London close: Stocks finish higher as housebuilders surge

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Sharecast News | 02 Sep, 2020

London stocks finished in the green on Wednesday, with housebuilders pacing the gains following well-received results from Barratt Developments and an upbeat survey from Nationwide.

The FTSE 100 ended the session up 1.35% at 5,940.95, and the FTSE 250 was ahead 0.57% at 17,704.42.

Sterling was trading mixed, last weakening 0.5% against the dollar to $1.3317, while gaining 0.16% on the euro to €1.1253.

“Equity markets are showing decent gains as the trading session draws to a close,” said CMC Markets analyst David Madden.

“Broadly speaking, European indices lost ground in the past two days, and today those losses have been mostly recovered.”

Madden said the mood on this side of the Atlantic was still optimistic in relation to the US coronavirus stimulus package, even though there were “serious differences” between what the two sides wanted.

“Steven Mnuchin, the US Treasury Secretary, said that a ‘bipartisan agreement still should be reached’.

“The politicians are playing politics with the issue, but dealers are still hopeful that some sort of agreement will be achieved at some point.”

Fresh data during the afternoon showed hiring in the US increased at a slower-than-expected pace last month, with ADP's non-farm private sector payrolls reports showing a 428,000 gain in employment.

That was less than the 900,000 person increase economists had forecasts.

It was the largest enterprises, those with more than 1,000 staff, that reported the biggest increase in payrolls, of 270,000, followed by a 79,000 rise among medium-sized firms, which are those employing between 50 to 499 persons.

Earlier, the latest survey from mortgage lender Nationwide showed house prices reached a new all-time high in August, thanks in part to pent-up demand following Covid-19 restrictions.

Prices rose 2% on the month to £224,123, following a 1.8% increase in July.

That marked the biggest monthly jump since February 2004 and pushed annual house price growth up to 3.7% in August from 1.5% the month before.

Analysts had been expecting a monthly rise of 0.5% and a yearly increase of 2%.

“House prices have now reversed the losses recorded in May and June and are at a new all-time high,” said Nationwide’s chief economist Robert Gardner.

“The bounce back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions.”

Gardner said the rebound reflected a number of factors.

“Pent-up demand is coming through, where decisions taken to move before lockdown are progressing. Behavioural shifts may also be boosting activity, as people reassess their housing needs and preferences as a result of life in lockdown.”

However, he also pointed out that most forecasters expect labour market conditions to weaken significantly in the coming quarters due to the after-effects of the pandemic and as government support schemes wind down.

“If this comes to pass, it would likely dampen housing activity once again in the quarters ahead," he said.

Housebuilders gained on the news, with Barratt Developments up 1.27%, Berkeley ahead 4.69%, Taylor Wimpey rising 7.14%, Persimmon adding 5.64%, Redrow 7.29% firmer and Bellway 5.45% higher.

Barratt was also up after it said full-year profits almost halved as the coronavirus lockdown hit sales in the fourth quarter, but reported a sharp rise in completions in the new year as restrictions were eased.

“The reaction to Barratt Developments’ full-year figures is a case in point of the market being as forward-looking as possible,” said IG market analyst Chris Beauchamp.

“The dire numbers for the past 12 months have been entirely disregarded, investors choosing instead to look at the admittedly-promising recovery in sales levels.”

Beauchamp said that, with the Nationwide data pointing to strength in house prices too, the outlook for the sector seemed quite bright - or at least much brighter than a few months ago.

“But those hoping for a smooth ride know that the prospect of a no-deal Brexit is rising, casting a huge pall over Barratt and its peers.”

Elsewhere, Computacenter advanced 11.61% as it said annual results were likely to be materially better than the company's previous expectations.

The computer services company said successful trading in the first half of the year had continued in the first two months of the second half.

Market Movers

FTSE 100 (UKX) 5,940.95 1.35%
FTSE 250 (MCX) 17,704.42 0.57%
techMARK (TASX) 3,815.04 1.76%

FTSE 100 - Risers

Barratt Developments (BDEV) 547.40p 8.70%
Taylor Wimpey (TW.) 126.05p 7.14%
Persimmon (PSN) 2,695.00p 5.64%
Rolls-Royce Holdings (RR.) 217.60p 5.27%
Melrose Industries (MRO) 100.50p 5.26%
Pennon Group (PNN) 1,051.50p 4.89%
United Utilities Group (UU.) 862.80p 4.86%
Berkeley Group Holdings (The) (BKG) 4,723.00p 4.70%
Severn Trent (SVT) 2,409.00p 4.56%
Compass Group (CPG) 1,227.00p 4.34%

FTSE 100 - Fallers

Polymetal International (POLY) 1,963.00p -3.40%
Fresnillo (FRES) 1,277.50p -3.22%
Flutter Entertainment (FLTR) 11,730.00p -2.70%
Barclays (BARC) 103.50p -2.27%
NATWEST GROUP PLC ORD 100P (NWG) 105.20p -1.41%
Standard Chartered (STAN) 372.80p -1.25%
3i Group (III) 904.40p -1.18%
Royal Dutch Shell 'A' (RDSA) 1,074.00p -1.01%
Royal Dutch Shell 'B' (RDSB) 1,031.00p -0.98%
Prudential (PRU) 1,184.00p -0.84%

FTSE 250 - Risers

Hammerson (HMSO) 292.00p 29.78%
Computacenter (CCC) 2,250.00p 11.61%
Redrow (RDW) 468.00p 7.29%
Countryside Properties (CSP) 333.60p 5.50%
Bellway (BWY) 2,478.00p 5.45%
Crest Nicholson Holdings (CRST) 201.20p 5.34%
Trainline (TRN) 391.60p 5.24%
Meggitt (MGGT) 285.10p 4.89%
Vistry Group (VTY) 631.00p 4.04%
Domino's Pizza Group (DOM) 347.00p 3.89%

FTSE 250 - Fallers

Provident Financial (PFG) 212.20p -7.34%
Hochschild Mining (HOC) 232.60p -6.89%
Aggreko (AGK) 425.00p -5.43%
Petropavlovsk (POG) 34.85p -5.17%
Centamin (DI) (CEY) 200.60p -5.06%
Watches of Switzerland Group (WOSG) 324.00p -4.71%
National Express Group (NEX) 114.10p -4.20%
Wizz Air Holdings (WIZZ) 3,590.00p -4.06%
Ferrexpo (FXPO) 180.60p -3.63%
Pets at Home Group (PETS) 288.20p -3.29%

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