Housebuilders surge on FTSE 100 amid Keir Starmer’s housing pledge

Housebuilders surge on FTSE 100 amid Keir Starmer's housing pledge
credit: yahoo

Housebuilders have rebounded sharply on the London stock market after Labour’s landslide general election success as investors bet that Keir Starmer’s commitment to bulldoze planning traditions and build 1.5m new homes would help the sector.

Why did housebuilders see a sharp rebound on the FTSE 100?

After reserving a majority widely anticipated in financial markets, the FTSE 100 and the pound edged more while government borrowing prices remained roughly unchanged.

City analysts stated a clear Labour success could bring stability to British politics after years of turmoil under the Conservatives since the 2016 Brexit vote while placing Britain as a “haven” for global investors amid growing political instability in the US and France.

“A landslide success provides the sort of clarity and stability that equity markets need in an increasingly explosive world,” stated Ben Ritchie, the head of developed market equities at the fund manager abrdn. “If the new administration gets this right, businesses with substantial exposure to the UK economy should be the likely winners.”

Housebuilders were the largest gainers, with housing stocks collectively up by 2.3%. Persimmon and Vistry were the top risers on the FTSE 100, both up almost 3%. Barratt and Taylor Wimpey climbed about 2%.

Why did shares in Crest Nicholson surge despite rejecting a bid?

Shares in Crest Nicholson went up as much as 11% after it reportedly snubbed a bid from its rival Avant Homes, which is possessed by the US hedge fund Elliott Advisors. Avant made an all-share recommendation to the board of Crest last month, Sky News conveyed, which was denied. Elliott would have become the largest shareholder in the combined company. Weeks earlier Crest had abandoned a bid from Bellway, another London-listed housebuilder, that cherished the business at £650m.

Reviewers at the investment bank Jefferies stated Labour’s win was “a major favourable for UK housebuilders” as the party “appears more supporting, engaged and concentrated on the delivery of homes”.

What role did housing policy play in Keir Starmer’s election strategy?

Starmer had made scheduling reform a centrepiece of his election movement to “get Britain building again,” aiming to stimulate economic growth, create jobs and produce 1.5m new homes over the next parliament.

How did the pound perform following Labour’s election victory?

The pound climbed 0.1% against the dollar to almost $1.28, with sterling the most powerful performing big currency this year after rebounding in the run-up to Thursday’s vote. Currency markets had widely priced in a Labour landslide and Starmer’s essential message was that he would strive to restore stability, drive economic development and take a fiscally responsible direction to government.

After four PMs in five years, sterling has recuperated from a record low of $1.03 in 2022, when Liz Truss’s mini-budget started a meltdown in financial markets that needed the Bank of England to intervene to stop pension funds from going bust.

Labour’s election success comes against a backdrop of an improving economy. Inflation has reciprocated to the government’s 2% target, after a prolonged duration of soaring price rises and a rise inflation rate of 11.1% in October 2022. That was the most elevated level in 41 years.

The economy has rebounded from a shallow recession at the end of 2023 and increased by 0.7% in the first quarter of 2024, in the latest official data.

Federica Calabrò

Federica Calabrò is a journalist at Parliament News, She is covering Business and General World News. She is a native of Naples, commenced her career as a teller at Poste Italiane before following her passion for dance. Graduating in classical dance, she showcased her talents with two entertainment companies, enchanting audiences throughout Italy. Presently, Federica serves as the general secretary at the Allianz Bank Financial Advisors financial promotion center in Naples. In this capacity, she manages office forms, provides document assistance for Financial Advisors, oversees paperwork for the back office, and ensures smooth customer reception and assistance at the front office. Outside her professional obligations, Federica indulges in her passion for writing in her leisure time.