Yahoo Finance FTSE 100 Live 05 July: Housebuilders surge after Labour win, Shell in $2bn setback
Housebuilding stocks and the UK-focused FTSE 250 index today rallied in the wake of Labour’s election landslide.
The pound and the internationally-focused FTSE 100 index posted subdued performances.
In corporate developments, Shell has revealed $2 billion in write offs following delays to a Rotterdam biofuels plant
FTSE 100 Live Friday
Labour win boosts building shares
FTSE 250 outperforms on UK optimism
Shell reveals $2bn writedowns
City Comment
13:45 , Simon English
Rachel Reeves and co can be forgiven for looking at the myriad problems the nation faces this morning and thinking that the City of London can hardly be a priority.
As hard as Labour fought to woo the City and wider business, it would in some ways be understandable if it thought rotting schools and hospitals a far bigger deal.
The City of London is surely big enough and ugly enough to look after itself.
The thing is, there are several things the new government could do which might quite quickly help raise money that could pay for those very things that most concern it.
One quick, eye-catching move which would be cheered across the Square Mile would be to bring back the dividend tax credit relief cancelled by Gordon Brown.
This move doesn't raise any money for the Treasury anymore, since, driven by caution, the pension funds only own 4% of the UK stock market these days. With friendlier tax deals, they might buy more stocks. That would boost the market, and in time, the value of the funds.
Three other ideas:
1) Remove liability for pension fund trustees so they aren't petrified of doing anything interesting (since pension funds are nearly all moving into surplus due to higher interest rates, it is time to take a few risks).
2) Stop regulations being the same for smaller companies as larger companies. The burden is disproportionate on smaller companies and can be overwhelming.
3) Encourage entrepreneurs to take risks by increasing the limit of entrepreneurs relief on Capital Gains Tax and remove the lifetime allowance so these rare risk-takers can build multiple businesses, create growth and boost tax receipts for the Treasury long into the future.
Tim Cockroft, Chair of Singer Capital Markets said:
"We believe with these nil cost, easy and quick to implement steps, Rachel Reeves and Labour will sow the seeds for future long-term economic growth. If they get this right, it could have as big an impact as when Labour gave the Bank of England independence in 1997."
Go for it.
FTSE 250 outperforms amid UK optimism, HSBC lower in FTSE 100
10:04 , Graeme Evans
A burst of UK optimism following Labour’s election landslide today fuelled a big advance for London’s mid-cap stocks.
The domestic-focused FTSE 250 jumped 1.8%, the second highest rise for the first day of a new UK prime minister since the index was created in 1994.
AJ Bell investment analyst Dan Coatsworth said: “Political uncertainty is over and this removes one of the key risks around UK equities, so it’s feasible that more domestic and foreign investors are now looking for opportunities on the market.
“This suggests today’s reaction might not be a one-day sensation.”
The FTSE 250 later settled 1.2% or 250.52 points higher to trade near its 2024 peak at 20,860.86. Stocks up 3% or more included Savills, publisher Future and Trainline.
In contrast, the FTSE 100 advanced by 0.2% or 19.94 points to 8261.20 as stronger homebuilding stocks were offset by falls for global players HSBC, Standard Chartered and Rio Tinto.
Glencore shares rose 2.2p to 483p after the mining giant got the regulatory green light to buy the steelmaking coal arm of Canada’s Teck Resources for $7 billion (£5.5 billion).
Shell shares lower on $2 billion Rotterdam and Singapore write downs
09:34 , Michael Hunter
Shell revealed the cost of the delays to its giant Dutch biofuels plant today, offering fresh insight into the extent of the latest blow to its push into green energy.
Construction of the Rotterdam biofuel facility – which will process used jet fuel into the environmentally friendly energy source – is on hold due to what Shell has previously referred to as weak market conditions.
The setback will cost it up to $1 billon (£780 million).
Shares in the UK’s second most valuable company were down almost 6p at 2895p, among the biggest fallers on the FTSE 100.
The Rotterdam plant has been key to Shell’s plans for the green energy transition and it has faced criticism from environmental groups for backtracking on its decarbonisation plans. Rotterdam was approved in 2021 and has been behind schedule due to technical problems.
It was supposed to start production of up to 820,000 tonnes of fuel a year in April and will now start up in the later part of this decade, according to a separate update issued earlier.
Shelll also wrote down the price of a Singapore chemicals facility it is selling, by up to $800 million
FTSE 250 jumps 1.7%, Trainline advances
09:10 , Graeme Evans
Optimism over UK prospects following the Labour landslide was seen in the FTSE 250 index, which bounced 1.7% or 358 points to just below 21,000.
This compares with the 0.4% advance for the FTSE 100 amid weaker sessions for global players including HSBC, Standard Chartered and Rio Tinto.
Between 75% and 80% of FTSE 100 revenues are generated outside the UK.
Strong performers in the FTSE 250 included bootmaker Dr Martens, which lifted 3% or 2.45p to 76.2p, and Trainline after its shares rallied 10p to 344p.
FTSE 100 housebuilding stocks rally
08:25 , Graeme Evans
Shares in Persimmon, Vistry and Taylor Wimpey all rose by around 2% in the FTSE 100 today as investors eyed improved prospects and potential interest rate cuts later this year.
Richard Hunter, head of markets at Interactive Investor, said: “One sector set to benefit from the new political regime is housebuilding, which has seen some recent strength on hopes of reforms, less red tape in terms of planning and more supply.”
He added that FTSE 100 is now ahead by 7% so far this year, while the more domestically focused FTSE250 has improved 5%, having swung from a negative position in previous months.
UK stocks higher in robust post-election session
08:10
The FTSE 100 index stands 21 points higher at 8262.26, reflecting an election result that was fully priced in by financial markets.
Among individual stocks, housebuilder Persimmon is 25p higher at 1457p, NatWest a penny stronger at 327.1p and British Gas owner Centrica ahead by 0.9p to 141.3p.
The pound is slightly ahead at $1.2764.
Forecasts unchanged after Labour landslide
08:00 , Graeme Evans
Capital Economics believes the changed political landscape is unlikely to lead to anything like as big a shift in the economic landscape.
It points out that the economy won’t be vastly different under Labour as the fiscal constraints are the same.
The consultancy added this morning: “We’ll know more about the new government’s plans for the economy after the next fiscal event, probably in September.
“For now, though, Labour’s victory generates a little more upside to our existing forecasts for GDP growth, inflation and interest rates.
“Finally, with the elections in France and the US causing a lot of uncertainty, the UK may soon be in the unusual position of standing out for its political and fiscal stability.”
Labour faces 'sizeable' challenge on public finances – ING
07:56 , Michael Hunter
The incoming Labour government faces a “sizeable” challenge in dealing with the public finances according to City bank ING.
When Keir Starmer and his likely pick for Chancellor, Rachel Reeves, become next door neighbours in Downing Street, “public debt is within spitting distance of 100%, [of GDP] and the deficit is at 4.4%,” said James Smith, developed market economist at the Dutch Bank.
“Global bond investors have turned more sensitive to fiscal sustainability these past few months, and there’s a sense that Labour will inevitably need to go beyond what it promised during the campaign,” he added.
“It’s not us that the government needs to convince; it’ll need to persuade the independent Office for Budget Responsibility (OBR) that its plans mean higher productivity and a brighter economy. That’s the key to unlocking more cash under the fiscal rules.”
House builders and transport stocks in City spotlight after Labour win
07:49 , Michael Hunter
House builders and transport stocks are expected to be among the sectors most likely to react to Labour’s election win when trading starts this morning in the City.
Labour plans to build 1.5 million houses in its five-year term in power which begins today. Streamlining the planning system to cut the time taken to get projects started is a key pat of its manifesto.
And its plans to renationalise the railways will have major implications for listed transport firms.
Tony Cross at City database Investegate said:
“Housebuilders, transport companies and the big government outsourcing providers are going to be very much in the spotlight. With change inevitable, the reality is not everyone will be a winner.”
City looks to new government for action on pensions to boost investment in UK stocks
07:42 , Michael Hunter
The City is looking to the incoming Labour government led by Kier Starmer for reform to boost investment in UK stocks.
With the tenure of 10 Downing Street set to change this morning, there are already calls for pension reform to boost funds’ holdings in UK stocks.
A steady decline in share ownership among the funds is widely seen as one of the main reasons company valuations on the London Stock Exchange are lower than elsewhere, especially arch-rival New York.
Encouraging pension funds to move back into UK shares is at the top of the City’s wish list.
Clive Pugh, at law firm Burges Salmon, said:
“The Labour party manifesto has promised us a review of the pensions landscape with the dual focuses of assessing a) how to improve pension outcomes and b) how to increase investments in UK markets.
“We can therefore expect to see both market consolidation and productive finance remain high on the agenda “
House prices steady as subdued trend continues
07:26 , Graeme Evans
The UK’s average house price dipped by 0.2% in June, according to the latest release by mortgage lender Halifax.
On an annual basis, the bank recorded a seventh consecutive month of year-on-year growth at 1.6% to leave the average UK property value at £288,455.
Halifax head of mortgages Amanda Bryden said: “This continued stability in house prices – rising by just 0.4% so far this year – reflects a market that remains subdued, though overall activity has been recovering.
“For now it’s the shortage of available properties, rather than demand from buyers, that continues to underpin higher prices.
FTSE 100 seen higher amid muted election reaction
07:20 , Graeme Evans
The pound is slightly higher against the US dollar and the FTSE 100 index forecast to open in positive territory following Labour’s election landslide.
IG chief market analyst Chris Beauchamp said: “Labour will form the next government, but compared to 2019 it has been accompanied by little fanfare on financial markets.
“This moment has been on the cards since Liz Truss’ short-lived premiership, and the lack of movement overnight in sterling is a testament to how much of a foregone conclusion this has been.”
Sterling stood at $1.275, which is near its highest level in three weeks. FTSE 100 futures are pointing to a rise of 17 points to 8258, having risen 0.9% yesterday.
