LONDON MARKET CLOSE: Housebuilders Push FTSE 100 To Close Higher

(Alliance News) - Stocks in London ended mixed on Tuesday, with housebuilders able to keep the blue-chip index in the green, thanks to positive UK construction data.

The large cap index closed up 7.00 points, or 0.1%, at 5,949.94. The FTSE 250 ended up 1.2% at 17,797.44, and the AIM All-Share closed down 0.1% at 972.68.

The Cboe UK 100 ended down 0.1% at 591.45, the Cboe UK 250 closed up 1.5% at 15,120.34, and the Cboe Small Companies ended up 0.6% at 9,427.59.

In European equities on Tuesday, the CAC 40 in Paris and the DAX 30 in Frankfurt ended up 0.5% and 0.6% higher, respectively.

"The mood in Europe is now a little bullish. This morning, the major indices were in the red as dealers used the cautious language in relation to the US president's release from the medical centre as an excuse to book profits. The move higher in US index futures in the middle of the European trading session lifted the sentiment on this side of the Atlantic," noted CMC Markets UK analyst David Madden.

US President Donald Trump on Monday returned to the White House after a three-day stay at a hospital where he was treated for the coronavirus, saying on Twitter he was "feeling really good."

Trump, wearing a mask, was taken by helicopter from the Walter Reed medical centre outside Washington.

Earlier, he had pumped his fist and given a thumbs-up as he emerged from the hospital's gilded doors, without speaking to reporters.

"Feeling really good! Don't be afraid of Covid. Don't let it dominate your life...I feel better than I did 20 years ago!" the president tweeted as he announced he was being discharged.

Stocks in New York were mixed at the London equities close, with the Dow Jones up 0.3%, the S&P 500 index flat, and the Nasdaq Composite down 0.4%.

The US recovery from the pandemic downturn will be "stronger and faster" with more government aid to protect against the potential for accelerating job losses, Federal Reserve Chair Jerome Powell said.

"Even if policy actions ultimately prove to be greater than needed, they will not go to waste," Powell said in an address to an economics conference.

There is a greater risk of not doing enough to support the economy, he said.

"Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses."

Powell, who has long said more economic support is likely needed, warned that if economic improvements slow that "could trigger typical recessionary dynamics, as weakness feeds on weakness."

The pound was quoted at USD1.2956 at the London equities close Tuesday compared to USD1.2968 at the close on Monday.

The euro stood at USD1.1787 at the European equities close Tuesday, unchanged when compared to the same time on Monday. Against the yen, the dollar was trading at JPY105.60 compared to JPY105.67 late Monday.

The UK construction sector continued to expand in September to post a solid end to the third quarter, figures from IHS Markit showed on Tuesday.

The IHS Markit/CIPS construction total activity index registered 56.8 in September, up from 54.6 in August. Any reading over 50.0 indicates expansion, and one below contraction.

The strongest performing category was home building, while work on commercial projects also increased strongly. Meanwhile, civil engineering activity fell for the second month running and at the sharpest rate since May.

September's expansion was driven by an improvement in demand. New orders rose for the fourth time in as many months as firms continued to note a release of pent-up demand.

Confidence towards the year ahead was the strongest since February, supported by expectations of a sustained rise in new work.

Housebuilders were on the front foot after a sharp rise in the construction PMI reading. British Land gained 4.7%, Barratt Developments closed up 2.7%, Persimmon closed up 2.6%, Taylor Wimpey gained 2.9% and Berkeley ended the day 0.9% higher.

"The housebuilders continue to enjoy a week of upside, with yesterday's plans to raise home ownership being accompanied by a strong construction PMI reading this morning," said Joshua Mahony, senior market analyst at IG.

Elsewhere on the LSE, Barclays closed up 4.8% after Redburn lifted the bank to Buy from Sell.

In contrast, Rentokil Initial lost 3.7% after Goldman cut the commercial pest control firm to Neutral from Buy.

Among the mid-caps, Ferrexpo closed down 3.2% after the Swiss-headquartered iron ore company, with assets in Ukraine, reported a drop in third quarter production due to a planned pelletiser maintenance and said its appeal over Ferrexpo Poltava Mining had been dismissed.

Ferrexpo noted its June announcement that a district court in Kyiv had placed a restriction which covered 50.3% of shares in Ferrexpo Poltava Mining held by Ferrexpo AG Switzerland. Ferrexpo AG Switzerland is Ferrexpo Poltava Mining's sole shareholder. The Kyiv Court of Appeal has dismissed Ferrexpo's appeal against the court order, meaning the restriction remains in place.

Separately, Ferrexpo reported its production for the third quarter of 2020, which ended September 30, of 2.5 million tonnes, down from 2.9 million in the second quarter. This drop was attributed to "reduced volume due to planned pelletiser maintenance in early September."

Victrex closed 1.3% lower. For the fourth quarter to the end of September, the polymers manufacturer's sales volumes was down 26% to 695 tonnes from 940 tonnes the year before, leading to revenue declining by 27% to GBP55.7 million from GBP76.2 million, in line with expectations.

For the year as a whole, Victrex's sales volumes was down 7% at 3,492 tonnes from 3,751 tonnes. Revenue was down 10% at GBP266 million from GBP294 million.

Victrex noted that although its top-line performance for the year was ahead of expectations, its high-fixed cost base and absorption of fixed costs due to lower output will impact margins.

Watches of Switzerland finished the day as the best performer among the FTSE 250s, up 26%, after the luxury watch retailer raised its full-year guidance.

Revenue for the first 10 weeks of the second quarter ending October 25 was stronger than expected, rising 18% in reported terms to GBP202.7 million from the year before. This represented a 20% revenue rise at constant currency.

Strong domestic UK sales offset lower tourist and airport business, and regional stores were outperforming London stores where footfall was still weak. US momentum accelerated, with second quarter US sales to date at GBP57.7 million, up 35% reported and 43% at constant currency.

Outlook-wise, the company upgraded its financial 2021 revenue guidance to between GBP880.0 million and GBP910.0 million from previously guided range of GBP840.0 million to GBP860.0 million.

It also upgraded its forecast for earnings before interest, tax, depreciation, and amortisation margin, now expecting a 1.0% to 1.5% rise year-on-year. It had previously been expecting this to be flat.

In Wednesday's corporate calendar, there are half-year results from grocer Tesco and used car dealer Vertu Motors.

Brent oil was quoted at USD42.58 a barrel at the London equities close Tuesday, up from USD41.66 late Monday.

Elsewhere in the commodity space, gold was quoted at USD1,909.10 an ounce at the London equities close Tuesday, lower against USD1,914.70 at the close on Monday.

In the economic calendar on Wednesday, there is UK Halifax house price index at 0830 BST followed by US FOMC meeting minutes at 1900 BST.

By Evelina Grecenko; evelinagrecenko@alliancenews.com

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