LONDON MARKET OPEN: Housebuilders fall on UK government cladding plan

(Alliance News) - Stock prices in London opened slightly lower on Monday, despite calls for a higher open. Housebuilders fell after the UK government announced plans to resolve the flammable cladding crisis.

The FTSE 100 index was down 11.48 points, or 0.2%, at 7,473.80 early Monday. The mid-cap FTSE 250 index was down 2.76 points at 23,350.49. The AIM All-Share index was flat at 1,186.87.

The Cboe UK 100 index was down 0.3% at 739.04. The Cboe 250 was down 0.3% at 20,746.02, and the Cboe Small Companies was flat at 15,577.25.

In Paris the CAC 40 stock index was down 0.1%, while the DAX 40 in Frankfurt was 0.2% lower.

In the FTSE 100, housebuilders were among the worst performers, with Persimmon down 2.7%, Barratt Developments down 2.6%, Taylor Wimpey down 2.5% and Berkeley Group down 2.4%. Midcap builders Bellway and Vistry were off 2.9% and 2.3% respectively.

Developers in the UK must agree a GBP4 billion plan to fix dangerous cladding on low-rise flats by early March or risk new laws forcing them to act, Housing Secretary Michael Gove has said.

The Cabinet minister threatened that he is "prepared to take all steps necessary" to fix the "broken system" in a letter to the industry ahead of detailing the plans on Monday. Potential action also includes restricting access to government funding and future procurements, the use of planning powers, and pursuing firms through the courts.

The proposals to alleviate the scandal that has trapped leaseholders in unsafe and unsellable homes come more than four years after the Grenfell Tower fire in June 2017, in which 72 people were killed. Leaseholders in buildings between 11 metres and 18m tall will no longer have to take out loans to cover the costs of remediation work despite no new money coming from the Treasury.

Instead, Gove told developers to agree to start contributing this year to cover the "full outstanding cost", which he estimates to be GBP4 billion.

Experian was down 1.9% after Morgan Stanley downgraded the credit checking agency to Equal Weight from Overweight.

In the FTSE 250, Plus500 was up 2.8%. The contracts-for-difference trading provider hailed an "outstanding" operational and financial performance throughout 2021 that exceeded market expectations.

For 2021, Plus500 said revenue is estimated around USD718 million, supported by customer income - a key underlying growth metric - of USD702 million. The revenue figure is below the USD872.5 million posted in 2020, but higher than the company-compiled consensus analyst forecast of USD655.2 million.

In addition, Plus500 said that it was considering a new share buyback programme, following the completion of the USD12.6 million buyback scheme announced in October.

On AIM, Tortilla Mexican Grill was up 3.5%, after saying it put in a "very strong" trading performance since listing in London in October, shaking off Omicron restrictions. Annual revenue and profit will be "materially ahead" of its expectations, the fast-casual restaurant chain said.

In Asia on Monday, the Shanghai Composite ended up 0.4%, while the Hang Seng index in Hong Kong gained 1.2%. The S&P/ASX 200 in Sydney closed down 0.1%. Financial markets in Japan were closed for the Coming of Age Day holiday.

The pound was quoted at USD1.3587 early Monday, up from USD1.3572 at the London equities close Friday.

The euro stood at USD1.1324, lower against USD1.1343. Against the Japanese yen, the dollar was trading at JPY115.77, up from JPY115.64.

Brent oil was quoted at USD82.15 a barrel Monday morning, up from USD81.99 late Friday. Gold stood at USD1,793.16 an ounce, marginally higher from USD1,791.80.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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