Investors could be forgiven for thinking lower interest rates and record-high house prices would be a boon for builders.
But shares across the sector fell yesterday amid ongoing concerns that Labour’s pledge to build 1.5million homes during this parliament will turn out to be yet another broken promise.
Industry figures have long argued it is not achievable because of planning delays and a shortage of workers from brickies and scaffolders to plumbers and electricians.
And while the Bank of England finally got on with another rate cut this week – from 4.75 per cent to 4.5 per cent – progress is painfully slow and the prospect of a new era of stagflation is hardly boosting confidence.
So even as Halifax announced house prices hit a record high of £299,138 last month, analysts at UBS cut their target price on Barratt Redrow shares to 575p from 630p.
Shares in the company – Britain’s biggest listed housebuilder – fell 4 per cent, or 18.02p, to 434.8p while fellow blue-chips Taylor Wimpey (down 2.8 per cent, or 3.4p, to 116.5p) and Persimmon (off 2.1 per cent, or 27p to 1232p) were also on the slide.
In the second tier, Vistry shares fell 3.8 per cent, or 23p, to 579.5p on another disappointing day as it struggles to recover from last year’s profit warnings.
While all eyes were on the Bank of England on Thursday, it was potentially crucial jobs data from the United States in focus yesterday.
So-called non-farm payrolls – a key measure of employment in the world’s biggest economy – increased by 143,000 last month.
Although the figure was weaker than anticipated, it did not dramatically alter the outlook for interest rates in the US.
As such, the FTSE 100 lost 0.3 per cent, or 26.75 points, to 8700.53 and the FTSE 250 slid 0.8 per cent, or 165.29 points, to 20807.84.
With Donald Trump and tariffs also on minds, Tom Shippey, finance director of wealth manager Ashmore, said emerging markets can withstand ‘knee-jerk’ trading in the early days of his presidency.
London-based Ashmore reported pre-tax profit of £49.9million for the six months to the end of December, against £74.5m in the same period a year earlier. Shares dipped 2 per cent, or 3.4p, to 168.2p.
Two London-listed investment trusts have agreed to merge their portfolios as the sector continues to be gripped by interest from Wall Street raider Boaz Weinstein.
The Henderson International Income Trust (HIIT) will combine its portfolio with FTSE 250-listed JP Morgan Global Growth & Income (JGGI) to create a £3.4billion player. HIIT shares surged 8.3 per cent, or 14p, to 182p but JGGI inched down 1 per cent, or 6p, to 603p.
The deal comes as the industry hopes to complete its drubbing of Weinstein’s Saba Capital, which has sought shareholder support to overhaul what he has described as the ‘miserable seven’ trusts on his hit-list.
So far, however, the six trusts which have held votes have resoundingly defeated him, with the final vote at Edinburgh Worldwide (down 2 per cent, or 3.8p, to 188.6p) due on Friday next week.
Six down with one to play is not where Weinstein hoped to be at this stage of his campaign.
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