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Housebuilders rally as investors bet on promise of new homes Starmers | Stock markets
Housebuilders rallied sharply on London's stock market after Labour's landslide general election victory, as investors bet Keir Starmers pledge to scrap planning rules and build 1.5 million new homes would benefit the sector.
After securing a widely expected majority in financial markets, the FTSE 100 and the pound rose as government borrowing costs remained roughly unchanged.
City analysts said a clear Labor victory could bring stability to British politics after years of turmoil under the Tories since the 2016 Brexit vote, while positioning Britain as a safe haven for global investors amid rising political instability. in the USA and France.
A landslide victory provides the kind of clarity and stability equity markets need in an increasingly volatile world, said Ben Ritchie, head of developed market equities at fund manager abrdn. If the new government gets this right, businesses with significant exposure to the UK economy should be the likely winners.
Housebuilders were the biggest gainers, with housing stocks up a collective 2.3%. Hurma and Vistry were the biggest risers in the FTSE 100, both up around 3%. Barratt and Taylor Wimpey rose around 2%.
Shares in Crest Nicholson jumped as much as 11% after it reportedly rejected a bid from rival Avant Homes, which is owned by US hedge fund Elliott Advisors.
Avant made an all-share proposal to Crest's board last month, Sky News reported, which was rejected. Elliott would have become the largest shareholder in the combined group. Last week Crest rejected an offer from Bellway, another London-listed housebuilder, that valued the business at 650 million.
Analysts at investment bank Jefferies said Labor's victory was a big positive for UK housebuilders as the party appears more supportive, engaged and focused on delivering homes.
Starmer had made planning reform the centerpiece of his election campaign to rebuild Britain, aiming to boost economic growth, create jobs and build 1.5 million new homes in the next parliament.
The pound rose 0.1% against the dollar to almost $1.28, with sterling the strongest performer against the greenback this year as it rose ahead of Thursday's vote.
Currency markets had widely priced in a Labor slide and Starmers' key message that he would seek to restore stability, boost economic growth and take a fiscally responsible approach to government.
After four prime ministers in five years, sterling has recovered from a record high of $1.03 in 2022, when Liz Truss's mini-budget triggered a meltdown in financial markets that prompted the Bank of England to intervene to prevent a collapse in pension funds .
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Labour's election victory comes against a backdrop of an improving economy. Inflation has returned to the government's target of 2%, after a prolonged period of rising prices and a peak inflation rate of 11.1% in October 2022. This was the highest level in 41 years.
The economy has recovered from a shallow recession at the end of 2023 and grew by 0.7% in the first quarter of 2024, according to the latest official data.
With inflation easing, the Bank of England is expected to start cutting interest rates, possibly as soon as next month, in a move that will provide relief and hope to households facing much higher mortgage costs.
Kathleen Brooks, director of research at broker XTB, said investors would refocus on what Labor does in its first days in power.
The focus will now quickly shift to Sir Keir Starmers first 100 days in office and how he presents his economic plans to boost growth while improving public services.
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Sources 2/ https://www.theguardian.com/business/article/2024/jul/05/pound-stable-as-investors-digest-decisive-election-win-for-labour The mention sources can contact us to remove/changing this article |
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