A weaker pound helped while a rise in housebuilders underpinned gains on Britain’s top share index on Wednesday following a well-received update from mid cap Bellway.
Britain’s blue chip FTSE 100 index climbed 0.4 percent to 7,528.33 points by 0912 GMT, while the mid caps gained 0.8 percent.
In the immediate aftermath of the UK’s general election, which resulted in a hung parliament, house builders were hit by a selloff. However, a trading update from Bellway eased investors’ concerns as the firm said that demand did not slow in the run-up to the election.
“Housebuilders generally … have been marked down because of fears over the UK economy and the UK property market. But actually, the numbers that are coming out of these companies are still pretty reassuring,” said Laith Khalaf, senior analyst at Hargreaves Lansdown.
“There are a number of tailwinds that (the housebuilders) also have, one of which is extremely low interest rates, another of which is the chronic lack of housing in this country, and a third thing is the government help to buy scheme,” Khalaf added.
Bellway’s shares rose 4.5 percent, while blue chip peers Barratt Developments, Persimmon and Taylor Wimpey were up between 1.9 percent to 2.3 percent.
British large caps extended gains after sterling weakened following UK data which showed that earnings after inflation contracted at the fastest pace since 2014, highlighting the growing post-Brexit strain on households.
Budget airline easyJet so its shares advancing 1.2 percent following a supportive note from Davy Research which upgraded the stock to “neutral” from “underperform”, citing its higher operating leverage in the current environment.
“We believe that the European low-cost carriers will continue to see improving pricing trends as we approach peak summer, albeit a consensus among the airlines has yet to form on whether pricing will be positive or negative,” analysts at Davy said in a note.