Shares in house builders have surged to the top of the FTSE 100, bucking a falling market, as stocks focused on the domestic economy rallied on hopes a no-deal Brexit could be avoided.
Among the trio of parliamentary defeats for the government yesterday was an amendment from former attorney general Dominic Grieve, allowing MPs more say over what happens next if, as expected, Prime Minister Theresa May’s deal fails to win their backing.
‘This will effectively give MPs the power to look at alternatives to a no-deal Brexit and is viewed as good news since it reduces the chances of crashing out without a deal,’ Commerzbank’s Peter Dixon said.
Analysts at Barclays spurred the rally in house builders higher, saying stocks in the sector could rally by up to 10% if a deal passes.
Builders headed the list of FTSE 100 risers, with stocks gaining including:
- Berkeley (BKGH) +6.5% at £34.40;
- Persimmon (PSN) +6% at £19.76;
- Barratt Developments (BDEV) +5.4% at 475.1p;
- Taylor Wimpey (TW) +5.4% at 138.6p.
It was the same story on the FTSE 250, where builders clustered at the top of the ‘mid-cap’ index, with risers including:
- Redrow (RDW) +7.1% at 501p;
- Bellway (BWY) +5.3% at £26.34;
- Countryside Properties (CSPC) +5.3% at 299p;
- Crest Nicholson (CRST) +3.7% at 337p;
- Bovis Homes (BVS) +3.5% at 878.2p.
Among ‘small-cap’ builders, McCarthy & Stone (MCS) jumped 3.5% to 136.6p.
Stocks geared to the housing market joined in the rally. Brick makers Ibstock (IBST) and Forterra (FORT) were up 8% at 219.8p and 5% at 229p, respectively. Builders’ merchants Travis Perkins (TPK) rose 3.5% to £11.31, and kitchen maker Howden Joinery (HWDN) was up 2.8% at 450.4p.
Real estate companies were also on the rise, with shares making gains including:
- Palace Capital (PCA) +4.9% at 300p;
- Hammerson (HMSO) +3% at 387.1p;
- British Land (BLND) +2.9% at 577.2p;
- St Modwen Properties (SMP) +2.8% at 400.8p;
- Derwent London (DLN) +2.5% at £28.75;
- Land Securities (LAND) +2% at 830.8p.
The rally spread more broadly to stocks with heavy exposure to the UK domestic economy. On the FTSE 100, Royal Mail (RMG) was up 3.6% at 317p, retailer Next (NXT) rose 3.3% to £49.83 and broadcaster ITV (ITV) was up 1.7% at 139p.