Shares drop as FTSE closes the year on a downer

Shares in London’s top businesses closed the year on a low note on Friday as traders went home early ahead of the new year celebrations.

There was no festive mood as the FTSE 100 closed at 7451.74, down 61 points or 0.8%, meaning that the index has gained less than 100 points in a year.

The fall on Friday was led by the UK’s biggest housebuilders, as figures on Friday from the Nationwide Building Society showed another fall in house prices.

For the fourth month in a row house prices fell in December, according to the building society.

“The mortgage lender cited the main driver of a potential soft landing (especially for house prices) is if forced selling can be avoided, and pointed out that there are good reasons to be optimistic on that front,” said Derren Nathan, head of equity research at Hargreaves Lansdown.

“Nationwide tells us that most forecasters expect the unemployment rate to rise towards 5% in the years ahead – a significant increase, but this would still be low by historic standards.

“Moreover, household balance sheets remain in good shape with significant protection from higher borrowing costs, at least for a period, with around 85% of mortgage balances on fixed interest rates.

“Whilst a moderate house price fall of 5% is likely, a significant deterioration in the labour market or more elevated mortgage rates would probably be required to generate the double-digit decline.”

But shareholders in the UK’s biggest housebuilders did not welcome even this cautious optimism from Nationwide.

By the end of the day Barratt Developments and Persimmon were at the bottom of the FTSE 100. Each company saw its shares drop by more than 2%.

Rightmove, Taylor Wimpey and Berkeley Group were also among the biggest losers on Friday.

In Germany the Dax index was trading down 0.8% around the time that markets closed in London, while France’s Cac 40 was down 0.7%.

Wall Street had not had time to open before the London Stock Exchange closed early.

In company news, Harland & Wolff saw its shares drop by a fifth after the business warned on revenue.

It said that problems in supply chains meant that about £20 million of revenue that it expected to make from a contract with the Lithuanian authorities would need to be deferred from 2022 into the first part of next year.

The business also reported other problems, which will make it miss revenue targets for the financial year.

The biggest risers on the FTSE 100 were JD Sports, up 3.85p to 127p, CocaCola HBC, up 42p to 1,970.5p, Fresnillo, up 15.2p to 900.3p, Next, up 94p to 5,843p, and Informa, up 4.4p to 624.1p.

The biggest fallers on the FTSE 100 were Persimmon, down 31p to 1,224p, Barratt Developments, down 9p to 400.35p, Ocado, down 14p to 620p, Schroders, down 8p to 437.15p, and Airtel Africa, down 2p to 111.8p.