London close: Housebuilders in the green as stocks finish higher

13 October 2021

(Sharecast News) - London stocks closed in positive territory on Wednesday, helped along by a strong showing in the housebuilding sector, as investors digested the latest UK GDP reading.
The <strong>FTSE 100</strong> ended the session up 0.16% at 7,141.82, and the <strong>FTSE 250</strong> was 0.74% firmer at 22,635.27.

Sterling was in the green as well, last rising 0.43% against the dollar to trade at $1.3646, and advancing 0.05% on the euro to &euro;1.1789.

"It is a mixed day for equities, as European markets are in positive territory, while the major indices in the US are showing losses," said <em>Equiti Capital</em> market analyst David Madden.

"Government bond yields are lower across the board, and the closely watched US 10-year yield is now 1.535%, down from over 1.6% yesterday.

"The slide in yields indicates that bond traders are less fearful about the prospect of monetary tightening, but it is worth noting that yields have been in an uptrend in recent weeks, so today's negative move might just be a pullback."

Figures released earlier by the Office for National Statistics showed the economy grew a touch less than expected in August despite the easing of Covid measures.

The economy grew 0.4% in August following a 0.1% contraction in July.

That was slightly weaker than consensus expectations for a 0.5% increase, and left GDP 0.8% below its pre-pandemic level in February 2020.

July's contraction was revised down from a previous estimate of 0.1% growth.

The service sector grew by 0.3% in August, while manufacturing was 0.5% higher.

Production output rose 0.8%, thanks mainly to the reopening of oil rigs, while construction output shrank 0.2%.

"The economy picked up in August as bars, restaurants and festivals benefited from the first full month without Covid-19 restrictions in England," said the ONS.

"This was offset by falls in health activity with fewer people visiting GPs and less testing and tracing.

"However, later and slightly weaker data from a number of industries now mean we estimate the economy fell a little overall in July."

Across the pond, headline inflation in the US rose at a faster-than-expected pace last month according to fresh data, pushed higher by climbing food and energy prices.

According to the US Bureau of Labor Statistics, the consumer price index increased 0.4% in September on a seasonally-adjusted basis, after rising 0.3% in August.

The annual rate was 5.4% before seasonal adjustments.

Both figures were higher than forecast, with economists looking for CPI of 0.3% month-on-month and 5.3% annually.

"Price increases stemming from ongoing supply chain bottlenecks amid strong demand will keep the rate of inflation elevated as supply-demand imbalances are only gradually resolved," noted <em>Oxford Economics</em>.

"While we share the Federal Reserve's view that this isn't the start of an upward wage price spiral, we look for inflation to remain persistently above 3% through mid-2022.

"Thus the Fed remains on course to commence quantitative easing tapering next month and to start rate lift-off by year-end 2022."

On home shores, miners were on the back foot, with <strong>Rio Tinto</strong> down 1.5%, <strong>BHP</strong> losing 1.49% and <strong>Anglo American</strong> 0.23% weaker.

<em>IG</em> market analyst Joshua Mahony said iron ore dependent miners such as the three names above "remain at risk of a volatile time as traders seek to ascertain exactly how much these Chinese energy curbs will dampen industrial production".

<strong>Centrica</strong> was 4.55% weaker after the British Gas owner said it was postponing its capital markets day due to an unprecedented crisis in the energy sector.

<strong>BT</strong> was knocked 2.65% lower by a downgrade to 'reduce' at <em>HSBC</em>, while <strong>RHI Magnesita</strong> was hit 6.92% by a downgrade to 'sector perform' at <em>RBC Capital Markets</em>.

<strong>Informa</strong> slumped 2.37% after a downgrade to 'sell' from 'neutral' at <em>UBS</em>, which pointed to material short-term earnings downgrades.

<em>UBS</em> said the recovery in travel was likely to be slower than the market expects.

<strong>Just Eat Takeaway</strong> fell 1.67% even after it reported a 25% jump in third-quarter orders and reiterated its full-year guidance.

On the upside, house builder <strong>Barratt Developments</strong> jumped 6.29% after it said strong demand for its homes had continued into the current fiscal year despite a reduction in government incentives, adding it was on track to deliver full-year medium targets.

Peers <strong>Taylor Wimpey</strong>, <strong>Persimmon</strong> and <strong>Berkeley</strong> also pushed higher, by 3.95%, 3.59% and 1.71%, respectively.

<strong>Man Group</strong> surged 7.59% after it posted a rise in third-quarter assets under management, driven by "strong" net inflows.

<strong>Britvic</strong> was boosted 1.69% by an upgrade to 'buy' at <em>HSBC</em>, which pointed to a better outlook.

<strong>Market Movers</strong>

FTSE 100 (UKX) 7,141.82 0.16%
FTSE 250 (MCX) 22,635.27 0.74%
techMARK (TASX) 4,566.94 0.63%

<strong>FTSE 100 - Risers</strong>

Barratt Developments (BDEV) 682.20p 6.29%
Ocado Group (OCDO) 1,723.00p 4.09%
Taylor Wimpey (TW.) 155.30p 3.95%
Aveva Group (AVV) 3,611.00p 3.94%
St James's Place (STJ) 1,481.50p 3.78%
Croda International (CRDA) 8,736.00p 3.68%
Johnson Matthey (JMAT) 2,706.00p 3.64%
Persimmon (PSN) 2,657.00p 3.59%
Burberry Group (BRBY) 1,855.50p 3.31%
Ashtead Group (AHT) 5,716.00p 2.95%

<strong>FTSE 100 - Fallers</strong>

Standard Chartered (STAN) 477.80p -2.73%
BT Group (BT.A) 141.40p -2.65%
International Consolidated Airlines Group SA (CDI) (IAG) 171.56p -2.47%
Informa (INF) 557.60p -2.37%
Barclays (BARC) 192.92p -2.30%
Aviva (AV.) 395.60p -2.03%
Lloyds Banking Group (LLOY) 47.76p -1.58%
Prudential (PRU) 1,437.50p -1.54%
Rio Tinto (RIO) 4,930.00p -1.50%
BHP Group (BHP) 1,921.00p -1.49%

<strong>FTSE 250 - Risers</strong>

Darktrace (DARK) 904.50p 7.68%
Man Group (EMG) 219.00p 7.59%
Vistry Group (VTY) 1,178.00p 4.71%
Kainos Group (KNOS) 1,889.00p 4.24%
Howden Joinery Group (HWDN) 867.40p 4.10%
Trainline (TRN) 327.20p 3.94%
Moonpig Group (MOON) 317.60p 3.79%
Crest Nicholson Holdings (CRST) 371.20p 3.75%
Volution Group (FAN) 490.50p 3.70%
Dunelm Group (DNLM) 1,299.00p 3.59%

<strong>FTSE 250 - Fallers</strong>

RHI Magnesita N.V. (DI) (RHIM) 2,958.00p -6.92%
Centrica (CNA) 58.30p -4.55%
Baltic Classifieds Group (BCG) 199.00p -4.33%
Contour Global (GLO) 187.00p -3.11%
Chrysalis Investments Limited NPV (CHRY) 224.00p -3.03%
National Express Group (NEX) 229.20p -2.80%
Energean (ENOG) 881.50p -2.76%
easyJet (EZJ) 608.20p -2.75%
Morgan Advanced Materials (MGAM) 333.00p -2.63%
Restaurant Group (RTN) 88.00p -2.55%