MARKET REPORT: Housebuilders offered much needed respite


Housebuilders were offered some much needed respite as analysts suggested a ‘relief rally lies ahead’ for the sector following a ‘brutal’ sell-off. 

Deutsche Bank warned that the housing market was in a ‘state of flux’ as mortgage rates triple and the availability of loans falls. 

It expects a fall in house prices, reduced sales and the rising cost of building materials to persist. 

Respite: With housebuilding shares already down around 50 per cent this year Deutsche Bank issued a number of ‘buy’ ratings

As such, the bank slashed the target price for a host of stocks within the sector. 

But with housebuilding shares already down around 50 per cent this year it also issued a number of ‘buy’ ratings. 

‘After a brutal sell off, we believe much is now in the price and a relief rally lies ahead,’ the Deutsche analysts said. 

This helped to lift Barratt Developments up 2.6 per cent, or 9p, to 353.2p, Bellway gained 1.3 per cent, or 23.5p, to 1798.5p and Taylor Wimpey added 1.2 per cent, or 1.04p, to 89.78p. 

Redrow climbed 0.9 per cent, or 3.6p, to 404.4p, Crest Nicholson rose 0.5 per cent, or 1p, to 191.4p and Persimmon gained 0.5 per cent, or 6p, to 1239p. Despite some glimmer of hope for the sector, it was not enough to lift shares in Vistry Group, which sank 0.2 per cent, or 1p, to 559.5p while Berkeley Group fell 0.5 per cent, or 16p, to 3357p. 

On another dramatic day in politics, the FTSE100 rose 0.27 per cent, or 18.92 points, to 6943.91 and the FTSE250 added 0.82 per cent, or 141.38 points, to 17,388.93. 

The London stock market rallied after Liz Truss resigned and became the country’s shortest-serving Prime Minister. 

Sterling was also on the rise against the dollar. 

Having plunged to a record low around $1.03 during Truss’s premiership, the pound rose as high as $1.1335. 

But analysts warned of further volatility ahead with the new Prime Minister set to be announced within a week. 

‘With the third Prime Minister in just a year expected to be announced by the end of the month, the UK will still be viewed in financial markets as politically unstable,’ said Hargreaves Lansdown analyst Susannah Streeter. 

‘What investors crave is more steadiness and reliability but until they know who will take charge and lead an economic recovery, that stability still remains highly elusive which means that neither sterling nor stocks are likely to make any big strides of progress.’ 

Oil prices edged higher on hopes that China, the world’s largest importer of crude, could relax its zero-Covid policy. 

BP added 1.3 per cent, or 5.7p, to 460.95p and Shell rose 2.1 per cent, or 47p, to 2320p as they were given an extra boost as Citi raised their target prices. 

Bargain retailer B&M rose 0.1 per cent, or 0.4 per cent, to 308.8p despite the fact that HSBC cut the stock’s target price to 480p from 600p. 

Segro shares rose 2.8 per cent, or 20p, to 735.4p as the property investment company revealed tenant demand remained strong. 

Dechra Pharmaceuticals slid 0.7 per cent, or 18p, to 2590p despite insisting its results for the year will meet expectations.

The animal medicine maker also praised the integration of two US acquisitions it completed earlier this year. 

At Bunzl, shares fell 2.1 per cent, or 58p, to 2720p even though the group expects ‘very good’ revenue growth this year. 

Meanwhile, Relx, the telecoms, media and tech group, fell 0.5 per cent, or 11p, to 2212p even after its revenue in the first nine months of the year rose 9 per cent. 

After failing to impress the City with its full-year results on Wednesday, Asos shares sank 2.4 per cent, or 13p, to 537p. Analysts at JPMorgan, RBC, Deutsche Bank and Societe Generale all cut the fast fashion brand’s target price.

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