FTSE 100 and AIM climb higher, undimmed by softening house prices

• FTSE 100 index adds 10 points
• US non-farm payrolls due at 1.30pm GMT
• AIM index hits highest point since financial crisis

10.43am: Housebuilders unconcerned by house price retreat

Housebuilders and estate agents shares are in positive territory despite news that UK house prices saw their biggest monthly fall in 10 months.

House prices fell 0.3% in January, the biggest fall since last April, according to data from mortgage lender Halifax.

The average price dropped to £251,968, though this is still 5.4% higher than in January 2020, but easing from the 6% difference in December and 7.6% in November.

House prices and the wider housing market were boosted last year with the release of pent-up demand following the easing of restrictions after the first coronavirus lockdown and the temporary raising of the stamp duty threshold.

Economist Howard Archer at the EY ITEM Club said he continues to believe that “the current robustness of housing market activity and the strength of prices will prove unsustainable sooner rather than later”, particularly as the removal of support from the stamp duty threshold increase looms at the end of next month and as the economy continues to be affected by COVID-19 restrictions.

Other pressures are also expected to emerge with a potentially significant rise in unemployment as the furlough scheme tails off in coming months.  

Sarah Coles, personal finance analyst, at Hargreaves Lansdown, said the price retreat last month “was always going to happen as we neared the cliff edge when the stamp duty holiday ends. While those who have already committed to a purchase may decide to power on regardless, it’s clearly putting people off getting started.”

But she said there could be some respite if Chancellor Rishi Sunak decides to tinker with stamp duty at his coming budget.

“However, it’s not just the stamp duty people are concerned about,” Coles said. “This lockdown, with no end in sight, and whole sectors of the economy closed, is raising questions for the future. People are starting to worry about how they’ll afford their existing mortgage: data shows high street banks expect more people to start defaulting on their mortgage payments over the next couple of months. In this environment, fewer people are going to consider the expense and commitment of a house move.”

Meanwhile, with () and among the top 20 risers, the FTSE 100 was up 10 points or 0.2% at 6,514.20. 

9.40am: Blue chips slumber, but AIM’s higher

London’s blue chips are remaining lethargic as the morning progresses, continuing a sideway trend that has persisted since the start of the week, missing out on the strong gains being made in the US and Europe.

PLC (), PLC () and other domestically focused shares such as housebuilders and property developers are leading the gains this morning.

With the pound extending gains and standing at close to two-and-a-half-year highs above $1.37, heavy overseas earners are providing the counterweight, with the fallers led by () and (), followed by the likes of Unilever (), Vodafone () and plc ().

Life insurers and utilities are also well represented among the fallers.

The more domestically focused FTSE 250 is outdoing its superior sibling, up 0.6% to the Footsie’s 0.1% to 6,509.2.

Similarly, small caps are also doing better, with the AIM index up 0.4% to above 1,208, its highest level since before the global financial crisis, in late 2007.

Small cap stocks also led the way higher on Wall Street overnight too, noted Neil Wilson at Market.com.

“The yield curve is steepening – reflation-rotation is well and truly back on – with the 10-year and 30-year Treasury yields at their highest in a year and the 5s30s spread has steepened to almost 150bps, the widest since 2015.”

He noted that…