 2.4%. Nanoco faced challenges after revising its annual revenue forecast down by 25% following the loss of a critical European client, leading to a substantial drop in its share price, which decreased by 4½p (34%) to 9p.

Meanwhile, Hutchmed, a Chinese biotechnology firm, saw its shares decline by 8p (3%) to 262p after it withdrew its new drug application in China for fruquintinib, a treatment for colorectal cancer.

Wall Street Insights

US markets reacted positively to strong growth data and declining inflation, with the Dow Jones industrial average achieving its 26th record close of the year, marking a monthly gain of 1.8%. The S&P 500 rose by 2.3% in August, while the Nasdaq experienced a 0.7% increase.