European stock markets push higher as housebuilders rally

·4 min read
Persimmon Homes signage near Larbert after the housebuilder reported pre-tax profits surpassed £1 billion, growing 13%. (Photo by Andrew Milligan/PA Images via Getty Images)
Halifax reported that the average property in Britain now costs £261,743 ($370,635), with annual house price inflation at its strongest level in almost seven years. Photo: Andrew Milligan/PA Images via Getty Images

European stock markets advanced on Monday, with housebuilders leading the gains in London after Halifax’s house price index revealed that May prices jumped 9.5% higher than the same month a year earlier.

The FTSE 100 (^FTSE) ended 0.1% higher, while the CAC (^FCHI) surged 0.4% in France and the German DAX (^GDAXI) slipped 0.1% lower just before the bell.

Halifax reported that the average property in Britain now costs £261,743 ($370,635), with annual house price inflation at its strongest level in almost seven years.

The average UK home increased in value by more than £22,000 over the past 12 months, while the average property added more than £3,000 (+1.3%) to its value in the last month alone.

The news sent homebuilders Barratt Development (BDEV.L), Persimmon (PSN.L), and Taylor Wimpey (TW.L) to the top of the FTSE 100 and Redrow (RDW.L) and Crest Nicholson (CRST.L) to the top of the FTSE 250.

Russell Galley, managing director of Halifax, said: "Heading into the traditionally busy summer period, market activity continues to be boosted by the government’s stamp duty holiday, with prospective buyers racing to complete purchases in time to benefit from the maximum tax break ahead of June’s deadline, after which there will be a phased return to full rates.

"For some homebuyers, lockdown restrictions have also resulted in an unexpected build-up of savings, which can now be deployed to fund bigger deposits for bigger properties, potentially pushing property prices even higher."

Read more: UK average house price hits record high in May

Watch: G7 agrees to tax big firms and squeeze havens

On the other hand, mining stocks were under pressure following a slowdown in China’s exports, with commodities giant Anglo American (AAL), copper producer Antofagasta (ANTO.L), and precious metal producer Fresnillo (FRES.L) amongst the top fallers.

Across the pond, the S&P 500 (^GSPC) dipped 0.3% after opening and the Dow Jones (^DJI) edged 0.4% lower. The tech-heavy Nasdaq (^IXIC) was flat, up just 0.05%, with shares in the US tech giants remaining calm, shrugging off the G7's tax agreement on Saturday.

The historic deal now means that companies will have to pay corporate taxes on profits where they operate, known as “pillar one” of the agreement, and will be unable to shift them to tax havens as they have done previously.

The second pillar of the agreement will see a global minimum corporate tax rate of 15% to avoid countries undercutting each other.

Traders are also looking ahead to key inflation data later this week.

Asian shares dipped overnight as a coronavirus outbreak in Taiwan took a toll on chip manufacturers, and China export growth slowed in May.

Taiwan’s stock index ended lower on the day as a spike in COVID cases hit three tech companies in the northern part of the country, including chip packager King Yuan Electronics (2449.TW).

Read more: The chip shortage bringing car factories to a standstill

Meanwhile, the Hang Seng (^HSI) fell 0.6% and the Shanghai Composite (000001.SS) edged 0.2% higher as China’s exports slowed last month, growing by 27.9% year-on-year, down from 32.3% in April. This was weaker than economists had forecasted.

The poor performance was down to the global chip shortage, rising raw material costs and struggling supply chains.

“As such we expect June trade and production data will be affected,” said Iris Pang of ING. “This could push up prices of electronic goods in general and affect China’s export prices and eventually import prices in the US and Europe. Supply chains in Asia will also likely be disrupted.”

However, imports surged by 51.1% in May, the fastest jump in a decade

Japan’s Nikkei (^N225) ended 0.3% up after touching its highest level in almost a month.

Watch: COVID-19: Chip shortage throws spanner in the works as car industry struggles

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