London midday: FTSE maintains gains as housebuilders rally

(Sharecast News) - London stocks were still firmer by midday on Monday, with housebuilders surging on news of a new Help to Buy-style scheme, and as oil prices rose after US President Donald Trump rejected an Iranian proposal for a seven-day truce that would have led to the reopening of the Strait of Hormuz.

The FTSE 100 was up 0.2% at 10,718.00, while Brent crude was 4.1% higher at $108.64 a barrel and West Texas Intermediate was up 4.2% at $96.32.

Conditions of the Iranian proposal included the US release of frozen Iranian funds, the lifting of oil sanctions and an end to its naval blockade on Iranian ports.

Susannah Streeter, chief investment strategist at Wealth Club, said: "It seems it's back to the drawing board again for talks after the US President turned down Iran's latest terms for reopening the Strait of Hormuz more fully.

"There are talks planned for later this week, but it seems that these negotiations are set to be long and drawn out, with hopes for a resolution before the US mid-term elections fading fast."

In equity markets, housebuilders surged following news over the weekend that there would be a new scheme to help first-time buyers including a loan of around 20% of the value of the property. Barratt, Taylor Wimpey, Vistry, Bellway, Persimmon and Berkeley all gained sharply.

B&Q owner Kingfisher, construction materials firm Breedon Group, builders' merchant Travis Perkins, Howden Joinery and Grafton also advanced.

The Your First Home scheme will enable purchases of newbuild properties with a deposit of 2.5% and a government-backed equity loan worth 20% of the property's value.

Russ Mould, investment director at AJ Bell, said: "The prayers of the housebuilding sector have been answered with news of a revived scheme to support first-time buyers in getting on the housing ladder, helping to drive their shares sharply higher.

"Executives in the sector have been calling for government help for some time. Housebuilders benefited materially from the Help to Buy scheme in the 2010s, the difference from today being that they also enjoyed a period with negligible build cost inflation and rising property prices, supported by ultra-low borrowing costs. The backdrop is now very different, with margins squeezed by a subdued housing market and significant inflationary pressures on input costs.

"Nonetheless, the new 'Your First Home' scheme - with details to be laid out at the Budget on 28 October - is a welcome fillip for an industry which has been in the doldrums for much of the last five years. The government will hope the scheme helps meet its ambitious target of delivering 1.5 million homes over the course of the current Parliament.

"The biggest gains in the sector were reserved for those who operate at the lower end of the housing market or across the spectrum, with higher end operator Berkeley seeing more modest gains. Suppliers and retailers with ties to the property market were also riding higher on the housebuilders' coattails as they enjoyed this rare spot of positive news."

On the downside, miners and precious meals miners fell in tandem with gold and copper prices, with Fresnillo, Antofagasta, Anglo American, Glencore and Hochschild all weaker.

Ladbrokes-owner Entain slumped as it trimmed its full-year guidance after Brazil banned online sports betting and gaming.

Bodycote fell as CVC said it was not planning to make another offer for the company, which agreed earlier this month to be bought by US private equity firm Veritas Capital in a £1.65bn deal.

Market Movers

FTSE 100 (UKX) 10,718.00 0.21%

FTSE 250 (MCX) 24,422.37 0.66%

techMARK (TASX) 6,176.69 -0.06%

FTSE 100 - Risers

Barratt Redrow (BTRW) 345.20p 11.62%

Kingfisher (KGF) 337.00p 2.62%

Compass Group 11 (CPG) 30.03p 2.00%

Shell (SHEL) 3,671.00p 1.70%

Airtel Africa (AAF) 304.60p 1.67%

BP (BP.) 567.00p 1.54%

Admiral Group (ADM) 3,666.00p 1.44%

Marks & Spencer Group (MKS) 379.60p 1.42%

British American Tobacco (BATS) 4,237.00p 1.39%

Tesco (TSCO) 479.60p 1.35%

FTSE 100 - Fallers

Fresnillo (FRES) 2,702.00p -6.51%

Antofagasta (ANTO) 3,617.00p -2.82%

Anglo American (AAL) 3,930.00p -2.75%

Glencore (GLEN) 548.10p -2.19%

Rentokil Initial (RTO) 303.00p -1.75%

Pershing Square Holdings Ltd NPV (PSH) 3,660.00p -1.67%

Weir (WEIR) 2,600.00p -1.66%

Rio Tinto (RIO) 6,975.00p -1.51%

The Sage Group (SGE) 993.00p -0.95%

Experian (EXPN) 2,586.00p -0.92%

FTSE 250 - Risers

Persimmon (PSN) 1,323.50p 14.68%

Genuit Group (GEN) 300.20p 12.94%

Bellway (BWY) 2,312.00p 11.80%

Taylor Wimpey (TW.) 89.34p 11.59%

Vistry Group (VTY) 284.00p 9.65%

Breedon Group (BREE) 334.60p 9.20%

Travis Perkins (TPK) 643.50p 7.52%

Bridgepoint Group (Reg S) (BPT) 315.80p 5.27%

Grafton Group Ut (CDI) (GFTU) 1,014.20p 5.22%

Howden Joinery Group (HWDN) 793.50p 4.61%

FTSE 250 - Fallers

Hochschild Mining (HOC) 531.50p -6.84%

Pan African Resources (PAF) 115.70p -6.24%

Endeavour Mining (EDV) 4,303.00p -4.84%

Raspberry PI Holdings (RPI) 681.50p -4.04%

Ceres Power Holdings (CWR) 400.20p -4.02%

Entain (ENT) 431.50p -3.87%

Bodycote (BOY) 917.50p -3.06%

Pacific Horizon Inv Trust (PHI) 1,112.00p -2.97%

Playtech (PTEC) 377.80p -2.78%

Trustpilot Group (TRST) 207.80p -2.62%