Housebuilding stocks shot up on Wednesday lunchtime after Gordon Brown’s shock announcement the interest rate would be cut by 50 basis points. A decision had been due on Thursday.
Not that the shares were faring badly anyway – the double-digit rises after the prime minister’s statement followed single-digit rises in the morning. The early cheer was owing to the news that the government would inject £50bn of capital into the banks.
Investors were heartened by the heavy hint from chancellor Alastair Darling that banks should use the cash, plus an extra £200bn under a special liquidity scheme, to start dishing out more mortgages.
Taylor Wimpey bounced the furthest but had the most ground to make up after its earlier pummelling . The City didn’t react well when it admitted it wouldn’t complete debt refinancing talks until 2009. “This just keeps dragging on,” said one irritated source close to the them.
By Wednesday lunchtime, our imaginary £100 stake in the housebuilders, bought at the end of February, was worth: Taylor Wimpey (£19), Barratt (£25), Persimmon (£52), Redrow (£62), Bovis (£73), Bellway (£69) and Berkeley (£75).