Housebuilders and retailers led a positive morning session for the London Stock Exchange on Tuesday, amid hopes of UK government help for hard-pressed consumers.
The FTSE 100 index was up 16.37 points, or 0.2%, at 7,303.80 midday Tuesday. The mid-cap FTSE 250 index was up 241.54 points, or 1.3%, at 18,871.22. The AIM All-Share index was up 4.08 points, or 0.5%, at 865.22.
The Cboe UK 100 index was up 0.3% at 829.66. The Cboe 250 was up 1.4% at 16,247.06, and the Cboe Small Companies was down 0.2% at 13,655.86.
‘The FTSE 100 nudged ahead...led by consumer cyclicals and financials. Investors appear to be betting that the potential relief on energy bills might help avoid the disastrous scenario previously feared whereby consumers would drastically cut back on spending,’ AJ Bell's Russ Mould said.
Liz Truss will enter Downing Street after her triumph in the Tory leadership contest as she prepares to roll out an emergency support package to deal with the energy crisis. Following her victory over Rishi Sunak, the new party leader will fly to Balmoral on Tuesday where she will be formally invited by the Queen to form a government.
The Daily Telegraph reported that among the measures under consideration was a scheme - costing tens of billions of pounds - to freeze bills until the next general election in 2024.
Details could be set out as early as Thursday, as the new administration seeks to reassure worried voters following a summer of political paralysis.
Mould continued: ‘Some of the top risers on the blue-chip stock index included retailers Next and JD Sports, kitchens seller Howden Joinery and DIY store chain owner Kingfisher. A similar trend was seen on the FTSE 250 with Dunelm, Marks & Spencer, ASOS and Greggs all surging.’
Next was up 4.0%, JD Sports 4.2%, Howden Joinery 3.9% and Kingfisher 4.0%. Dunelm gained 6.5%, M&S 4.5%, Asos 2.9% and Greggs 7.4%.
Mould noted these stocks have suffered with earnings expectations slashed ahead of a predicted recession in the UK.
‘Now we might be at the stage where investors take the view that shares in retailers have been oversold, hence the big recovery rally today. How long it will last is another matter, as the general cost of living crisis is still punishing for households, whether energy bills go up further or not.’
Sterling was quoted at $1.1581 midday Tuesday, up sharply from $1.1507 at the London equities close on Monday.
The UK's construction sector improved slightly in August, survey results showed, but still recorded its second straight month of decline as new orders ‘slowed to a crawl’.
The headline seasonally adjusted S&P Global/Chartered Institute of Procurement UK construction purchasing managers' index inched up to 49.2 points in August from 48.9 in July. The reading came in ahead of market consensus, according to FXStreet, of 48.0.
However, any reading below the 50.0 mark indicates contraction in the sector.
The eurozone construction sector contracted further in August in its worst performance for over a year and a half, survey data showed.
S&P Global said the eurozone construction PMI fell to 44.2 points in August from 45.7 in July. The reading signalled the fastest decline in activity since January 2021.
All three of the largest eurozone economies posted steeper contractions.
Germany's PMI score shrank to 42.6 points from 43.7, France's fell to 48.2 from 48.6, and Italy's declined to 41.2 from 46.2.
In mainland Europe, the CAC 40 in Paris was up 0.6%, while the DAX 40 in Frankfurt was 1.3% higher.
Back in London, Berkeley was up 4.4% in midday trade.
The housebuilder said trading in the first four months of its new financial year was ahead of financial 2022.
‘The good level of demand continues to support pricing above business plan levels, which is sufficient to cover cost increases on a blended basis across Berkeley's developments,’ it added.
Berkeley said it on track to meet annual profit guidance, guiding for financial 2023 pretax profit of £600 million and £625 million for financial 2024. In financial 2022, it recorded pretax profit of £551.5 million.
Looking ahead, the housebuilder said its forward sales will be ‘marginally above’ the £2.17 billion booked as of April 30.
Shares in peers Taylor Wimpey, Barratt Development and Persimmon were up 4.0%, 3.7% and 3.7%, respectively.
Among London midcaps, Tullow Oil slipped 2.4% after Capricorn Energy said it is considering alternatives to its previously announced merger with Tullow.
In an earnings update, in which Capricorn posted a narrowed loss in the first half of 2022, the company explained it continues to progress its merger with peer Tullow, but it also is ‘exploring a number of expressions of interest relating to alternative transactions’. The plan to merge was first announced in June.
Capricorn said its pretax loss narrowed to $48.7 million in the six months that ended June 30 from a $87.4 million loss a year prior, boosted by its recent Egyptian acquisition and rising oil prices.
Capricorn, formerly known as Cairn Energy, was up 1.3% at midday.
In London's junior market, AIM, Orosur Mining jumped 41% after it returned substantial, high-grade gold intersection from the first three diamond drill holes at its Anza project in Colombia.
It noted its best intersection of 150.9 metres at 3.00 grammes per tonne of gold from the surface. Additional holes are now underway across the Pepas and Pupino prospects on Anza.
Heading in the opposite direction, Inland Homes slumped 32%.
The housing plot developer experienced unforeseen planning delays for two major schemes under its Land and Asset Management segments.
As a result, it now expects to post a pretax loss of £37.1 million for the full-year, widened from previous expectations of a £29.3 million loss.
Looking ahead to the open on Wall Street, the Dow Jones Industrial Average and the S&P 500 were both seen opening 0.6% higher, while the Nasdaq Composite was called up 0.7%.
Traders in the US return from a holiday weekend on Tuesday, with services PMI data at 1445 BST providing an early focus.
Brent oil was trading at $92.92 a barrel, lower from $95.49 late Monday.
The euro traded at $0.9933 midday Tuesday, higher than $0.9919 late Monday. Against the yen, the dollar was quoted at JP¥141.75, up from JP¥140.53.
Gold was quoted at $1,711.20 an ounce midday Tuesday, higher than $1,710.56 on late Monday.
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