London open: Stocks edge up as Barratt, Redrow announce £2.5bn merger
London stocks edged up in early trade on Wednesday, with housebuilders in the black as Barratt Developments and Redrow announced a £2.5bn merger, and as investors mulled the latest Halifax house price data.
At 0820 GMT, the FTSE 100 was up 0.2% at 7,693.19p.
Figures released earlier by Halifax showed that house prices rose in January for the fourth month in a row, as mortgage rates fell.
House prices were up 1.3% on the month following a 1.1% increase in December 2023.
On the year, prices rose 2.5% in January following a 1.8% jump the month before. This marked the highest annual growth since January 2023.
The average UK home now costs £291,029, up from 287,244.
Kim Kinnaird, director at Halifax mortgages, said: "The recent reduction of mortgage rates from lenders as competition picks up, alongside fading inflationary pressures and a still-resilient labour market has contributed to increased confidence among buyers and sellers. This has resulted in a positive start to 2024’s housing market.
"However, while housing activity has increased over recent months, interest rates remain elevated compared to the historic lows seen in recent years and demand continues to exceed supply. For those looking to buy a first home, the average deposit raised is now £53,414, around 19% of the purchase price. It’s not surprising that almost two thirds (63%) of new buyers getting a foot on the ladder are now buying in joint names.
"Looking ahead, affordability challenges are likely to remain and further modest falls should not be ruled out, against a backdrop of broader uncertainty in the economic environment."
In equity markets, housebuilders shot higher after Barratt and Redrow said they had agreed an all-share merger valuing the latter at £2.5bn.
Under the terms of the deal, Redrow investors will receive 1.44 new Barratt shares for their own stock which would leave them with 32.8% of the combined group and Barratt shareholders with the remainder.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "The economic winds have not been kind to the housebuilders and Barratt Developments and Redrow clearly believe they’ll be stronger together, giving the new combined company much bigger clout to capitalise on the structural need for housing in the UK."
Redrow surged, while Taylor Wimpey, Persimmon, Berkeley, Bellway and Vistry also racked up strong gains. Barratt was in the red.
Smurfit Kappa rallied as the corrugated packaging group reported a drop in full-year earnings and revenue amid a "difficult" demand environment, but said that volumes returned to growth in the fourth quarter.
Sainsbury’s lost ground after saying in a strategy update that it plans to overhaul its supermarkets to focus more on food space as it looks to cut costs by £1bn over the next three years.
Imperial Leather maker PZ Cussons tumbled as it warned on profits and cut its interim dividend by nearly a half as a result of a significant slide in the Nigerian naira in the first half.
Market Movers
FTSE 100 (UKX) 7,693.19 0.16%
FTSE 250 (MCX) 19,211.12 0.21%
techMARK (TASX) 4,431.46 0.09%
FTSE 100 - Risers
Smurfit Kappa Group (CDI) (SKG) 2,978.00p 3.76%
Taylor Wimpey (TW.) 149.45p 1.63%
Persimmon (PSN) 1,443.50p 1.16%
Berkeley Group Holdings (The) (BKG) 4,832.00p 1.09%
WPP (WPP) 789.60p 1.00%
Hikma Pharmaceuticals (HIK) 1,937.50p 0.89%
AstraZeneca (AZN) 10,626.00p 0.87%
Smith (DS) (SMDS) 275.20p 0.81%
Rolls-Royce Holdings (RR.) 320.10p 0.72%
Croda International (CRDA) 4,990.00p 0.63%
FTSE 100 - Fallers
Barratt Developments (BDEV) 515.00p -2.83%
Sainsbury (J) (SBRY) 271.70p -1.42%
B&M European Value Retail S.A. (DI) (BME) 505.60p -0.75%
Auto Trader Group (AUTO) 726.40p -0.60%
Scottish Mortgage Inv Trust (SMT) 777.40p -0.59%
Pearson (PSON) 934.20p -0.57%
Vodafone Group (VOD) 65.86p -0.56%
Pershing Square Holdings Ltd NPV (PSH) 3,834.00p -0.52%
International Consolidated Airlines Group SA (CDI) (IAG) 147.80p -0.44%
Standard Chartered (STAN) 597.20p -0.43%
FTSE 250 - Risers
Bridgepoint Group (Reg S) (BPT) 276.80p 4.69%
Virgin Money UK (VMUK) 159.70p 4.48%
Bellway (BWY) 2,836.00p 2.98%
Morgan Advanced Materials (MGAM) 269.50p 2.67%
Just Group (JUST) 85.30p 2.52%
Hochschild Mining (HOC) 100.40p 2.40%
Genuit Group (GEN) 426.00p 2.16%
Vistry Group (VTY) 1,005.00p 2.03%
Diversified Energy Company (DEC) 934.50p 2.02%
Playtech (PTEC) 465.00p 2.02%
FTSE 250 - Fallers
Travis Perkins (TPK) 750.80p -2.42%
Hammerson (HMSO) 25.74p -2.35%
Bytes Technology Group (BYIT) 619.00p -2.13%
Templeton Emerging Markets Inv Trust (TEM) 146.20p -2.01%
Harbour Energy (HBR) 259.40p -1.74%
4Imprint Group (FOUR) 5,360.00p -1.47%
Derwent London (DLN) 2,018.00p -1.18%
Mitie Group (MTO) 101.60p -1.17%
FirstGroup (FGP) 165.80p -1.13%
Sirius Real Estate Ltd. (SRE) 84.90p -1.05%