London open: Housebuilders pace gains as investors eye ADP report

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

At 0840 BST, the FTSE 100 was up 1.3% at 5,911.22 - having fallen to a three-month low in the previous session amid sterling strength - while the pound was down 0.3% against the dollar at 1.3343.

Spreadex analyst Connor Campbell said European markets were "giddy on vaccine speculation".

"There were a few different reports you could point to. In the UK, Matt Hancock has said that the law could be changed to fast track a vaccine before Christmas, while in the US Dr Anthony Fauci said a similar thing, stating that if the ongoing clinical trials were overwhelmingly positive, then a vaccine could arrive earlier than expected. To compliment these claims, human trials of the Oxford vaccine have now begun in the US.

"This was more than enough for investors - so much so, in fact, that it meant they could ignore the US saying it won’t join in with the global, WHO-backed effort to develop and distribute a vaccine."

On the macroeconomic front, all eyes will be on 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.

On home turf, 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.

In equity markets, housebuilder Barratt Developments rallied despite saying that full-year profits almost halved as the coronavirus lockdown hits sales in the fourth quarter, as it reported a sharp rise in completions in the new year as restrictions were eased. Other housebuilders also gained, with Berkeley, Taylor Wimpey and Persimmon all higher, also boosted by the Nationwide survey.

Elsewhere, Computacenter advances 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) 5,938.59 1.31%
FTSE 250 (MCX) 17,727.03 0.70%
techMARK (TASX) 3,812.08 1.68%

FTSE 100 - Risers

Barratt Developments (BDEV) 528.20p 4.88%
Informa (INF) 410.30p 4.88%
Rolls-Royce Holdings (RR.) 216.40p 4.69%
Aveva Group (AVV) 5,238.00p 3.64%
Persimmon (PSN) 2,637.00p 3.37%
Ashtead Group (AHT) 2,628.00p 3.26%
Burberry Group (BRBY) 1,443.00p 3.15%
Melrose Industries (MRO) 98.26p 2.91%
Ferguson (FERG) 7,500.00p 2.82%
InterContinental Hotels Group (IHG) 4,497.00p 2.74%

FTSE 100 - Fallers

Fresnillo (FRES) 1,302.00p -1.36%
Lloyds Banking Group (LLOY) 26.91p -0.13%
M&G (MNG) 165.35p -0.12%
Phoenix Group Holdings (PHNX) 690.20p -0.12%
International Consolidated Airlines Group SA (CDI) (IAG) 202.40p -0.05%
Standard Chartered (STAN) 377.80p 0.08%
Prudential (PRU) 1,195.00p 0.08%
Royal Dutch Shell 'A' (RDSA) 1,086.40p 0.13%
Aviva (AV.) 276.60p 0.33%
Royal Dutch Shell 'B' (RDSB) 1,045.00p 0.36%

FTSE 250 - Risers

Computacenter (CCC) 2,160.00p 7.14%
Helios Towers (HTWS) 163.60p 2.89%
Airtel Africa (AAF) 61.40p 2.85%
Allianz Technology Trust (ATT) 2,630.00p 2.73%
Future (FUTR) 1,518.00p 2.71%
Trainline (TRN) 383.80p 2.57%
Bellway (BWY) 2,406.00p 2.38%
Liontrust Asset Management (LIO) 1,320.00p 2.33%
Renishaw (RSW) 4,890.00p 2.30%
Redrow (RDW) 445.60p 2.15%

FTSE 250 - Fallers

Hammerson (HMSO) 206.40p -8.27%
Aggreko (AGK) 421.40p -6.23%
Pets at Home Group (PETS) 285.00p -4.36%
Serco Group (SRP) 134.40p -2.61%
Hochschild Mining (HOC) 243.60p -2.48%
Petropavlovsk (POG) 35.85p -2.45%
Herald Investment Trust (HRI) 1,652.00p -2.02%
Centamin (DI) (CEY) 207.80p -1.66%
St. Modwen Properties (SMP) 318.00p -1.09%
UK Commercial Property Reit Limited (UKCM) 65.80p -0.90%