LONDON MARKET OPEN: FTSE 100 up as miners slip but housebuilders rally

(Alliance News) - London stocks started the week on the front foot, with losses for mining stocks in the wake of a slight Chinese trade data miss offset by a housebuilding rally, as data showed UK property prices continued to climb last month.

The FTSE 100 index was up 18.86 points, or 0.3%, at 7,087.90 early Monday. The mid-cap FTSE 250 index was up 38.24 points, or 0.2%, at 22,870.97. The AIM All-Share index was down 0.1% at 1,255.75.

The Cboe UK 100 index was up 0.2% at 705.69. The Cboe 250 was up 0.1% at 20617.08, and the Cboe Small Companies flat at 15178.50.

In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were both down 0.4% early Monday.

London-listed miners fell after some strong Chinese trade data failed to hurdle market expectations.

China's exports rose 28% in May while imports grew at the fastest pace in more than a decade as the global economy powers back from the pandemic crisis, official data showed overnight. While growth was strong, it failed to live up to expectations of a 32% gain.

Demand for China's goods has bounced after economically painful lockdowns last year due to the Covid-19 crisis, and as vaccines are rolled out across much of the world. The figures are also boosted by last year's low base of comparison when the coronavirus was spreading rapidly.

"The main reason for the shortfall is that all export items related to semiconductor chips have slowed. Auto processing products and parts, the biggest export item, fell 4% year-on-year in terms of export value. This is most likely the result of the semiconductor chip shortage," ING highlighted.

In May, import growth hit its highest rate since January 2011, coming in at 51% on-year, also slightly below expectations of a Bloomberg poll of analysts.

Anglo American fell 2.0%, Antofagasta 2.0% and Glencore 1.6%.

In China, the Shanghai Composite closed up 0.2%, while the Hang Seng index in Hong Kong was down 0.6% in late trade.

In Tokyo, the Nikkei 225 index closed up 0.3%. The yen was trading lower, with the dollar quoted at JPY109.51 early Monday, up versus JPY109.44 late Friday in London.

The S&P/ASX 200 in Sydney ended down 0.2%.

Sterling was quoted at USD1.4132 early Monday, easing from USD1.4169 at the London equities close on Friday. The euro traded at USD1.2158, down from USD1.2172 late Friday.

Gold was quoted at USD1,883.62 an ounce early Monday, lower than USD1,893.48 on Friday. Brent oil was trading at USD71.20 a barrel, soft on USD71.55 late Friday.

Back in London, housebuilders gained as Halifax reported a 9.5% annual surge in UK home prices in May. The average UK property price now stands at GBP261,743, a new record high.

"Heading into the traditionally busy summer period, market activity continues to be boosted by the government's stamp duty holiday, with prospective buyers racing to complete purchases in time to benefit from the maximum tax break ahead of June's deadline, after which there will be a phased return to full rates," said Russell Galley, managing director at Halifax.

Taylor Wimpey rose 2.3%, Persimmon 2.2% and Barratt Developments 2.1%.

Shares in IWG tumbled 14% after the office workspace provider guided to full-year earnings "well below" 2020 due to a slower-than-expected recovery.

The FTSE 250 constituent said it has continued to see strong recovery in some of its markets since updating on first quarter activity, but the overall improvement across the group has been less than expected due to "prolonged" Covid-19 fallout, including lockdown restrictions and the emergence of new variants.

As such, this will delay IWG's anticipated recovery and, in turn, is expected to have a "significant impact" on its 2021 results, with underlying group earnings before interest, tax, depreciation and amortisation now seen "well below" 2020's level. However, the company said its expectation for a strong recovery in 2022 is unchanged.

IWG said: "In markets where Covid-19 related restrictions are easing such as the US, we have seen positive momentum. Occupancy is improving, enquiries have reached pre-Covid-19 levels, we have an increasing pipeline of corporate customers on network-wide deals and service revenues are starting to improve. These positive trends support the board's view that the prolonged impact of Covid-19 on the group's 2021 results is one of timing."

Meanwhile, S4 Capital gained 2.8% after boosting its guidance following a strong start to 2021.

The firm's executive chair, Martin Sorrell, said ahead of Monday's annual general meeting that trading in the first four months of the year has "accelerated strongly", with revenue up almost 90% versus a rise of 71% for the first quarter. Net revenue was up almost 84% compared with 71% for the first quarter.

"We do not have our May figures as yet, but early indications are that May will be similar to April and that in June, the pipeline continues to be robust," the digital advertising and marketing services company said.

In light of the pick-up in trade during the second quarter so far, S4 has raised its guidance for net revenue growth to 35% from 30% seen previously.

"We are confident that we will be able to deliver sector leading, high double-digit like-for-like revenue and gross profit growth for 2021, along with a strong operating earnings before interest, taxes, depreciation and amortisation margin," said Sorrell.

By Lucy Heming; lucyheming@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.