1st Mar 2021 08:47
(Alliance News) - Stock prices in London opened higher on Monday as US bond markets stabilised, while housebuilders rose sharply as a mortgage guarantee scheme is expected to be unveiled in this week's budget statement.
The 10-year US Treasury note yield edged down to 1.4% Monday morning from 1.5% late Friday, further narrowing from one-year highs reached on Thursday.
The FTSE 100 index was up 94.39 points, or 1.4%, at 6,577.82. The mid-cap FTSE 250 index was up 323.06 points, or 1.5%, at 21,234.84. The AIM All-Share index was up 0.6% at 1,190.73.
The Cboe UK 100 index was up 1.6% at 654.50. The Cboe 250 was up 1.5% at 18,904.85, and the Cboe Small Companies up 0.3% at 13,187.82.
In mainland Europe, the CAC 40 in Paris was up 1.6% while the DAX 30 in Frankfurt was up 1.3%.
Richard Hunter, head of Markets at interactive investor, commented: "There has been a pause for breath after the bond market sell-off stabilised, although inflation concerns remain near the surface. Those fears of inflation have certainly not gone away but attention has shifted back, perhaps temporarily, to the immediate positive drivers which could propel a strong economic rebound."
In the FTSE 100, housebuilders were among the best performers amid hopes UK Chancellor of the Exchequer Rishi Sunak will unveil a mortgage guarantee scheme to help first-time buyers with small deposits get on the property ladder in Wednesday's budget.
Taylor Wimpey was up 5.2%, Barratt Developments up 4.8%, Persimmon up 5.3% and Berkeley Group up 3.6%. Property portal Rightmove was up 3.5%.
Midcap peers Bellway, Vistry Group and Redrow were up 4.7%, 4.5% and 4.3% respectively.
Analysts at Jefferies said: "The government's continued focus on 'Generation Buy' we see as a positive. We remain unconvinced by the potential re-emergence of the Help to Buy mortgage guarantee. However, testing new policies while Help to Buy still has 2 years to run, and with what looks like a pipeline of plans, we believe de-risks the longer term demand profile for the sector. Our top picks of the volume housebuilders remain Persimmon and Taylor Wimpey."
Sunak is under vast pressure to continue emergency support packages to prevent waves of job losses and business closures, but has said he plans to "level with people" during his Commons speech. On Sunday, the chancellor indicated he will extend emergency support packages, such as the furlough scheme due to expire at the end of April, as the coronavirus lockdown is unwound over the coming months.
However, the chancellor issued a warning about the scale of the damage to public finances caused by the pandemic, saying the belt-tightening to pay for pandemic expenses may extend for years. He told Sky News' Sophy Ridge on Sunday: "This is going to take time to fix".
Pennon Group was up 3.6% after Barclays raised the utility to Overweight from Equal Weight.
At the other end of the large-caps, Bunzl was the worst performer, down 3.3%, as the distribution firm said it does not expect large Covid-19 related orders to repeat in 2021.
For 2020, revenue was GBP10.11 billion, up 8.4% from GBP9.33 billion in 2019, and pretax profit was GBP555.7 million, up 23% from GBP453.3 million.
Bunzl raised its dividend for the year 5.5% to 54.1 pence from 51.3p paid out the year before, as the company hailed its 28-year track record of consecutive annual dividend growth.
The Japanese Nikkei 225 index closed up 2.4% on Monday. In China, the Shanghai Composite closed up 1.2%, while the Hang Seng index in Hong Kong closed up 1.3%. In Sydney, the S&P/ASX ended 1.7% higher.
On the economic front, factory activity in China grew at the slowest pace in nine months in February, as business operations slowed over the country's Lunar New Year holiday, according to official data released Sunday.
The purchasing managers' index, a key gauge of manufacturing activity, fell to 50.6 points last month from 51.3, said the National Bureau of Statistics, with slowdowns seen in production, new orders and foreign trade.
Although this was the lowest reading overall since last May, when manufacturing PMI also came in at 50.6, the figure remains above the 50-point mark separating growth from contraction.
The pound was quoted at USD1.3954 early Monday, up from USD1.3940 at the London equities close Friday.
The euro was priced at USD1.2070, down from USD1.2111. Against the yen, the dollar was trading at JPY106.65, down from JPY106.62.
Brent oil was quoted at USD65.70 a barrel Monday morning, lower from USD66.10 late Friday. Gold was trading at USD1,752.01 an ounce, up sharply from USD1,728.20.
The economic events calendar on Monday has manufacturing PMI readings from Germany, the eurozone and the UK at 0855 GMT, 0900 GMT and 0930 GMT respectively.
By Arvind Bhunjun; [email protected]
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