REPEAT: Housebuilders and miners bookend FTSE 100

(Alliance News) - The FTSE 100 ended higher on Monday as a rise in housebuilders managed to offset declines in the mining sector.

The FTSE 100 index closed up 8.18 points, or 0.1%, at 7,077.22. The FTSE 250 ended up 75.33 points, or 0.3%, at 22,908.06. The AIM All-Share closed flat at 1,257.68.

The Cboe UK 100 ended up 0.2% at 705.80, the Cboe UK 250 closed up 0.4% at 20,663.80, and the Cboe Small Companies ended up 0.1% at 15,202.70.

In Paris the CAC 40 ended up 0.4%, while the DAX 30 in Frankfurt ended down 0.1%.

"The FTSE has managed to maintain the gains of the morning session off the back of strong performances from housebuilder stocks," said Spreadex.

In the FTSE 100, housebuilders ended among the best performers after data showed UK house prices continued to rocket as the market heads into the bustling summer period, according to figures from Halifax.

Persimmon, Barratt Developments, Taylor Wimpey and Berkeley Group closed up 2.7%, 1.7%, 1.1% and 0.8% respectively.

Home prices jumped 9.5% in May on an annual basis, and notched up a monthly gain of 1.3%. The average UK property price now stands at GBP261,743, a new record high, Halifax said.

Annual house price inflation is at its strongest level in nearly seven years.

Blue-chip travel-related stocks ended higher. International Consolidated Airlines and Rolls-Royce closed up 2.8% and 2.6% respectively.

"UK housebuilders have bounced in the wake of strong Halifax house price data, while it looks like some optimism has returned to airline stocks and associated engineering firms following last week's stumble thanks to changes regarding UK holiday travel. Transient inflation notwithstanding, the overall outlook should see demand for flights and planes pick up over time, as the global economy slowly recovers from the pandemic," said IG Group's Chris Beauchamp.

At the other end of the large-caps, Anglo American ended the worst performer, down 3.1%, as shares in its spin-off Thungela Resources underperformed in their Monday debut in London.

Shares in Thungela ended at 111.02 pence in London, a 26% drop from its opening price of 150.00p, following an attack from a short seller saying that the company is worthless due to being riddled with environmental liabilities.

Thungela's listing on the London Main Market and primary listing in Johannesburg marks the completion of Anglo American's demerger of its thermal coal business in South Africa, including seven collieries in Mpumalanga, South Africa.

Boatman Capital Research on Sunday claimed that Thungela has underestimated its environmental liabilities associated with closing its mines, which all have five to 11 years of expected life left.

Thungela has recognised a provision of ZAR6.45 billion, around USD468 million, for end-of-life mine rehabilitation costs, based on regulations from the South African Department of Mineral Resources & Energy, known as MPRDA.

Boatman noted however that new rules, known as NEMA 2015, have been proposed which will impose tougher and more expensive environmental standards on miners in South Africa. The new rules are set to take effect in June 2022, delayed from the original date of June 19, 2021.

Anglo American on Sunday had responded to the claims by Boatman in a written response to Mining Weekly.

"The basis for provisioning under South Africa's draft NEMA regulations simply does not accurately reflect the actual or likely sums needed to discharge such liabilities. It is precisely because these sums are considered to be artificial, and arbitrarily inflated, that the draft has remained under review since 2015. This is an industry-wide matter in South Africa, so the regulations on which the Boatman report apparently draws its conclusion are far from being finalised," said Anglo head of Corporate Communications James Wyatt-Tilby.

Anglo's decline was also part of broader mining sector declines, following slightly weaker-than-expected trade data from China.

Antofagasta, Glencore, BHP and Rio Tinto closed down 2.8%, 1.7%, 1.2% and 1.3% respectively

China's exports rose 28% in May on a year before in dollar terms, 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.

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. Growth was boosted by last year's low base of comparison when the coronavirus was spreading rapidly. Exports from the world's second largest economy posted strong growth but came in lower than expectations of 32%.

In May, import growth hit its highest rate since January 2011, coming in at 51% year-on-year in dollar terms, also slightly below expectations of a Bloomberg poll of analysts. China's overall trade surplus came in at USD45.53 billion in May, a year-on-year decrease of 27%.

In the FTSE 250, IWG was the worst performer, down 10%, after the office provider warned it faces a significant hit to its 2021 results as occupancy rates are lower than expected.

The company, formerly known as Regus, said underlying earnings before interest, tax, depreciation and amortisation this year will be "well below" the 2020 level. The improvement in occupancy has been lower than expected because of the prolonged effects of the pandemic, the company said.

The pound was quoted at USD1.4172 at the London equities close, firm from USD1.4169 at the close Friday.

The euro stood at USD1.2197 at the European equities close, up from USD1.2172 late Friday. Against the yen, the dollar was trading at JPY109.23, down from JPY109.44 late Friday.

Stocks in New York were subdued at the London equities close after US Treasury Secretary Janet Yellen downplayed fears over the prospect of higher interest rates triggered by a spike in inflation.

The DJIA was down 0.1%, the S&P 500 index down 0.2%, but the Nasdaq Composite was up 0.1%.

Investors weighed also moves over the weekend by the G7 group of nations towards an eventual global minimum corporate tax rate aimed firmly at tech giants seen as not paying enough.

Yellen told Bloomberg News that US President Joe Biden should push ahead with his USD4.0-trillion recovery plan for the world's top economy even if it triggers high inflation that leads to interest rate rises.

Yellen said any inflation spike in reaction to Biden's massive plan to revitalise the US economy would be transitory and that higher interest rates would actually be positive.

"If we ended up with a slightly higher interest rate environment, it would actually be a plus for society's point of view and the Fed's point of view," the former Federal Reserve chair said in an interview Sunday with Bloomberg.

Yellen was speaking after returning from a meeting of G7 finance ministers in London which endorsed a global minimum corporate tax rate of at least 15%, rallying behind a US-backed plan targeting tech giants and other multinationals.

Brent oil was quoted at USD71.43 a barrel at the close Monday, lower from USD71.55 at close Friday.

Gold was quoted at USD1,893.07 an ounce late Monday, flat against USD1,893.48 at the same time Friday.

The economic events calendar on Tuesday has Germany industrial production at 0700 BST, eurozone economic growth figures at 1000 BST and US trade data at 1330 BST.

The UK corporate calendar on Tuesday has annual results from Oxford Instruments and Intermediate Capital Group. British American Tobacco puts out a trading update.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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