London midday: Stocks pare gains as investors mull PBOC policy move

21st Oct 2024 12:28

(Sharecast News) - London stocks had pared gains by midday on Monday as investors mulled the latest policy move by the People's Bank of China and UK house price data.

The FTSE 100 was flat at 8,354.84.

Earlier, the PBOC cut its two benchmark lending rates by 25 basis points. The one-year and five-year loan prime rates were reduced from 3.35% and 3.85% to 3.10% and 3.6%, respectively, in line with market expectations.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "Miners were among the gainers in early trade after the People's Bank of China cut key lending rates. Burberry has also gained ground amid hopes that cheaper loans for consumers might stimulate demand for luxury goods.

"The one-year and five-year loan prime rate have been slashed by 25 basis points. These benchmarks are used to price consumer loans and mortgages, and the idea is that the move will encourage lending and spending and help mend the ailing property market. There are also hints from authorities that there may be further cuts to the amount banks need to hold in reserve, to try and boost lending further.

"With the taps of support being turned on more fully there is renewed hope that this approach of throwing the kitchen sink at the problem will help the economy reach growth targets. But there are still expectations that further fiscal stimulus will be needed, with tax tinkering expected to put more money into consumers' pockets."

Investors were also mulling the latest house price index from Rightmove, which showed the number of homes being put up for sale surged in October, holding back selling prices.

The number of available homes for sale was up 12% year-on-year, the highest per estate agent since 2014.

Underlying buyer demand also remained strong, with the number of people contacting agents spiking 17%, despite uncertainty around the forthcoming Budget.

But it meant that house price growth was curtailed and the national average asking price edged up just 0.3% to £371,958. Rightmove said that the "muted" autumn bounce was well below average growth for October of 1.3%.

"With a greater choice of properties to consider, buyers are making use of their increased negotiating power, helping to keep price rises subdued," it noted.

The number of sales being agreed surged 29% as the market rebounded strongly from quieter conditions a year previously.

Tim Bannister, director of property science at Rightmove, said: "With the ball in the buyer's court and the pick of a big crop to choose from, sellers need to be pricing competitively to find a buyer, particularly with affordability still very stretched.

"We're not seeing activity slow down, but some estate agents report that some movers are now waiting for Budget clarity and anticipated cheaper mortgage rates later this year."

The Bank of England, which ramped up interest rates to tackle surging inflation, cut the cost of borrowing in August for the first time in four years.

Rates were then left on hold in September, but another 25 basis point reduction is widely expected at the Monetary Policy Committee's next meeting in November. Some believe a further cut will then follow shortly afterwards, in December.

Rightmove said that the 2025 outlook for the housing market remained positive, although it acknowledged ongoing affordability pressures.

In equity markets, gold miners shone as the price of the yellow metal a hit a new record. Fresnillo, Endeavour and Hochschild all rose as uncertainty over the US election and tensions in the Middle East drove investors to safe haven assets.

Streeter said: "Israel's continuing bombardment of Lebanon and Gaza is adding to the risk of overspill into wider conflict in the region. The uncertain outcome of the US presidential election is also likely to be playing on minds and leading to more defensive positioning."

Miners were also in the black as copper prices pushed up after the Chinese rate cuts, with Antofagasta, Glencore and Rio Tinto all higher.

FirstGroup gained as it announced the acquisition of Anderson Travel, a coach operator providing contracted school, private hire, mini coach and tour services in and around London, for an undisclosed sum.

Intertek was knocked lower by a downgrade to 'sector perform' from 'outperform' at RBC Capital Markets.

"Intertek has performed well versus the wider sector year to date and now trades at what we deem to be fair value, taking into account recent FX movements and, we think, a less certain outlook for FY25," the bank said.

Market Movers

FTSE 100 (UKX) 8,354.84 -0.04%

FTSE 250 (MCX) 21,079.25 -0.33%

techMARK (TASX) 4,806.48 -0.09%

FTSE 100 - Risers

Fresnillo (FRES) 736.00p 4.69%

BP (BP.) 407.45p 1.96%

Smith (DS) (SMDS) 454.40p 1.66%

Smurfit Westrock (DI) (SWR) 3,411.00p 1.34%

Shell (SHEL) 2,566.50p 1.18%

Croda International (CRDA) 3,785.00p 1.15%

Barratt Redrow (BTRW) 493.70p 1.15%

London Stock Exchange Group (LSEG) 10,630.00p 0.90%

Reckitt Benckiser Group (RKT) 4,818.00p 0.88%

B&M European Value Retail S.A. (DI) (BME) 409.00p 0.84%

FTSE 100 - Fallers

Intertek Group (ITRK) 4,944.00p -3.34%

Weir Group (WEIR) 2,128.00p -1.48%

Prudential (PRU) 663.60p -1.46%

Severn Trent (SVT) 2,675.00p -1.44%

Entain (ENT) 717.00p -1.43%

easyJet (EZJ) 514.20p -1.23%

United Utilities Group (UU.) 1,074.00p -1.20%

Airtel Africa (AAF) 116.00p -1.19%

IMI (IMI) 1,792.00p -1.10%

Tesco (TSCO) 358.20p -1.00%

FTSE 250 - Risers

Future (FUTR) 831.50p 4.66%

Burberry Group (BRBY) 712.80p 3.15%

Ithaca Energy (ITH) 104.80p 2.75%

Hochschild Mining (HOC) 240.50p 2.34%

Energean (ENOG) 967.50p 2.11%

PureTech Health (PRTC) 153.40p 1.86%

Raspberry PI Holdings (RPI) 370.60p 1.81%

Auction Technology Group (ATG) 458.00p 1.55%

Apax Global Alpha Limited (APAX) 147.20p 1.52%

Centamin (DI) (CEY) 170.00p 1.25%

FTSE 250 - Fallers

North Atlantic Smaller Companies Inv Trust (NAS) 3,840.00p -2.54%

Vesuvius (VSVS) 381.00p -2.43%

Genuit Group (GEN) 499.50p -2.25%

XPS Pensions Group (XPS) 355.00p -2.20%

Oxford Instruments (OXIG) 2,080.00p -2.12%

Wizz Air Holdings (WIZZ) 1,180.00p -1.99%

Investec (INVP) 598.50p -1.97%

Pennon Group (PNN) 577.50p -1.62%

JPMorgan European Discovery Trust (JEDT) 462.50p -1.60%

Renishaw (RSW) 3,300.00p -1.49%