Real estate leads UK stocks fall after Jefferies downgrade; Ithaca shines

Reuters

Published Sep 27, 2023 08:25

Updated Sep 27, 2023 17:31

By Siddarth S and Johann M Cherian

(Reuters) -London stocks closed down on Wednesday with real estate stocks hitting over a month's low after Jefferies said the capital city's office market was in "rental recession" and Ithaca Energy gained on a UK nod for the Rosebank oil and gas field.

Land Securities, British Land, Derwent London and Great Portland Estates fell between 3.4% and 4.3% after the brokerage downgraded all the stocks.

London's embattled office market is in rental recession as volumes of empty space across the capital's West End, City and Canary Wharf business districts hit a 30-year high, Jefferies analysts said.

The broader real estate index fell 2.8% and is set for a 3.6% loss this quarter as the roll-out of flexible working policies for corporate employees has partly dented demand for huge office rental spaces.

More broadly, the large-cap FTSE 100 closed 0.4% down despite a 1.3% gain in heavyweight oil stocks. The firms gained as crude prices got a lift on supply concerns. [O/R]

Midcap stocks ended 0.6% lower, overshadowing a 8.8% surge in Ithaca Energy after Britain gave the green light for one of its biggest new oil and gas projects in years despite opposition from environmentalists.

"It's been a good day for UK oil and gas small cap Ithaca Energy after the UK government approved the development of the Rosebank oil field in Shetland," said Michael Hewson, chief market analyst at CMC Markets.

"The approval... should help to improve the energy security of the UK."