LONDON MARKET OPEN: Housebuilders rise as UK house prices jump

Tue, 29th Jun 2021 08:49

(Alliance News) - Stock prices in London were rebounding at the open on Tuesday with housebuilders among the best blue-chip performers, while IWG led the midcaps as a private equity firm set its sights on the company formerly known as Regus.

The FTSE 100 index was up 33.67 points, or 0.5%, at 7,106.43 early Tuesday. The flagship index closed down 63.10 points, or 0.9%, at 7,072.97 on Monday.

The mid-cap FTSE 250 index was up 58.36 points, or 0.3%, at 22,591.91. The AIM All-Share index was little changed at 1,253.73.

The Cboe UK 100 index was up 0.4% at 707.50. The Cboe 250 was up 0.1% at 20,241.73, and the Cboe Small Companies was flat at 15,351.10.

In Paris, the CAC 40 was up 0.5%, while Frankfurt's DAX 30 rose 0.6%.

In Asia, the Japanese Nikkei 225 index closed down 0.8% on Tuesday. In China, the Shanghai Composite ended down 0.9%, while the Hang Seng index in Hong Kong was down 1.0%. The S&P/ASX 200 in Sydney ended 0.1% lower.

In the FTSE 100, housebuilders were among the best performers reacting positively to industry data from Nationwide.

UK house prices continued to surge in June with the highest rate of annual growth since November 2004, figures from the mortgage lender showed.

Taylor Wimpey was up 1.7%, Persimmon rose 1.6%, Barratt Developments added 1.5% and Berkeley Group gained 1.3%.

On an annual basis, the Nationwide house price index jumped 13% in June, rising from 11% growth in May. The reading missed the market estimate, cited by FXStreet, of 14%. On a monthly basis, house prices rose 0.4% in June, slowing from 1.7% in May. The print missed the market forecast of 0.7%.

The average UK house price stood at GBP245,432 in June, up from GBP242,832 in May.

The domestic housing market continued to benefit from borrowing costs at near record lows and the UK government's stamp duty holiday on purchases.

In sector news, Barratt Developments said it has appointed Mike Scott as an executive director and chief financial officer. The date he will join Barratt is currently being finalised and will be announced in due course.

Scott, who is currently CFO of FTSE 250-listed peer Countryside Properties, has extensive experience in the housebuilding sector, having joined Countryside as financial controller in 2014, Barratt said.

Countryside Properties noted the announcement, saying it was commencing a search for Scott's successor and will confirm his leaving date in due course. Countryside was up 0.5%.

At the other end of the FTSE 100, United Utilities was the worst performer, down 1.2%, after Morgan Stanley downgraded the water company to Underweight from Equal Weight.

In the FTSE 250, IWG was the best performer, up 6.2%, giving the company a market value of GBP3.22 billion. The office space provider has held secret talks with a New York-based private equity firm over a GBP4 billion buyout, Sky News reported late Monday.

CC Capital held talks with the Regus owner, Sky said. Citing a property industry source, Sky added that any bid will be a "very significant" premium to IWG's current share price. A potential CC Capital bid would value IWG at GBP4 billion at least, Sky News noted.

Midcap UDG Healthcare said it has agreed to be bought by Clayton Dubilier & Rice, after the US private equity firm returned to the table with an improved takeover offer.

UDG Healthcare said it has agreed final terms with CD&R on an offer that values the Dublin-based private healthcare provider at GBP2.76 billion.

Under the deal terms, UDG shareholders will be entitled to receive 1,080 pence for each share, up 5.6% from the previous offer of 1,023p per share. UDG shares were up 0.4% at 1,070.26p.

UDG said CD&R has the support of 11% of shareholders, including Allianz Global Investors and Kabouter Management, for the final offer. Other institutional shareholders of UDG also have indicated their willingness to vote in favour of the deal.

As such, UDG directors unanimously recommend the acquisition to shareholders, the company said. "The UDG directors believe that the UDG group is well positioned for future continued success and that the long-term prospects of the group are strong as an independent listed entity. Nevertheless, the UDG directors recognise that uncertainties exist, many of which are beyond UDG's control," it explained.

The dollar was higher against major counterparts. The pound was quoted at USD1.3863 early Tuesday, down from USD1.3884 at the London equities close Monday.

The euro was priced at USD1.1918, down from USD1.1932. Against the yen, the dollar was trading at JPY110.64, up from JPY110.53.

Brent oil quoted at USD74.33 a barrel on Tuesday morning, lower against USD75.32 late Monday in London. Gold was trading at USD1,778.50 an ounce, down slightly from USD1,779.56.

The fall in oil prices come amid expectations that OPEC and other major producers will decide to lift output at their meeting on Thursday.

Tuesday's international economic calendar has eurozone consumer confidence at 1000 BST, followed by German inflation at 1300 BST.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com