London midday: Stocks gain as housebuilders rally; Fed announcement eyed

(Sharecast News) - London stocks were firmly in the black by midday on Wednesday, underpinned by strength in the housebuilding sector, as investors braced for another big rate hike by the US Federal Reserve. The FTSE 100 was up 0.6% at 7,235.97.

Sentiment got a boost after the government confirmed that business energy bills will be discounted for six months in response to surging wholesale energy prices.

Under the Government Energy Bill Relief Scheme, electricity and gas bills for all non-domestic customers - including charities and public sector organisations - will be automatically discounted, in line with support already announced for households.

The scheme will apply to fixed contracts agreed on or after 1 April 2022, as well as variable and flexible tariffs, and cover energy used between 1 October 2022 and 31 March 2023. Prices are expected to be fixed at £211 per MWh for electricity and £75 per MWh for gas during the six-month period, "less than half the wholesale prices anticipated this winter", the Department of Business, Energy and Industrial Strategy said.

An overall cost for the subsidy was not announced, as it will depend on what happens to wholesale market prices during winter, the department added.

Looking ahead to the rest of the day, the focus was firmly on a rate announcement due from the Fed after the close of European markets.

Russ Mould, investment director at AJ Bell, said: "There is really no question of whether the Federal Reserve will raise rates or not today. They're almost certainly going up. The key unknown is exactly how much the central bank will push up the cost of borrowing. The consensus is for a 0.75 percentage point rise, which would be the third hike of such magnitude in a row. That would push rates to the 3-3.25% range, the highest since 2008.

"There is a generation who have never seen rates that high, and now they're about to get the shock of their life as credit becomes a lot more expensive. Rates could feasibly go even higher in the coming months, which spells trouble for both consumers and businesses as it could take a long time for high rates to bring inflation down to the Fed's 2% target rate.

"Higher rates will cause pain to households and businesses, with the jobs market being closely watched for signs of redundancies and hiring freezes. The Fed is having to be cruel in order to restore price stability."

On home shores, figures released earlier by the Office for National Statistics showed that government debt hit a fresh record in August. Interest payments rose by £1.5bn on the year to £8.2bn, marking the highest August figure since records began in 1997.

In equity markets, defence firm BAE Systems shot to the top of the FTSE 100 after Russian President Putin announced the partial mobilisation of forces in Russia.

Victoria Scholar, head of investment at Interactive Investor, said: "Russian President Vladimir Putin is mobilising more troops for Ukraine and said the West wants to destroy Russia ahead of announced referendum plans on Ukraine joining Russia in the coming days. His speech sent the Russian rouble lower and oil prices sharply higher amid escalating tensions after a partially successful counterattack by Ukraine."

Housebuilders jumped amid reports that Friday's mini-Budget could include plans to cut stamp duty. Persimmon, Taylor Wimpey, Berkeley Group, Barratt, Redrow, Bellway, Vistry and Crest Nicholson all rallied.

Aveva rose after the software firm agreed to be bought by France's Schneider Electric in a £9.5bn deal.

On the downside, Flutter Entertainment was knocked lower by a downgrade to 'neutral' at Citi.

JD Sports was weaker after saying it had agreed a truce with former CEO Peter Cowgill, including a non-compete and consultancy deal that will see him receive £5.5m in addition to his salary package up to his departure in May and a 12 month notice period.

Games Workshop tumbled after it reported a year-on-year fall in pre-tax profit for the three months to August 28, in line with expectations.

Market Movers

FTSE 100 (UKX) 7,235.97 0.60% FTSE 250 (MCX) 18,606.09 0.42% techMARK (TASX) 4,229.03 0.74%

FTSE 100 - Risers

BAE Systems (BA.) 809.00p 4.82% Persimmon (PSN) 1,388.00p 3.81% Harbour Energy (HBR) 487.40p 3.50% Hargreaves Lansdown (HL.) 871.60p 3.32% Barratt Developments (BDEV) 417.30p 3.09% Schroders (SDR) 441.00p 3.05% Taylor Wimpey (TW.) 106.00p 2.86% Aveva Group (AVV) 3,119.00p 2.33% Vodafone Group (VOD) 108.78p 2.26% Shell (SHEL) 2,351.50p 2.13%

FTSE 100 - Fallers

Ocado Group (OCDO) 590.00p -2.70% International Consolidated Airlines Group SA (CDI) (IAG) 105.44p -2.68% Flutter Entertainment (CDI) (FLTR) 10,120.00p -1.84% Melrose Industries (MRO) 103.95p -1.56% Rolls-Royce Holdings (RR.) 74.74p -1.42% InterContinental Hotels Group (IHG) 4,582.00p -1.36% Rentokil Initial (RTO) 504.80p -1.33% JD Sports Fashion (JD.) 121.40p -1.22% Smith & Nephew (SN.) 1,025.50p -1.20% Kingfisher (KGF) 234.80p -1.18%

FTSE 250 - Risers

Volution Group (FAN) 315.00p 4.48% AJ Bell (AJB) 280.00p 3.93% Ferrexpo (FXPO) 135.70p 3.67% W.A.G Payment Solutions (WPS) 96.30p 3.66% Drax Group (DRX) 706.00p 3.29% Jupiter Fund Management (JUP) 106.10p 3.01% Chemring Group (CHG) 292.50p 2.99% TP Icap Group (TCAP) 168.80p 2.93% Sirius Real Estate Ltd. (SRE) 77.70p 2.91% Redrow (RDW) 491.80p 2.76%

FTSE 250 - Fallers

Games Workshop Group (GAW) 6,235.00p -11.69% Carnival (CCL) 776.60p -5.52% Aston Martin Lagonda Global Holdings (AML) 175.70p -4.33% Wizz Air Holdings (WIZZ) 1,957.50p -4.33% Bridgepoint Group (Reg S) (BPT) 235.80p -3.99% TUI AG Reg Shs (DI) (TUI) 133.70p -3.71% PureTech Health (PRTC) 226.00p -3.42% easyJet (EZJ) 340.80p -3.35% Urban Logistics Reit (SHED) 159.50p -3.33% Hammerson (HMSO) 20.60p -2.55%