The FTSE 100 rose on Monday as construction-related stocks jumped after the UK government announced a new ‘Your First Home’ scheme to boost housebuilding.
Andy Burnham announced the scheme ahead of the Labour conference, igniting a rally in housebuilding stocks and companies involved in the supply chain.
Elsewhere, oil prices rose after Trump rejected Iranian proposals to end the conflict.
“The FTSE 100 started off on the front foot on Monday, supported by its limited tech exposure and heavyweight oil and gas names,” says AJ Bell investment director Russ Mould.
“This put it on the right side of two major developments over the weekend. First, the pausing of training of OpenAI’s latest models on safety concerns led to selling in Asia, particularly for those pockets of the market exposed to artificial intelligence.
“Second, there was renewed strength in oil prices after comments from President Trump that he had rejected Iran’s latest proposal to reopen the Strait of Hormuz. Although there are some hopes that negotiations will continue through the course of this week.
“In London, housebuilders, banks and BP and Shell were among those making progress, while precious metals miners were firmly on the back foot.”
Housebuilders surged on Monday after the UK Prime Minister announced a relaunch of a Help to Buy-style scheme called ‘Your First Home’.
It’s telling that Barratt Redrow is the only remaining housebuilder in the FTSE 100 after Persimmon was demoted in the latest reshuffle.
The prior Help to Buy scheme sparked and sustained a multi-year rally in housebuilders, making them one of the best-performing FTSE 100 sectors while it was in place.
But the sector has struggled since the punch bowl was removed, with the likes of Taylor Wimpey and Berkeley Group dropping out of London’s leading index as the Uk property market stagnated.
The new scheme is designed to help first-time buyers who don’t have the privilege of the ‘bank of mum and dad’ to finance their way onto the housing ladder through 2.5% deposits and a 20% government-backed loan. Such schemes have their critics, but they won’t include investors in housebuilders such as FTSE 100 Barratt Redrow, whose shares soared 12% on Monday
Howden Joinery rose 5% on the news, while B&Q-owner Kingfisher added 3%.
Fresnillo was the FTSE 100’s biggest casualty, sinking 6%, as gold prices slipped again.