FTSE 100 movers: Housebuilders rally on spending review; Anglo slumps on downgrade

London’s FTSE 100 was up 1% to 6,340.12, with housebuilders leading the charge as investors cheered Chancellor George Osborne’s new plans for the sector.

Housebuilders were the standout gainers on Wednesday after Osborne unveiled his new plans for the sector in his Autumn Statement. Osborne pledged to invest just under £7bn into housing, which includes the construction of 400,000 affordable new homes by 2020. Half the new properties will be sold at 20% of the market value to help first-time buyers get on the housing ladder.

Osborne also announced a new ‘London Help-to-Buy’ scheme, whereby buyers with a 5% deposit will be offered a loan of up to 40% of the value of a new build home, interest-free for five years.

Taylor Wimpey, Persimmon and Barratt Developments were all in the black, but off earlier highs, dented by Osborne’s announcement of a new buy-to-let and second-home tax that will result in 3% higher stamp duty on buy-to-let owners and second home owners.

Premier Inn and Costa Coffee owner Whitbread rallied as HSBC initiated coverage of the stock at ‘buy’ with a 5,400p price target. It said revenue per available room expectations have come down after a soft summer, not helped by the strong pound.

The bank thinks these trends will improve as corporate spend takes over from Leisure and growth from here will be price-driven, which is more lucrative.

“We believe the RevPAR premium of Premier Inn over the market has now fallen to a sustainable level. We expect 3-4% RevPAR growth pa for Premier Inn over the next three years,” it said.

In addition, HSBC said the company was well equipped to handle the UK National Living Wage.

Anglo American was under pressure after HSBC downgraded the stock to ‘reduce’ from ‘hold’ and slashed the price target to 410p from 770p as it pointed to the miner’s precarious cash flow situation. HSBC said that before further capex cuts, Anglo would likely burn at least $2.7bn in 2016 on spot prices to maintain the dividend. “We see high likelihood of a zeroed dividend (now in our numbers), which saves $1.1bn cash annually,” it said.

Pharmaceutical firm Shire was also on the back foot following a report it was preparing to make a fresh takeover bid for US biotechnology business Baxalta. The news came four months after Baxalta rejected an unsolicited £20bn offer. At the time, Baxalta’s board considered the offer to be too low.

A source told Reuters on Tuesday that Shire had asked advisors to renew the takeover effort. It is understood Shire is working with Deutsche Bank, Evercore and Morgan Stanley on the offer.

Risers

Taylor Wimpey (TW.) 184.90p 3.82%
Persimmon (PSN) 1,843.00p 3.42%
Rolls-Royce Holdings (RR.) 608.00p 3.40%
Barratt Developments (BDEV) 578.00p 3.31%
Capita (CPI) 1,268.00p 3.26%
Compass Group (CPG) 1,115.00p 3.24%
Whitbread (WTB) 4,445.00p 3.23%
Intertek Group (ITRK) 2,743.00p 2.93%
St James's Place (STJ) 994.00p 2.90%
Sage Group (SGE) 574.50p 2.86%

Fallers

Anglo American (AAL) 413.50p -8.52%
Glencore (GLEN) 90.46p -3.75%
BHP Billiton (BLT) 856.90p -2.16%
Rio Tinto (RIO) 2,231.50p -1.87%
Shire Plc (SHP) 4,560.00p -1.85%
Royal Mail (RMG) 480.00p -1.52%
Randgold Resources Ltd. (RRS) 4,030.00p -0.98%
BP (BP.) 382.60p -0.86%
Royal Dutch Shell 'B' (RDSB) 1,658.00p -0.57%
Morrison (Wm) Supermarkets (MRW) 150.90p -0.46%