LONDON MARKET OPEN: Barratt Developments Leads Housebuilders Higher

(Alliance News) - Stock prices in London opened higher on Wednesday with Barratt Developments among the blue-chip risers buoyed by signs of life in the housebuilding sector.

In London, the blue-chip FTSE 100 index was up 73.91 points, or 1.2%, at 5,935.96. The mid-cap FTSE 250 index was up 114.07 points, or 0.7%, at 17,718.67, and the AIM All-Share index was up 0.8% at 972.58.

The Cboe UK 100 index was up 1.3% at 590.69. The Cboe 250 was up 0.7% at 15,055.68, and the Cboe Small Companies was flat at 9,407.65.

In mainland Europe, the CAC 40 index in Paris was up 0.6%, while the DAX 30 in Frankfurt was up 1.0%.

In the FTSE 100, Barratt Developments was up 5.4% after the UK's largest housebuilder said it was seeing green shoots of recovery in the housing market, despite the coronavirus hitting its annual results.

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.

"From a wider perspective, many of the tailwinds for the sector remain in place, with the current stamp duty holiday adding to the list of historically low-interest rates, generally good mortgage availability and an ongoing housing shortage. The immediate question is whether the current return to form can be maintained in an environment where many of the potential negative factors are outside of the company's control," said Interactive Investor's Richard Hunter.

Also on Wednesday morning, 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.

Fellow blue-chip housebuilders Taylor Wimpey, Persimmon and Berkeley Group were up 2.8%, 3.3% and 2.4% respectively.

At the other end of the large caps, gold miner Fresnillo was the worst performer, down 1.3%, tracking spot gold prices lower.

Gold was quoted at USD1,961.51 an ounce early Wednesday, down from USD1,974.90 at the London equities close Tuesday.

In the FTSE 250, Hammerson was the best performer, with its shares almost five times higher, after the shopping centre operator's capital reorganisation came into effect.

Computacenter was up 6.5% after the IT services provider said it expects results for 2020 to be "materially above" its previous expectations.

At the other end of the midcaps, Aggreko was the worst performer, down 5.7% after Morgan Stanley started coverage on the temporary power generation supplier with an Underweight rating.

The pound was quoted at USD1.3355 on Wednesday morning, down from USD1.3414 at the London equities close Tuesday.

The euro stood at USD1.1900 early Wednesday, lower from USD1.1946 late Tuesday. The single currency briefly touched the USD1.20 mark for the first time since 2018 on Tuesday.

German retail sales fell unexpectedly in July, according to official data, as hopes of a swift economic recovery from Covid-19 faltered.

Retail sales were down 0.9% month-to-month in real terms in July, Destatis said. Although this compared favourably to the revised 1.9% month-on-month drop in June, consensus tipped retail sales to return to monthly growth in July. FXStreet-supplied consensus forecast a 0.5% monthly rise in July.

Against the yen, the dollar was trading at JPY106.07, flat from JPY106.00.

In commodities, Brent oil was quoted at USD46.00 a barrel from USD45.86.

The Japanese Nikkei 225 index ended up 0.5. In China, the Shanghai Composite closed down 0.2%, while the Hang Seng index in Hong Kong is down 0.2%.

Japan's ruling party will vote on September 14 on Prime Minister Shinzo Abe's replacement, an official confirmed Wednesday, as powerful chief cabinet secretary Yoshihide Suga consolidated his frontrunner status in the race.

The Liberal Democratic Party's general council approved the date at a meeting, with candidate registration set for September 8, an official told AFP.

In Wednesday's economic calendar, there are eurozone producer prices at 1000 BST and the US ADP national employment report at 1315 BST.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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