FTSE rebounds on vaccine hopes, UK house price jump

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The FTSE 100 rebounded on Covid-19 vaccine hopes and UK house prices hitting an all-time high, which buoyed housebuilders and construction-related stocks. 

After slipping 1.7%  yesterday, blue chips this morning rallied 1.3%, or 77 points, to 5,939 on vaccine speculation. UK health secretary Matt Hancock is reported as stating that the law could be changed to fast-track a coronavirus vaccine before Christmas.

While the US has refused to join the global World Health Organisation-backed initiative to develop a vaccine, markets decided to focus instead on an update from Dr Anthony Fauci, who is leading the US’ coronavirus reponse, who said clinical trials were ‘overwhelmingly positive’.

To add to the positive news, a vaccine being developed by the University of Oxford in collaboration with AstraZeneca (AZN) started human trials in the US today. Shares in the pharmaceutical giant gained 0.9%, or 74p, to £82.71.

Housebuilders and construction materials groups were reaping the benefits of UK house prices hitting a record high thanks to the stamp duty holiday announced in the Budget. 

Barratt Developments (BDEV) jumped to the top of the blue chips, rising 6.2%, or 31p, to 535p as Nationwide building society revealed the housing market had recovered from a recent blip and growth hit 3.7% in August, up from 1.5% in July and the highest monthly rise in 16 years.  

Taylor Wimpey (TW) gained 3.4% to 121p, Persimmon (PSN) jumped 3.3% to £26.37, and Berkeley (BKG) was up 3.2% at £46.56. Construction equipment rental group Ashtead (AHT) rose 3.2% to £26.27 and plumbing supplies business Ferguson (FERG) gained 3.3% to £75.36.

Fiona Cincotta, analyst at City Index, said while house prices were benefiting from a ‘stamp duty holiday, low mortgage rates, pent-up demand, and people reassessing their housing needs after lockdown’ this could be a ‘false dawn’ for the market. 

‘Unemployment is expected to rise to 7.5% over the coming months as the government withdraws its support from the furlough programme. Fewer people employed will undoubtedly have an impact on the housing market,’ she said. 

‘This will also come as the UK leaves the EU…and then in March the Help to Buy scheme which has underpinned a strong rise in housebuilders in also set to expire.’

Housebuilders also helped pull the FTSE 250 index higher, lifting it 0.5%, or 104 points, to 17,709. Redrow (RDW) jumped 3.6% to 452p, Bellway (BWY) was up 3.4% at £24.32, and Countryside Properties (CSP) rose 3% to 325p.

Computacenter (CCC) soared to the top of the mid-caps after gaining 9.8%, or 198p, to trade at £22.14 as the group reported that full-year results are likely to be much better than expected as strong first-half performance followed into the second half of the year. 

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