Sector movers: Housing stocks drop on rate-hike fears, Balfour sinks

20th Aug 2014 15:45

Renewed concerns about an interest-rate hike this year dampened the demand for housebuilding and construction stocks on Wednesday, as investors worried about the potential impact from policy tightening on the housing market.Meanwhile, another takeover rejection by infrastructure specialist Balfour Beatty sent shares in the FTSE 250 constituent firmly lower.One day after falling inflation figures prompted economists to push back their forecasts for the first rate hike, minutes from this month's Monetary Policy Committee meeting showed that two out of the nine members actually voted for an increase in the Bank Rate.This was the first split vote in three years and "shows that the first rate hike is approaching", according to analyst Philippe Gudin from Barclays, who predicts an increase will come before the end of the year.Jeremy Duncombe, the director at the Legal & General Mortgage Club, said that the discussion has moved from 'if' to 'when' rates will rise."Our latest Mortgage Mood survey shows that 68% of homeowners think there is likely to be a rate rise in the next year. Whilst there is still some debate about exactly when this will happen borrowers need to consider the impact it will have on their finances now," he said.Investors are now worried that these concerns will curb demand in the UK housing market, which has seen rampant price growth over the last year. Housebuilders such as Barratt Developments, Bellway, Persimmon, Redrow, Bovis Homes and Berkeley Group were all trading in the red on Wednesday afternoon in London.As for Balfour, shares were down more than 7% after the firm rebuffed an improved merger proposal from construction outfit Carillion and decided not to extend the 'put up or shut up' deadline which expires on Thursday.Carillion responded by saying that it will not longer pursue a merger.Top performing sectors so far todayElectricity 9,639.08 +0.75%Pharmaceuticals & Biotechnology 12,679.09 +0.42%Mining 17,819.63 +0.39%Gas, Water & Multiutilities 6,110.44 +0.33%Industrial Transportation 2,823.66 +0.16%Bottom performing sectors so far todayConstruction & Materials 3,889.11 -3.17%Forestry & Paper 10,792.90 -2.05%Tobacco 39,653.63 -1.50%Household Goods & Home Construction 11,864.23 -1.40%Insurance (non-life) 1,825.88 -1.12%BC