London midday: Stocks push higher as housebuilders rally
London stocks were firmly in the black by midday 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 was up 2.1% at 6,284.25.
Spreadex analyst Connor Campbell said: "The prospect of more economic stimulus, and a five-year high for stocks in China, allowed investors to ignore another disastrous weekend for Covid-19 cases.
"The daily figure in the US is stubbornly above 50,000, India has just become the third most infected nation with 697,413 known cases, while globally cases now sit at 11.4 million. There have also been warnings about the severe long-term health impact of even a ‘mild’ instance of the illness.
"But, with China’s CSI300 Index at its best levels since summer 2015, and the Shanghai Composite surging 4.2%, the European markets found plenty of reason to close their eyes and rocket forwards."
Campbell said the FTSE had more reason than most to celebrate. "After a £1.57bn arts package was confirmed on Sunday night following ‘leaks’, speculation has turned to Wednesday and what is being framed as a ‘mini-budget’ from Rishi Sunak.
"Measures doing the rounds include a 6-month pause on stamp duty, a £111m expansion of trainee programmes, a potential cut to VAT, and a £500 voucher for all UK adults to spend in struggling sectors like hospitality and face-to-face retail."
Data released earlier showed the UK construction sector gathered pace in June as lockdown restrictions eased and output surged.
The IHS Markit CIPS UK construction purchasing manages’ 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.
Tim Moore, economics director at IHS Markit, said: "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.
"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, Persimmon, Taylor Wimpey, Berkeley Group, Crest Nicholson, Vistry, Redrow and Bellway were all sharply higher.
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.
The sector 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 ground 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-focused 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 lower by a downgrade to ‘hold’ at Jefferies, while Softcat was hit by a downgrade to ‘sell’ at Citi. Energean was lower after a downgrade to ‘sector perform’ RBC Capital Markets and Computacenter was up after an initiation of coverage at ‘buy’ by Citi.
FTSE 100 - Risers
Barratt Developments (BDEV) 529.40p 7.97%
Rolls-Royce Holdings (RR.) 280.60p 6.61%
Persimmon (PSN) 2,406.00p 6.51%
HSBC Holdings (HSBA) 406.15p 5.91%
Taylor Wimpey (TW.) 144.70p 5.62%
Standard Chartered (STAN) 458.10p 5.31%
British Land Company (BLND) 407.30p 4.70%
Prudential (PRU) 1,258.50p 4.53%
St James's Place (STJ) 987.80p 4.13%
Berkeley Group Holdings (The) (BKG) 4,333.00p 4.08%
FTSE 100 - Fallers
Smith (DS) (SMDS) 282.10p -3.19%
Polymetal International (POLY) 1,560.00p -0.57%
ITV (ITV) 71.54p -0.53%
Admiral Group (ADM) 2,266.00p -0.53%
Morrison (Wm) Supermarkets (MRW) 184.80p -0.30%
Ashtead Group (AHT) 2,734.00p -0.11%
Experian (EXPN) 2,890.00p -0.10%
Flutter Entertainment (FLTR) 10,725.00p 0.00%
Sainsbury (J) (SBRY) 197.30p 0.03%
Coca-Cola HBC AG (CDI) (CCH) 1,978.00p 0.28%
FTSE 250 - Risers
Crest Nicholson Holdings (CRST) 214.40p 8.28%
Vistry Group (VTY) 734.50p 7.86%
Hammerson (HMSO) 89.12p 7.04%
Redrow (RDW) 457.00p 6.98%
Ibstock (IBST) 184.90p 6.57%
Countryside Properties (CSP) 346.60p 5.86%
Cairn Energy (CNE) 126.00p 5.26%
Brewin Dolphin Holdings (BRW) 264.00p 5.18%
Meggitt (MGGT) 326.00p 5.16%
Bellway (BWY) 2,626.00p 5.08%
FTSE 250 - Fallers
Energean (ENOG) 571.00p -6.24%
Mitchells & Butlers (MAB) 179.40p -5.39%
Hochschild Mining (HOC) 178.20p -5.16%
Petropavlovsk (POG) 25.40p -2.50%
Essentra (ESNT) 308.40p -1.85%
PPHE Hotel Group Ltd (PPH) 1,135.00p -1.73%
Greggs (GRG) 1,650.00p -1.49%
Helios Towers (HTWS) 149.00p -1.32%
Ninety One (N91) 212.40p -1.21%
Spirent Communications (SPT) 249.00p -1.19%