Shares in Foxtons (FOXT) have tumbled as the estate agent warned of a slowdown in business in the second half of the year due to the government’s attempts to cool down the housing market.
The ‘mid cap’ stock fell 10.4% to 263.8p, despite an otherwise strong set of results in which it announced a £12.8 million payout to shareholders and reported a 29% rise in first-half core earnings.
Foxtons said expectations of a rise in interest rates were reducing demand, while Bank of England measures to rein in high loan-to-income lending would also lead to a slowdown in the rapid rate of transactions.
‘The range of policy initiatives introduced in 2014 aimed at controlling mortgage lending, together with the expectation of early increases in interest rates, is now having an impact on short-term demand among buyers,’ said chief executive Nic Budden.
‘Consistent with others in the sectors, we expect this to lead to lower rates of market growth in both property sales transactions and prices during the second half of the year.’
Asos (ASOS) surged 18.3% to £27.77 amid rumours of a US bid for the online fashion company.
The Daily Mail reported rumours major shareholder Bestseller, a Danish clothing firm, had been approached over its 27.4% stake in the business with a £50-per-share offer.
It marks a small recovery for the AIM-listed Asos, which has been in the doldrums since a profit warning in June prompted the shares to lose around a third of their value. The stock is down 56% over the year to date, having hit a year high of £70.39 in February.
RPS Group (RPS) was a another big mid cap mover, rising 3.7% to 290.8p as the energy and environmental consultant announced the acquisition of property development consultancy CgMs Holdings.
Trading on the FTSE 100 was muted, with the UK blue-chip index adding just three points to trade at 6,826. Sainsbury’s (SBRY) was among the biggest fallers, as figures from retail analyst Kantar Worldpanel showed UK grocery sales were up just 0.8% in the 12 weeks to 17 August, a 10-year record low. Sainsbury’s fell 2.8% to 303.6p, as it clocked in sales just 0.3% higher over the period.
However, investors shrugged off a 1.9% fall in sales at Morrisons (MRW), sending the stock 1.4% higher at 184.4p.
Jonathan Sudaria, dealer at Capital Spreads, said the bulls were taking a ‘breather’ after markets had rallied following hints from European Central Bank president Mario Draghi of the launch of a quantitative easing programme.
‘However, they remain firmly in the ascendancy, as they believe they have Draghi in their corner warming up the printing presses,’ he said.
‘Unlike the US markets, the major European indices are a fair distance from their all-time highs, but with Draghi apparently about to provide the ultimate economic backstop, traders have got something initially to aim for.’