London midday: Stocks maintain gains as housebuilders rally
London stocks were still firmly in the black by midday on Wednesday, with housebuilders pacing the gains following well-received results from Barratt Developments and an upbeat survey from Nationwide.
The FTSE 100 was up 1.7% at 5,959.45 - having fallen to a three-month low in the previous session amid sterling strength - while the pound was down 0.1% against the dollar at 1.3366.
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. This 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. Analyst had been expecting a monthly rise of 0.5% and a yearly increase of 2%.
Nationwide’s chief economist Robert Gardner said: "House prices have now reversed the losses recorded in May and June and are at a new all-time high. The bounce back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions.
"This rebound reflects 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, Gardner pointed out that most forecasters expect labour market conditions to weaken significantly in the coming quarters due to the aftereffects 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, Berkeley, Taylor Wimpey, Persimmon, Redrow and Bellway all 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.
IG market analyst Chris Beauchamp said: "The reaction to Barratt Developments’ full-year figures is a case in point of the market being as forward-looking as possible. 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.
"With the Nationwide HPI pointing to strength in house prices too the outlook for the sector seems 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 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.
Still to come, investors were eyeing the US ADP employment report, due at 1315 BST. It is expected to show that 950,000 jobs were added last month, up from 167,000 in July.
Market Movers
FTSE 100 (UKX) 5,959.45 1.66%
FTSE 250 (MCX) 17,813.86 1.19%
techMARK (TASX) 3,828.79 2.13%
FTSE 100 - Risers
Barratt Developments (BDEV) 544.40p 8.10%
Rolls-Royce Holdings (RR.) 218.30p 5.61%
Taylor Wimpey (TW.) 123.75p 5.18%
Smiths Group (SMIN) 1,482.00p 4.73%
Persimmon (PSN) 2,666.00p 4.51%
Informa (INF) 408.00p 4.29%
Berkeley Group Holdings (The) (BKG) 4,703.00p 4.26%
Melrose Industries (MRO) 99.30p 4.00%
Johnson Matthey (JMAT) 2,459.00p 3.89%
Evraz (EVR) 337.60p 3.72%
FTSE 100 - Fallers
Fresnillo (FRES) 1,285.00p -2.65%
Flutter Entertainment (FLTR) 11,975.00p -0.66%
NATWEST GROUP PLC ORD 100P (NWG) 106.15p -0.52%
Phoenix Group Holdings (PHNX) 687.80p -0.46%
Standard Chartered (STAN) 376.10p -0.37%
Barclays (BARC) 105.54p -0.34%
Polymetal International (POLY) 2,028.00p -0.20%
3i Group (III) 913.40p -0.20%
Lloyds Banking Group (LLOY) 26.97p 0.13%
Prudential (PRU) 1,196.50p 0.21%
FTSE 250 - Risers
Computacenter (CCC) 2,232.00p 10.71%
Hammerson (HMSO) 244.10p 8.49%
Bellway (BWY) 2,467.00p 4.98%
Crest Nicholson Holdings (CRST) 200.20p 4.82%
Redrow (RDW) 457.20p 4.81%
Future (FUTR) 1,548.00p 4.74%
Countryside Properties (CSP) 330.60p 4.55%
Vistry Group (VTY) 633.50p 4.45%
Renishaw (RSW) 4,982.00p 4.23%
Meggitt (MGGT) 282.50p 3.94%
FTSE 250 - Fallers
Aggreko (AGK) 425.00p -5.43%
Hochschild Mining (HOC) 241.20p -3.44%
National Express Group (NEX) 115.90p -2.69%
Petropavlovsk (POG) 35.80p -2.59%
AO World (AO.) 182.20p -2.46%
Provident Financial (PFG) 223.80p -2.27%
OneSavings Bank (OSB) 294.00p -1.67%
Centamin (DI) (CEY) 208.20p -1.47%
BMO Commercial Property Trust Limited (BCPT) 69.00p -1.43%
Wizz Air Holdings (WIZZ) 3,692.00p -1.34%