FTSE 100 hits fresh intraday high as housebuilders rally

And there goes 8,300. Another technical milestone for the equity bulls was easily overcome as the FTSE 100 continued to march higher.

The FTSE 100 set another all-time intraday high of 8,311 in early trade on Tuesday before dipping to trade at 8,299 at the time of writing.

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“The FTSE 100 has scaled fresh heights as buds of May hope unfurl about interest rate cuts on the horizon. The blue-chip index smashed through the 8300 mark in early trade as the feel-good factor around London-listed stocks continued,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

The index has consistently broken to record highs in recent weeks, reminiscent of how the S&P 500 made fresh highs throughout last year’s AI boom.

Of course, the factors at play are very different, but this will be of little concern in the short term, with London’s markets playing catch-up with overseas peers. 

Indeed, the economic influences on stocks this morning may have longer-term ramifications for equities. Yet, a big miss in the US Non-Farm Payrolls last week, and slower UK retail sales and patchy house price data all feed the narrative the Bank of England and Federal Reserve will have to cut interest rates to support the economy before long. 

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Concerns were creeping in that both major central banks would push their first rate cuts into 2025. Data over the last week has dispelled this notion, and stocks have reacted accordingly.

“Rising another 1.1% as post-Bank Holiday trading gets underway, the FTSE 100 is now up 2% so far in May and 7.4% year-to-date. That’s quite a performance given we’re not even at the halfway point in the year. Add in returns from dividends on top and it’s easy to see why more investors might finally have rekindled their interest in the UK stock market,” said Russ Mould, investment director at AJ Bell.

The FTSE 100 gains were broad on Tuesday, with 89 of the 100 constituents trading positively at the time of writing.

Although the Halifax House Price Index released on Tuesday shows big disparities across different regions, the trend for UK property prices is definitely going in the right direction, which helped spark a rally in the housebuilders.

“Housebuilders were among the stocks in demand after British house prices returned to growth, albeit only by a fraction. Halifax data gave hope that the property market was getting up on its feet after a soggy patch, enticing investors to look at names such as Persimmon and Barratt,” Russ Mould said.

Persimmon was 3.4% higher at the time of writing, and Barratt Developments gained 2.4%.

Ocado had a good showing as the lower interest rate narrative helped boost the stock due to its technology credentials. DCC was the FTSE 100’s best performer with a 4.5% gain after Deutsche Bank rated the stock a ‘buy’.

The headline corporate update came from BP and a massive fall in profits in Q1 2024 compared to Q1 2023. Lower oil prices have ravaged the bottom line, but there was a bright spot for investors in a share buyback, preventing any significant share price declines.

“Consistency quarter to quarter seems to be tough to achieve for BP at the moment with a missed forecast in Q1 following on from a very strong update last time out to round off 2023,” said Adam Vettese, analyst at investment platform eToro.

“Lower energy prices and weaker fuels margin are to blame for the slump. Investors will be pleased to see this miss will not affect the buyback programme and the dividend is being held steady.”

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