FTSE 100 rallies as chancellor plans help for home buyers

Britain’s leading share index has risen sharply on the prospect of more help for the housing sector in Rishi Sunak’s Budget later this week, as well as a boost for government stimulus in the US.

The FTSE 100 was up by about 2% – or more than 100 points – in morning trading, with builders such as Persimmon, Taylor Wimpey and Barratt Developments leading the way.

It was part of a global rally for stocks following the approval by the US House of Representatives on Friday of President Joe Biden‘s $1.9trn coronavirus pandemic relief bill.

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In London, the rally for house builders came after it was revealed over the weekend that a scheme to guarantee 95% of mortgage loans for first-time buyers will be announced in the Budget.

They are also in line to benefit if, as reported, the chancellor extends a stamp duty holiday announced last summer.

Persimmon and Taylor Wimpey were each up by around 7%, with mining and oil stocks also climbing amid the global upturn in sentiment.

Hopes for the reopening of the UK economy – as the number of people receiving vaccines in the UK passed 20 million – also buoyed British Airways owner International Airlines Group, up 5%.

The optimism globally reversed sell-offs seen at the end of last week as markets worried about the potential for an inflation spike when economies emerge from lockdowns – and what that might mean for interest rates.

In Europe, France‘s Cac 40 and Germany‘s Dax were each more than 1% higher, while in Japan, the Nikkei rose 2% – its biggest gain in seven months – and indices in Hong Kong and Shanghai were also ahead.

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