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LONDON MARKET MIDDAY: Stocks enjoy boost on UK construction data

Stocks prices in London were higher at midday on Tuesday, as local data added to the uplift provided by US markets on Monday.

The FTSE 100 index was up 82.73 points, 1.0%, at 8,296.22. The FTSE 250 was up 225.42 points, 1.1%, at 20,389.96, and the AIM All-Share was 5.72 points, 0.7%, at 777.25.

The Cboe UK 100 was up 1.0% at 828.39, the Cboe UK 250 was up 1.0% at 17,662.42, and the Cboe Small Companies was down 0.1% at 15,773.92.

In European equities on Tuesday, the CAC 40 in Paris was up 0.4%, while the DAX 40 in Frankfurt was 0.7%.

Sterling was quoted at $1.2537 at midday Tuesday, lower than $1.2549 at the London equities close on Friday. The euro traded at $1.0762 on Tuesday midday, lower than $1.0769 late Friday. Against the yen, the dollar was quoted higher at JP¥154.60 from JP¥152.89.

Growth in the UK construction sector quickened in April, according to the latest purchasing managers’ index survey results from S&P Global.

The headline S&P Global UK construction PMI in April rose to 53.0 in points in April from 50.2 in March.

The reading indicates an expansion of growth, rising further above the 50.0 no-change mark. FXStreet-cited consensus had been expecting a reading of 50.4.

It also marked expansion for the second month in a row, S&P Global said.

Pantheon Macroeconomics analyst Rob Wood commented on the data: ‘Housebuilding took a breather in April but civil engineering and commercial activity surged as economic conditions continued to improve. Remarkably the construction PMI has recovered to only one point below its 1998-to-2019 average, having been nine points below last September, and is consistent with official construction output rising 0.6% three-months-on-three-months.’

Annual growth in UK house prices quickened last month, while they returned to slight growth on a monthly basis, numbers from mortgage lender Halifax showed Tuesday.

UK house price growth quickened to 1.1% year-on-year in April, Halifax said, from a 0.4% rise in March. Prices ticked up 0.1% in April from March, having fallen 0.9% in March from February.

The monthly rise in April was expected to be 0.2%, according to FXStreet-cited consensus. The average UK house price in April was £288,949, up from £288,781 in March.

‘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,’ said AJ Bell analyst Russ Mould.

Persimmon and Barratt both rose 2.6% and 1.7% respectively.

Elsewhere in the FTSE 100, BP ticked down 0.1%.

The oil major said replacement cost profit was down to $1.61 billion from $8.67 billion a year earlier, but up from $1.53 billion from the fourth quarter. Total first quarter revenue was down to $48.88 billion from $56.18 billion a year earlier, and down from $52.14 billion in the fourth quarter, while first quarter upstream production was 2.4 million barrels of oil equivalent per day, up 2.1% from a year earlier.

BP has started a new $1.75 billion share buyback programme for the first quarter as planned, while it says a total of $3.5 billion is still planned in share buybacks for the first half of 2024.

It declared a quarterly dividend of 7.27 cents per share, unchanged from the fourth quarter and up from 6.61 cents a year earlier.

Looking ahead, it expects upstream production to be slightly lower in the second quarter from the first quarter, while across 2024, it expects upstream production to be slightly up from 2023 on both a reported and underlying basis.

‘BP’s first-quarter profits are down year-on-year and lower than expected thanks in the main to lower gas prices and temporary problems at a refinery in Indiana, US, although shareholders are unlikely to be too concerned given the company’s ability to return $3 billion to them via dividends and buybacks in just three months,’ said AJ Bell’s Mould.

‘BP is on course to return the same amount in the next three months of 2024 and if it maintains that pace for the whole year then the oil and gas major will return more than 11% of its stock market valuation to investors, a cash yield that easily exceeds Bank of England base rates, government gilt yields and inflation.’

In the FTSE 250, SDCL Energy Efficiency rose 3.7%, after it agreed to sell UU Solar to UK Power for £90.8 million.

The investor in assets in the energy efficiency sector said the agreed price represents a 4.5% premium to UU Solar’s September 30 valuation. SDCL Energy Efficiency said the sale proceeds will be used to reduce short term borrowings under its revolving credit facility.

Among London’s small-caps, Robert Walters rose 4.6% to 385 pence, after Deutsche Bank starts its coverage of the recruitment consultancy firm with a ’buy’ rating, setting a target price of 600p per share.

Mears Group also rose 5.0% to 386.5p, after Deutsche Bank also starts its coverage of the housing maintenance and social housing provider with a ’buy’ rating, setting a target price of 425p per share.

On AIM in London, Totally rose 19%.

In a trading update for the financial year that ended March 31, the healthcare services provider said it expects revenue to fall to £106 million from £135.7 million a year earlier, but with earnings before interest, tax, depreciation and amortisation to double to around £2.3 million from £1.1 million.

Totally said the improved bottom-line was against a tough operational backdrop and follows a review by the board of its ‘structures, systems and processes to ensure it remains focused on growth and the provision of support to its commissioners when required’.

Stocks in New York were called mixed. The Dow Jones Industrial Average was called up 0.2%, the S&P 500 index marginally up, while the Nasdaq Composite was called down 0.2%.

Brent oil was trading at $83.07 a barrel on Tuesday midday, higher than $82.91 late Friday.

Israel carried out strikes on the Gazan city of Rafah overnight as it sought to put ‘pressure’ on Hamas ahead of talks in Egypt on Tuesday aimed at sealing a truce proposal endorsed by the militants.

After having vowed for weeks to push into the southern border town, Israel called on Monday for Palestinians in eastern Rafah to leave for an ‘expanded humanitarian area’ ahead of a ground incursion.

After talks earlier in the day failed to produce an agreement, Hamas said Monday evening that it had informed mediators Egypt and Qatar of its ‘approval of their proposal regarding a ceasefire’ in the seven-month-old war.

Israeli Prime Minister Benjamin Netanyahu’s office said the proposal ‘is far from Israel’s essential demands’, but the government would send negotiators for talks ‘to exhaust the potential for arriving at an agreement’.

Gold was quoted at $2,313.54 an ounce, higher than $2,301.11.

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