London close: Stocks finish higher as housebuilders pop
London stocks finished well above the waterline on Monday, underpinned by a strong showing from housebuilders as investors digested a better-than-expected reading on the UK construction sector.
The FTSE 100 ended the session up 2.09% at 6,285.94, and the FTSE 250 was 1.43% firmer at 17,550.03.
Sterling was in a mixed state at the end of the day, however, last rising 0.05% against the dollar to $1.2489, but losing 0.54% on the euro to €1.1042.
CMC Markets analyst David Madden said bullish sentiment from China spilled over to the West early in the session, boosting the mood at the start of the week.
“On Saturday, the World Health Organization claimed there were over 212,000 new cases of Covid-19 - a new daily record,” he noted.
“The Beijing authorities can’t talk up their own market forever, so it is likely in the next few days, the pandemic will be back in centre-stage as far as traders are concerned.
“Data released earlier showed the UK construction sector gathered pace in June as lockdown restrictions eased and output surged,” Madden added.
The IHS Markit/CIPS UK construction purchasing managers’ index rose to 55.3 in June from 28.9 in May.
It was the steepest expansion since July 2018 and well above consensus for a reading of 46.0 - any reading above 50.0 indicates growth.
The increase was attributed to the phased restart of work on construction sites, which boosted both output volumes and business confidence, and supply chains reopening.
“As the first major part of the UK economy to begin a phased return to work, the strong rebound in construction activity provides hope to other sectors that have suffered through the lockdown period,” said Tim Moore, economics director at IHS Markit.
“While it has taken time for the construction supply chain to adapt and rebuild capacity after widespread business closure, there is now clear evidence that a return to growth that has been achieved.”
In equity markets, housebuilders rallied on reports that Chancellor Rishi Sunak will announce plans this week to raise the threshold at which people start paying stamp duty to as much as £500,00 from £125,000.
Barratt Developments was up 7.97%, Persimmon rose 6.15%, Taylor Wimpey added 4.84%, Berkeley Group was ahead 3.87%, Crest Nicholson advanced 5.05%, Vistry tacked on 6.83%, Redrow was 5.63% firmer, and Bellway managed gains of 3.68% .
The Times said the move, which is expected to be implemented in the autumn budget, is a temporary measure intended to stimulate the housing market.
Housebuilders also got a boost after Barratt said its current forward order book was strong with sales ahead of the same time last year as it emerged from the coronavirus lockdown that closed all its sites.
On the downside, Hochschild Mining lost 2.87% as it said it was suspending operations at its Inmaculada mine in Peru after some of its workers tested positive for Covid-19.
The South America-focussed miner said the infections occurred “despite taking a number of preventative measures, including a comprehensive testing programme as well as quarantine for all employees”.
In broker note action, DS Smith was knocked 1.1% lower by a downgrade to ‘hold’ at Jefferies, while Softcat finished flat after a downgrade to ‘sell’ at Citi.
Energean was 5.58% lower after a downgrade to ‘sector perform’ from RBC Capital Markets, while Computacenter was up 0.6% after an initiation of coverage at ‘buy’ by Citi.
FTSE 100 - Risers
Barratt Developments (BDEV) 529.40p 7.97%
Rolls-Royce Holdings (RR.) 280.90p 6.72%
HSBC Holdings (HSBA) 408.65p 6.56%
Persimmon (PSN) 2,398.00p 6.15%
Scottish Mortgage Inv Trust (SMT) 898.00p 5.15%
Standard Chartered (STAN) 454.90p 5.13%
Taylor Wimpey (TW.) 143.95p 5.07%
Prudential (PRU) 1,263.00p 4.90%
Evraz (EVR) 295.90p 4.78%
Berkeley Group Holdings (The) (BKG) 4,324.00p 3.87%
FTSE 100 - Fallers
BT Group (BT.A) 110.00p -1.66%
ITV (ITV) 70.84p -1.50%
Tesco (TSCO) 218.90p -1.17%
Smith (DS) (SMDS) 288.20p -1.10%
Sainsbury (J) (SBRY) 195.70p -0.79%
National Grid (NG.) 917.20p -0.54%
Morrison (Wm) Supermarkets (MRW) 184.35p -0.54%
Burberry Group (BRBY) 1,623.50p -0.40%
Pearson (PSON) 572.60p -0.24%
United Utilities Group (UU.) 901.80p -0.22%
FTSE 250 - Risers
Hammerson (HMSO) 90.38p 8.55%
Ibstock (IBST) 186.60p 7.55%
Vistry Group (VTY) 727.50p 6.83%
Investec (INVP) 168.35p 6.05%
Coats Group (COA) 55.90p 5.87%
Redrow (RDW) 452.00p 5.81%
Cairn Energy (CNE) 126.60p 5.76%
Fidelity China Special Situations (FCSS) 304.00p 5.74%
Countryside Properties (CSP) 345.80p 5.62%
Brewin Dolphin Holdings (BRW) 264.50p 5.58%
FTSE 250 - Fallers
Mitchells & Butlers (MAB) 175.80p -7.18%
Energean (ENOG) 575.00p -5.58%
Go-Ahead Group (GOG) 776.00p -4.67%
Cineworld Group (CINE) 57.60p -4.26%
Petropavlovsk (POG) 25.05p -3.84%
Wetherspoon (J.D.) (JDW) 1,017.00p -3.51%
Clarkson (CKN) 2,295.00p -3.37%
Future (FUTR) 1,236.00p -3.30%
Hochschild Mining (HOC) 180.80p -2.87%
Essentra (ESNT) 305.60p -2.74%