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London stocks rallied in early trade on Tuesday following solid gains on Wall Street and in Asia, as investors mulled the latest data on house prices and retail sales.
At 0840 BST, the FTSE 100 was up 1% at 8,293.97, having earlier risen above 8,300 for the first time.
Figures released by Halifax showed that average house prices rose 0.1% on the month in April following a 0.9% decline in March.
On the year, house prices increased 1.1% following a 0.4% jump the month before.
The data showed that a typical UK home now costs £288,949 compared to £288,781 in March.
Amanda Bryden, head of mortgages at Halifax, said the reality is that average house prices have largely plateaued in the early part of 2024.
“This reflects a housing market finding its feet in an era of higher interest rates. While borrowing costs remain more expensive than a few years ago, homebuyers are gaining confidence from a period of relative stability. Activity and demand is improving, evidenced by greater numbers of mortgage applications so far this year, while at an industry level mortgage approvals have reached their highest point in 18 months,” she said.
“Our recent research also found that buyers are adjusting their expectations, with first-time buyers in particular compensating for higher borrowing costs by targeting smaller properties. We see this reflected in property prices for the first few months of this year, with the value of flats rising most sharply, closing the ‘growth gap’ on bigger properties that’s existed for most of the last four years.
“However, we can’t overlook the fact that affordability constraints are still a significant challenge, for both new buyers and those rolling off fixed-term deals. Mortgage rates have edged up again in recent weeks, primarily as a result of expectations around future Bank of England base rate changes, with markets now pricing in a slower pace of cuts.”
She said that if the Bank of England cuts rates later this year, as expected, fixed mortgage rates should fall. This, combined with the resilience displayed by the housing market over recent months, means Halifax now expects property prices to rise modestly over the course of this year.
Investors were also digesting industry data showing that total UK retail sales fell 4% year-on-year in April as wet spring weather deterred shoppers, despite businesses offering hefty discounts in an attempt to entice customers into stores.
The rain dampened sales growth for clothing and footwear, especially outdoor sportswear, as well as DIY and garden furniture, the BRC-KPMG retail sales monitor for the four weeks to April 27 showed. The early timing of the Easter break also had an impact, it added.
In equity markets, online supermarket Ocado was the standout gainer on the FTSE 100.
Shell gushed higher following a report it is in talks with Saudi Arabia’s state-owned Saudi Aramco to sell its gas station business in Malaysia.
According to Reuters sources, a deal could be worth up to $1bn.
On the downside, BP was a little weaker after it reported a fall in first-quarter profit on the back of lower oil and gas prices, an outage at a US refinery and “significantly weaker” fuels margins. It also started a $1.75bn share buyback.
Underlying replacement cost profit for the quarter was $2.7bn, compared with $5bn a year earlier and $3bn for the final three months of 2023, BP said.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Dcc Plc | +3.82% | +210.00 | 5,705.00 |
| 2 |  |
Tui Ag | +3.71% | +21.00 | 587.50 |
| 3 |  |
Intercontinental Hotels Group Plc | +3.13% | +242.00 | 7,968.00 |
| 4 |  |
International Consolidated Airlines Group S.a. | +3.02% | +5.40 | 184.05 |
| 5 |  |
Glencore Plc | +2.70% | +12.30 | 467.30 |
| 6 |  |
Ocado Group Plc | +2.64% | +9.40 | 365.00 |
| 7 |  |
British Land Company Plc | +2.58% | +10.40 | 414.00 |
| 8 |  |
Rentokil Initial Plc | +2.55% | +10.40 | 418.10 |
| 9 |  |
Kingfisher Plc | +2.53% | +6.30 | 255.00 |
| 10 |  |
Flutter Entertainment Plc | +2.42% | +380.00 | 16,085.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Phoenix Group Holdings Plc | -1.92% | -10.00 | 509.50 |
| 2 |  |
Smith & Nephew Plc | -1.32% | -13.20 | 983.60 |
| 3 |  |
Standard Chartered Plc | -0.53% | -4.00 | 751.00 |
| 4 |  |
Melrose Industries Plc | -0.33% | -2.00 | 601.60 |
| 5 |  |
Bp Plc | -0.25% | -1.30 | 509.10 |
| 6 |  |
Burberry Group Plc | -0.25% | -3.00 | 1,177.00 |
| 7 |  |
Vodafone Group Plc | -0.23% | -0.16 | 68.28 |
| 8 |  |
Unilever Plc | -0.12% | -5.00 | 4,183.00 |
| 9 |  |
Smurfit Kappa Group Plc | -0.05% | -2.00 | 3,738.00 |
| 10 |  |
Shell Plc | -0.00% | -0.00 | 1,894.60 |
Tuesday newspaper round-up: House prices, employers, Wayve
Universal Music Group could become the latest company to face an embarrassing shareholder revolt this AGM season, after an influential advisory firm urged investors to reject an “excessive” €139m (£119m) payout for its chief executive, Lucian Grainge. Glass Lewis said it had “severe reservations” about supporting the Dutch-American music company’s pay decisions, which included a €92m share-based bonus for its British-born CEO that easily made up for a 51% cut in his salary, to €7.5m. – Guardian
A decline in mortgage rates has prompted a forecaster to reverse its predictions of a fall in UK house prices in 2024, instead suggesting the average cost of a property could rise by £61,500 over the next five years. The property company Savills had forecast in November that it expected the average price of a home to fall by 3% this year because recent rises in the Bank of England base rate had heightened the affordability pressures on would-be buyers. – Guardian
Employers are cutting back hours and hiring less to cope with the rise in the National Living Wage, the boss of one of Britain’s biggest recruiters has said. James Reed, chief executive of Reed, said April’s 9.8pc increase in minimum wage was already being reflected in hiring patterns. Mr Reed said: “We have seen some employers changing their behaviour. “They might be taking on people for shorter periods or fewer hours or fewer of them because of the increasing cost.” – Telegraph
Wayve, a British driverless car company, has raised over a billion dollars from three of the world’s most influential tech companies to commercialise its products. Led by investor SoftBank, with contributions from Nvidia and Microsoft, the funds will help develop the start-up’s artificial intelligence software, which can make any vehicle hands-free. – The Times
The UK is likely to have exited recession at the beginning of this year, with growth now gathering momentum in a suite of key economic sectors, analysis suggested. Figures shared with The Times by Lloyds Bank showed that more than half of sectors within the UK economy grew in the first three months of this year, suggesting that official GDP estimates this week will confirm that the economy left recession. – The Times
