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(Alliance News) - Stocks in London closed in the green on Wednesday, with sterling hurt by the positive move in the US dollar, and housebuilders leading the FTSE 100 index higher.
"Equity markets are showing decent gains as the trading session draws to a close. Broadly speaking, European indices lost ground in the past two days, and today those losses have been mostly recovered," said CMC Markets UK analyst David Madden.
The FTSE 100 index closed up 78.90 points, or 1.4%, at 5,940.95 on Wednesday. The FTSE 250 ended up 99.82 points, or 0.6%, at 17,704.42, and the AIM All-Share closed up 3.36 points, or 0.4%, at 968.08.
The Cboe UK 100 ended up 1.4% at 591.10, the Cboe UK 250 closed up 0.5% at 15,023.67, and the Cboe Small Companies ended down 0.3% at 9,382.80.
In European equities on Wednesday, the CAC 40 in Paris ended up 1.9% and the DAX 30 in Frankfurt up 2.1%.
The pound was quoted at USD1.3302 at the London equities close Wednesday, lower compared to USD1.3414 at the close on Tuesday.
"Housebuilding stocks are helping to lift the FTSE, with a weak pound providing a boost. With fears of a slow recovery and no-deal Brexit, the pound has finally started to give back some of the recent gains," said IG Senior Market Analyst Joshua Mahony.
The UK risks crashing out of the EU without a trade deal by refusing to compromise and break the deadlock in post-Brexit negotiations, Michel Barnier has warned.
Brussels' chief negotiator said on Wednesday that he is "worried and disappointed" after his counterpart in Downing Street, David Frost, did not make any concessions to end the impasse during informal talks.
The EU negotiator reiterated that a deal must be brokered by the "strict deadline" of the end of next month in order to have it in place for the close of the transition period on December 31.
Number 10 acknowledged "it is clear that it will not be easy to achieve" a deal after Barnier and Frost met in London on Tuesday ahead of the eighth round of formal negotiations next week.
The euro stood at USD1.1834 at the European equities close Wednesday, lower than USD1.1946 at the same time on Tuesday. Against the yen, the dollar was trading at JPY106.14, higher compared to JPY106.00 late Tuesday.
On the LSE, Barratt Developments was the best performer in the blue-chip index, closing up 8.7%, with the UK's largest housebuilder seeing green shoots of recovery in the housing market after the coronavirus crisis hit its annual results.
In addition, the wider homebuilding sector was supported by data from Nationwide showed UK house price growth picked up to 3.7% in August from 1.5% in July. On a monthly basis, house prices rose by 2.0% in August, after taking account of seasonal factors, following a 1.8% rise in July. Buyers shrugged off continued uncertainty in the economy and social distancing to send the average price of a home to GBP224,123.
For the financial year ended June 30, Barratt's revenue fell 28% to GBP3.42 billion from GBP4.76 billion last year and pretax profit almost halved to GBP491.8 million from GBP909.8 million.
Total completions fell 29% to 12,604 homes from 17,856 last year, while Covid-19-related costs came to GBP74.3 million.
In terms of current trading, Barratt said it has seen a substantial increase in home completion volumes in the eight weeks to August 23, which were up 62% compared to the prior period at 1,439 homes due to "pent up demand" in the sector.
Fellow blue-chip housebuilders Taylor Wimpey, Persimmon and Berkeley Group finished up 7.1%, 5.6% and 4.7% respectively.
"The housebuilders have led the way higher today, as a surge in activity and demand across the sector sent average prices into a record high," noted Mahony.
At the other end of the large-caps, Mexican gold miner Fresnillo ended the day down 3.2%, tracking spot gold prices lower.
Gold was quoted at USD1,941.20 an ounce at the London equities close Wednesday, down from USD1,968.01 late Tuesday.
Brent oil was quoted at USD44.82 a barrel at the London equities close Wednesday from USD45.86 late Tuesday.
In the FTSE 250, Computacenter closed up 12% after the IT services provider said it expects results for 2020 to be "materially above" its previous expectations. The stock hit a record high of 2,238.00 pence in early trade.
At the other end of the midcaps, Aggreko closed down 5.4% after Morgan Stanley started coverage on the temporary power generation supplier with an Underweight rating.
The UK corporate calendar for Thursday has half-year results from Melrose Industries, Curtis Banks Group and packaging solutions firm Mpac Group. Full-year reports are expected from IT security firm NCC Group, PPHE Hotel Group and DCD Media.
Stocks in New York were mixed at the London equities close, with the Dow Jones up 0.7%, the S&P 500 index up 0.6%, and the Nasdaq Composite down 0.1%.
US private payroll growth came in well below expectations for August, according to a report from payroll processor ADP on Wednesday.
US private sector employment increased by 428,000 jobs in August following an upwardly revised figure of 212,000 jobs added in July. The figure missed market expectations, cited by FXStreet, for a 950,000 rise.
"The August job postings demonstrate a slow recovery," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. "Job gains are minimal, and businesses across all sizes and sectors have yet to come close to their pre-Covid-19 employment levels."
The ADP report preludes the closely-watched US jobs report for August due on Friday.
In Thursday's economic calendar, there is a slew of PMI reports, with eurozone at 0900 BST, UK at 0930 BST and US at 1445 BST.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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