London midday: Stocks maintain gains as housebuilders rally

The FTSE 100 was up 1% at 6,927.45, trading at its best levels in around a month.

Investors seemed to be taking heart from the fact that negotiations between the US and China went on for a day longer than expected, with a statement on the talks due soon.

Joshua Mahony, senior market analyst at IG, said: "With the US and China moving into a third day of trade negotiations, the length and intensity of these talks seem to portray a new, more resolute approach from both sides which raises hopes that there could finally be some light at the end of the tunnel.

"It is unlikely that this week will see any complete resolution to the differences between both sides, yet some form of progress on the trade side of things would no doubt provide a further boost for depressed markets."

In currency markets, sterling was up 0.2% against the dollar at 1.2736 and flat versus the euro at 1.1120 as the Brexit withdrawal bill returns to Parliament to be debated for four days ahead of the Commons vote on 15 January.

On Tuesday, Prime Minister Theresa May suffered what could well be the first of many defeats from opponents of a no-deal Brexit as MPs backed by 303 votes to 296 a cross-party amendment that would limit the scope for tax changes following a no deal unless authorised by MPs.

"While yesterday’s vote in parliament looks to have made it marginally more difficult to bring about a no-deal Brexit, the fact is that in the absence of any alternative a no-deal remains the default outcome," said Mahony.

On the corporate front, housebuilders were the standout gainers as Taylor Wimpey rallied after saying it would report 2018 full year results in line with expectations as the housing market remained stable despite uncertainties caused by Brexit. In a trading statement for the year to 31 December 2018, it said total home completions increased by 3% to 14,947, including joint ventures.

Peers Persimmon, Barratt Developments, Berkeley and Crest Nicholson all advanced.

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: "These are pretty good numbers from Taylor Wimpey. Sales rates are moving in the right direction, the development pipeline looks promising and investors will be pleased that the dividend’s set to grow again next year too.

"That said, the group can’t hide from the Brexit question. Build costs are still creeping up and any major blow to house prices would test Taylor’s foundations as margins get a squeeze. The housing market in the South East is already stagnating, and the company could really do without the malaise spreading."

Meanwhile, Sainsbury's reversed earlier losses to trade up even as it reported a fall in revenues over the past 15 weeks due to a slump in general merchandise sales, which the grocer blamed on cautious customer spending and a decision to reduce Black Friday promotions.

Total sales fell 0.4% in the third quarter ending 5 January, with like-for-like sales excluding fuel down 1.1%. City analysts had forecast a 0.3% dip in LFL sales after the 0.2% gain in the first quarter and 1.0% in the second.

Richard Hunter at Interactive Investor said the supermarket's headline sales figures "are not pretty" but "all is certainly not lost".

"Argos had a strong run-in over the Christmas weeks and remains an inspired acquisition. The increasingly important channels of online and convenience continue to post strong sales growth of 6% and 3% respectively, whilst the group’s planned cost savings of £200 million remain on track. In the meantime, grocery sales held up relatively well and, from an investment perspective, the projected dividend yield of 4.1% is an attraction to income-seeking investors."

Fashion brand Ted Baker, which was recently rocked by harassment claims against founder Ray Kelvin, rose sharply as it posted 12.2% jump in sales over the Christmas period thanks to strength in the online segment.

Bakery chain Greggs - which launched its controversial vegan sausage roll last week - advanced as it bumped up its full-year profit guidance and hailed a strong finish to last year.

Retailers were also in focus outside the FTSE 350, with Majestic Wine, Shoe Zone, Topps Tiles, Mothercare and Sosandar all releasing updates. Shoe Zone outshone the rest with its full year results sending the shares marching 10% higher.

Softcat, a provider of IT infrastructure products and services, surged after saying in a very brief update that it is now "materially ahead" of where it expected to be at this stage of the year.

In broker note action, Vodafone was hit by a note from Macquarie, which said the company's structural challenges remain significant.

Auto Trader was initiated at 'hold' by Jefferies, while BHP was cut to 'sell' at Deutsche Bank, HSBC was downgraded to 'underweight' at Barclays and Prudential was cut to 'sell' at Societe Generale.

Serco was boosted by upgrades to 'buy' at Citi and Shore.

Market Movers

FTSE 100 (UKX) 6,927.45 0.96%
FTSE 250 (MCX) 18,408.66 1.28%
techMARK (TASX) 3,402.48 1.29%

FTSE 100 - Risers

Taylor Wimpey (TW.) 150.15p 6.94%
GVC Holdings (GVC) 757.00p 5.87%
Wood Group (John) (WG.) 596.20p 5.15%
Persimmon (PSN) 2,142.00p 5.00%
Antofagasta (ANTO) 853.80p 4.94%
ITV (ITV) 137.70p 4.79%
Micro Focus International (MCRO) 1,500.00p 4.46%
Barratt Developments (BDEV) 499.00p 4.11%
Berkeley Group Holdings (The) (BKG) 3,748.22p 3.80%
Glencore (GLEN) 298.05p 3.17%

FTSE 100 - Fallers

Vodafone Group (VOD) 152.66p -1.89%
Royal Bank of Scotland Group (RBS) 223.87p -0.85%
British Land Company (BLND) 543.40p -0.62%
Land Securities Group (LAND) 824.80p -0.60%
Hargreaves Lansdown (HL.) 1,899.00p -0.37%
Paddy Power Betfair (PPB) 6,785.00p -0.37%
International Consolidated Airlines Group SA (CDI) (IAG) 595.60p -0.23%
Unilever (ULVR) 4,091.50p -0.20%
Relx plc (REL) 1,645.25p -0.17%
SEGRO (SGRO) 614.80p -0.16%

FTSE 250 - Risers

Softcat (SCT) 706.00p 19.86%
Ted Baker (TED) 1,800.00p 11.39%
Greggs (GRG) 1,470.00p 7.53%
Crest Nicholson Holdings (CRST) 357.00p 5.81%
888 Holdings (888) 180.06p 5.48%
Dixons Carphone (DC.) 122.17p 4.91%
Britvic (BVIC) 860.75p 4.91%
JD Sports Fashion (JD.) 392.30p 4.89%
Indivior (INDV) 125.85p 4.83%
Mediclinic International (MDC) 334.60p 4.69%

FTSE 250 - Fallers

Funding Circle Holdings (FCH) 319.10p -3.30%
Just Group (JUST) 96.85p -3.15%
Stobart Group Ltd. (STOB) 149.20p -2.61%
CYBG (CYBG) 185.40p -2.47%
Rank Group (RNK) 146.00p -2.41%
Entertainment One Limited (ETO) 365.20p -1.78%
Assura (AGR) 54.79p -1.64%
Clarkson (CKN) 2,305.00p -1.50%
Energean Oil & Gas (ENOG) 630.10p -1.33%
Man Group (EMG) 139.55p -1.20%