Market update - 8 December

The FTSE 100 was up 189.6 points at 4237.99 and the FTSE 250 advanced to 5921.68, up 236.15 points, at 11.46am today

The market rallied after President-elect Barack Obama unveiled plans for the biggest infrastructure investment programme in the US since Dwight Eisenhower championed the creation of the interstate highway system more than half a century ago. Investors bought into equities amid hopes that the initiative might stave off the worst of the recession, stimulate growth and put the American economy on a path to recovery.

Moving up

News of the stimulus package sparked gains across sectors, including insurance, where Prudential climbed to 330.25p, up 13.49 per cent or 39.25p, and construction, where Wolseley gained 11.72 per cent or 35.25p to 336p.

Miners were firm as investors looked forward to increased demand for commodities from the US. Vedanta Resources was the strongest, gaining 11.16 per cent or 58.5p at 582.5p.

On the second tier, the shift in sentiment also boosted the housing sector with Barratt Developments gaining 7.88 per cent or 4p to 54.75p and Persimmon advancing to 222.5p, up 11.81 per cent or 23.5p. The sector rallied despite a bearish note from Arbuthnot Securities, whose analysts said that a recovery was still distant.

“A key difference between the current housing market downturn and that of previous cycles is the speed of the deterioration in conditions. House prices declined 9.6 per cent in the 10 months to July 2008, against a mere 1.8 per cent decline seen in the first 10 months of the market downturn in 1988/89. In the 12 months to September 2008, both the Halifax and Nationwide showed house price declines of 12 per cent. Mortgage approvals are down around 70 per cent over the 18 months from their 2006 peak. Another key differentiator is the fact that all regions, almost simultaneously, have been affected. Previously, market conditions have tended to ripple out to the regions from the London/South East epicentre,” the broker said, adding:

“Across the board, irrespective of financing positions, the housebuilders have been forced to adjust away from a focus on margin and volume growth to a cash generation mode, where prices and hence margins are sacrificed to generate cash. The more highly geared and therefore cash hungry the housebuilder, the greater the discount required,”

Moving down

Carphone Warehouse traded lower, losing 3.76 per cent or 3.5p to 89.6p, after co-founder David Ross resigned from the board. The departure was prompted by the revelation that Mr Ross had failed to declare that he had used a large chunk of his shareholding in the group as security for personal loans. It also emerged this morning that Mr Ross had used part of his stakes in National Express, where he is chairman, and Big Yellow, where he is a director, to secure personal loans.

Cazenove, which weighed in on the news, said that while Mr Ross’s resignation did not signify a material change for Carphone Warehouse owing to his limited operational involvement, it is likely to create fears that he might be forced to sell his stake, thereby creating the risk of a substantial stock overhang.

Start your day with The Independent, sign up for daily news emails
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Day In a Page

Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most
Katy Perry prevented from buying California convent for $14.5m after nuns sell to local businesswoman instead

No grace of God for Katy Perry as sisters act to stop her buying convent

Archdiocese sues nuns who turned down star’s $14.5m because they don’t approve of her
Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

Residents just want water and power in a city chosen to be a ‘smart’ metropolis

The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
Michael Fassbender in 'Macbeth': The Scottish play on film, from Welles to Cheggers

Something wicked?

Films of Macbeth don’t always end well - just ask Orson Welles... and Keith Chegwin
10 best sun creams for body

10 best sun creams for body

Make sure you’re protected from head to toe in the heatwave
Wimbledon 2015: Nick Bollettieri - Milos Raonic has ability to get to the top but he must learn to handle pressure in big games

Nick Bollettieri's Wimbledon files

Milos Raonic has ability to get to the top but he must learn to handle pressure in big games
Women's World Cup 2015: How England's semi-final success could do wonders for both sexes

There is more than a shiny trophy to be won by England’s World Cup women

The success of the decidedly non-famous females wearing the Three Lions could do wonders for a ‘man’s game’ riddled with cynicism and greed
How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map