FTSE 100 holds losses; house prices hit record high in March

• FTSE 100 closes in red
• US stocks on the up
• Strong US PPI data

5.05pm: FTSE closes lower

FTSE 100 closed on Friday in the red with miners under pressure as commodity prices eased.

Britain’s blue-chip benchmark finished down over 26 points, or 0.38%, at 6,915 but FTSE 250 stayed in the green, adding nearly four points, or 0.02%, to close at 22,251.

Chris Beauchamp, chief market analyst at trading group IG, said it was a “mixed bag” for stocks at the end of the week following on from some US producer price index (PPI) data, which came in “stronger than expected”.

On Wall Street, the Dow Jones Industrial Average advanced around 80 points at 33,583, while the S&P 500 gained around nine at 4,106. The Nasdaq added six points at 13,853.

“Markets will once again have to revisit the topics of inflation and the Fed’s response to it, bearing in mind the dovish Fed minutes from this week,” said Beauchamp.

“The feeling of being in uncharted waters remains, since normally PPI data begins to strengthen towards the end of the cycle, as the Fed is already tightening, but we are generally assumed to be at the beginning of a cycle, and no Fed tightening is in sight.”

3.40pm: House prices hit record high in March

FTSE 100 held its losses before close and was down 21 points to 6,920, while sterling was flat at US$1.3731.

The average house price hit a new record high in March, according to the latest Halifax report, thanks to government support to boost confidence in the market.

The sector is benefitting from the stamp duty holiday and is expected to get a further lift from the new mortgage guarantee scheme that should start this month.

Last month, house prices were 6.5% higher than in March 2020 and 1.1% higher than in February, for an average of £254,606.

However, growth is expected to slow down by the end of this year due to the current levels of uncertainty and the potential for higher unemployment, the bank said.

House prices will be flat year-on-year by early 2022, the EY ITEM Club said, as the strengthening of the housing market has been outsized relative to economic fundamentals.

“Some quarters of falling prices likely at the end of 2021 and early on in 2022 as the Stamp Duty benefit ends, unemployment rises and there is a waning of pent-up demand,” noted Howard Archer, chief economic advisor to the EY ITEM Club.

“Housing market activity may also be affected from the latter months of 2021 onwards by growing expectations that interest rates could start to rise before long.”

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