London stocks managed a positive finish on Tuesday, as fresh data showed house price growth accelerating further, and mortgage approvals beating expectations.
The FTSE 100 ended the session up 0.21% at 7,087.55, and the FTSE 250 was 0.04% firmer at 22,542.17.
Sterling was in the red, meanwhile, last trading 0.27% weaker against the dollar at $1.3846, and losing 0.1% from the euro to change hands at €1.1630.
“With the pound losing ground against the dollar and euro, we are clearly seeing lasting effects from last week’s dovish Bank of England stance,” said IG senior market analyst Joshua Mahony.
“However, the declines seen throughout the airlines sector highlights the fear that the UK is on the cusp of a sharp resurgence in cases, with Sajid Javid apparently willing to let cases surge in a bid to reopen the economy.”
Mahony said Hong Kong’s decision to block arrivals from the UK highlighted the risk that Britain becomes increasingly isolated should cases continue to rise, with airlines likely to suffer as countries reclassify the UK in response to the recent rise in ‘Delta’ variant cases.
“Home builders have enjoyed a positive day in the wake of yet another upward move for house prices,” he added.
Fresh data out earlier showed UK house prices rising at their fastest rate since 2004 in June, as buyers competed fiercely in a market rebounding from Covid-19 lockdowns.
The average price of a property in the UK rose 13.4% year-on-year in June to a record £242,709, according to lender Nationwide, while in the quarter to the end of June prices were 10.3% firmer, up from growth of 6.3% in the first three months of the year.
June’s rate of growth was boosted by the shutdown of the property market a year earlier during the first Covid-19 lockdown, but prices also rose sharply amid a buying frenzy.
“It’s starting to feel like prices are freewheeling with buyers snapping up properties, particularly those with generous outside space, as soon as they come on to the market,” said David Westgate, chief executive of property consultants Andrews Property.
“The end of the full stamp duty holiday tomorrow may see activity cool a little but not significantly, as there are plenty of buyers who still have time and the motivation to complete before the tapered relief ends on 30 September.”
Mortgage approvals, meanwhile, rose in May, with the Bank of England reporting that approvals for house purchases totalled 87,500 last month, up on April’s 86,900 and above consensus expectations for 85,800.
Approvals were still below November 2020’s peak of 103,200, but above pre-February 2020 levels.
The bank said approvals for remortgage – which are only captured when lenders are changed – rose to 34,800 from 33,400 in April.
“The housing market is going full gas – house purchase mortgage approvals in May greatly exceeded their 61,300 average in the 2010s, while house prices rose at their fastest year-over-year growth rate since November 2004,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.
“A big correction in house prices looks unlikely: mortgage payments still absorb a much lower share of households’ incomes than in the 2000s, and households’ preferences likely have changed as a result of the pandemic.”
In equity markets, IWG closed up 2.5% but was still well off earlier highs, after United States private equity firm CC Capital said it was not planning to make a bid for the company.
CC was responding to a Sky News report that IWG had held talks with the private equity firm in the last month about a possible £4bn takeover.
Elsewhere, housebuilders were also off earlier highs after Nationwide’s house price survey, with Berkeley Group up 0.49%, Persimmon adding 1.57%, and Taylor Wimpey 1.12% firmer.
UDG Healthcare ticked up 0.28% after US private equity firm Clayton, Dubilier & Rice confirmed its increased final £2.7bn offer for the Dublin-based company.
Shipping services group Clarkson rallied 3.67% after an initiation at ‘buy’ by Peel Hunt.
On the downside, travel-related stocks were under the cosh again amid worries about restrictions, with InterContinental Hotels off 0.93%, tour operator TUI down 5.05%, low-cost carrier Wizz Air descending 3.06%, British Airways owner IAG falling 1.42%, and travel retailer WH Smith 3.03% weaker.
United Utilities was knocked 1.48% lower by a downgrade to ‘underweight’ at Morgan Stanley.
Market Movers
FTSE 100 (UKX) 7,087.55 0.21%
FTSE 250 (MCX) 22,542.17 0.04%
techMARK (TASX) 4,458.37 0.11%
FTSE 100 – Risers
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,875.00p 3.88%
Ocado Group (OCDO) 2,074.00p 2.72%
Johnson Matthey (JMAT) 3,097.00p 2.52%
Evraz (EVR) 612.20p 2.14%
Pershing Square Holdings Ltd NPV (PSH) 2,650.00p 2.12%
Ferguson (FERG) 10,160.00p 1.91%
B&M European Value Retail S.A. (DI) (BME) 575.00p 1.73%
Intermediate Capital Group (ICP) 2,189.00p 1.62%
Smurfit Kappa Group (CDI) (SKG) 3,956.00p 1.59%
Mondi (MNDI) 1,911.50p 1.54%
FTSE 100 – Fallers
Polymetal International (POLY) 1,562.50p -3.25%
BT Group (BT.A) 195.30p -2.28%
Rolls-Royce Holdings (RR.) 98.58p -1.91%
Fresnillo (FRES) 786.40p -1.82%
Standard Life Aberdeen (SLA) 274.30p -1.61%
United Utilities Group (UU.) 982.80p -1.48%
International Consolidated Airlines Group SA (CDI) (IAG) 173.90p -1.42%
JD Sports Fashion (JD.) 917.60p -1.14%
Admiral Group (ADM) 3,204.00p -1.08%
Compass Group (CPG) 1,493.50p -1.03%
FTSE 250 – Risers
Liontrust Asset Management (LIO) 1,850.00p 5.71%
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,875.00p 3.88%
Serco Group (SRP) 137.50p 3.77%
CMC Markets (CMCX) 468.50p 3.77%
IG Group Holdings (IGG) 863.00p 3.35%
Elementis (ELM) 153.10p 3.31%
IWG (IWG) 309.50p 3.10%
Clarkson (CKN) 3,215.00p 2.72%
AO World (AO.) 255.20p 2.65%
Micro Focus International (MCRO) 542.80p 2.38%
FTSE 250 – Fallers
TUI AG Reg Shs (DI) (TUI) 363.50p -5.36%
Hochschild Mining (HOC) 152.90p -3.78%
Pagegroup (PAGE) 572.50p -3.38%
Telecom Plus (TEP) 1,160.00p -3.17%
Wizz Air Holdings (WIZZ) 4,600.00p -3.06%
WH Smith (SMWH) 1,621.50p -2.79%
Petropavlovsk (POG) 23.98p -2.76%
Lancashire Holdings Limited (LRE) 618.00p -2.37%
Euromoney Institutional Investor (ERM) 1,022.00p -2.29%
Playtech (PTEC) 431.60p -2.26%
