London midday: Stocks rally as housebuilders lifted by mortgage guarantee reports

London stocks were firmly in the black by midday on Monday as bond markets recovered, with housebuilders pacing the advance.
The FTSE 100 was up 1.5% 6,579.96.

Spreadex analyst Connor Campbell said: “After February’s turbulent end, the European indices started March ready to rebound as bond markets stabilised over the weekend.

“Of course it also helps that the US stimulus package has properly returned to the spotlight this week (even if fears of surging inflation caused BY the success of the bill was one of the reasons behind last week’s tantrum).

“Following safe passage through the firmly blue House, the American Rescue Plan is off to the Senate, where the Biden administration will need every Democrat senator to vote with the bill to ensure it gets passed via the simple majority required by the budget reconciliation method. This will be easier now that the $15 minimum wage provision has been removed – a provision two Democrat senators opposed – after being deemed extraneous to budget legislation by Senate Parliamentarian Elizabeth MacDonough.”

On home shores, a survey released earlier showed that activity in the manufacturing sector grew a touch more than initially estimated in February but remained subdued amid supply chain disruptions.

The IHS Markit CIPS manufacturing purchasing managers’ index ticked up to 55.1 from a flash estimate of 54.9 and January’s reading of 54.1. Meanwhile, business optimism rose to a near six-and-a-half year high.

A reading above 50.0 signals expansion, while a reading below indicates contraction.

The survey found supply-chain disruption and rising cost pressure meant there was only marginal growth in output despite a modest improvement in new order intakes.

Elsewhere, figures from the Bank of England showed mortgage borrowing remained strong at £5.2bn in January and households continued to pay off debt amid economic uncertainty.

The value of mortgages approved dipped from December’s figure of £5.6bn and the number of house purchase approvals fell to 99,000 from 102,800.

The figures were well above recent trends and indicated the start of a slowdown in a market fuelled by Chancellor Rishi Sunak’s stamp duty holiday for the first £500,000 of a property purchase. The tax break was due to finish at the end of March but Sunak is reported to be considering extending the deadline in his budget on Wednesday.

In equity markets, housebuilders were the standout gainers, with Persimmon, Taylor Wimpey, Barratt Developments, Berkeley, Crest Nicholson and Vistry all higher following news that Chancellor Rishi Sunak will unveil in his budget this week a mortgage guarantee scheme to help first-time buyers.

As part of the scheme, the government will offer incentives to lenders which would mean that people would be able to buy properties worth up to £600,000 with a deposit of just 5%.

Morgan Stanley said this would be a “clear positive” for UK homebuilders, given their sensitivity to the house price trajectory.

Elsewhere, Ladbrokes owner Entain was in the black as it raised its offer for Swedish rival Enlabs to SEK53 from SEK40.

Pennon was boosted by an upgrade to ‘overweight’ at Barclays, while cruise operator Carnival rallied on the back of an initiation at ‘buy’ by Peel Hunt.

Market Movers

FTSE 100 (UKX) 6,579.96 1.49%
FTSE 250 (MCX) 21,270.41 1.72%
techMARK (TASX) 3,991.71 1.48%

FTSE 100 – Risers

Persimmon (PSN) 2,755.00p 6.37%
Taylor Wimpey (TW.) 166.30p 5.52%
International Consolidated Airlines Group SA (CDI) (IAG) 202.50p 5.50%
Barratt Developments (BDEV) 699.60p 5.30%
Berkeley Group Holdings (The) (BKG) 4,238.00p 4.56%
Pennon Group (PNN) 910.20p 4.14%
Scottish Mortgage Inv Trust (SMT) 1,182.00p 4.14%
Standard Chartered (STAN) 481.20p 4.13%
Rightmove (RMV) 587.40p 3.96%
Evraz (EVR) 591.00p 3.50%

FTSE 100 – Fallers

Informa (INF) 543.40p -1.34%
Ocado Group (OCDO) 2,190.00p -0.45%
B&M European Value Retail S.A. (DI) (BME) 544.00p -0.44%
Sainsbury (J) (SBRY) 226.20p 0.00%
HSBC Holdings (HSBA) 426.25p 0.01%
RSA Insurance Group (RSA) 676.20p 0.12%
Tesco (TSCO) 225.50p 0.31%
BAE Systems (BA.) 485.50p 0.33%
NATWEST GROUP PLC ORD 100P (NWG) 185.00p 0.43%
Fresnillo (FRES) 914.60p 0.51%

FTSE 250 – Risers

Carnival (CCL) 1,704.50p 8.19%
Crest Nicholson Holdings (CRST) 341.60p 6.35%
Bellway (BWY) 2,982.00p 6.20%
Capita (CPI) 47.85p 5.77%
Hammerson (HMSO) 27.58p 5.59%
Allianz Technology Trust (ATT) 2,885.00p 5.10%
Edinburgh Worldwide Inv Trust (EWI) 368.00p 4.99%
Vistry Group (VTY) 882.50p 4.81%
Capital & Counties Properties (CAPC) 177.60p 4.66%
Baillie Gifford US Growth Trust (USA) 339.00p 4.63%

FTSE 250 – Fallers

Petropavlovsk (POG) 26.65p -2.74%
Jupiter Fund Management (JUP) 288.20p -2.44%
Rank Group (RNK) 174.60p -1.47%
IMI (IMI) 1,300.00p -0.69%
HICL Infrastructure (HICL) 165.40p -0.60%
TalkTalk Telecom Group (TALK) 96.20p -0.52%
Sanne Group (SNN) 585.00p -0.51%
LXI Reit (LXI) 126.40p -0.47%
Clarkson (CKN) 2,530.00p -0.39%
Serco Group (SRP) 129.50p -0.38%

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