Wednesday, October 5 2022

Persimmon shares fall despite robust trading

Persimmon’s strong half-year results failed to lift shares of the homebuilder today, with the FTSE 100-listed share falling 8.5p to 1,840.5p.

The company was above 2500p at the start of the year, but expectations of a slowing housing market and rising costs dampened investor sentiment across the sector.

Today’s figures were skewed by strong prior year comparators, meaning first half revenue down £1.69bn and profit down £480.1m sterling at £439.7 million.

But the housing gross margin edged up to 31% despite inflationary pressures and demand remains strong, with the group’s average private sales rate around 1% ahead of the year. It announced a strong forward order book of £2.32 billion.

Richard Hunter, Head of Markets at Interactive Investor, said: “The homebuilding industry is deeply out of favor with investors at the moment, even as its constituents continue to hay while the sun shines, and Persimmon does not is no exception.”


Inflation peak still to come, rate hike in September

The peak of UK inflation is yet to come as further increases in household energy bills mean the annual rate is set to top 12% from October.

But ING economist James Smith hopes underlying inflation may have peaked – or is about to peak – now that property price pressures are easing.

He expects the headline rate to fall back below 10% in next month’s release after a nearly 7% drop in average petrol/diesel prices, which came too late to affect the figure for July.

Smith sees another half-point interest rate hike in September and possibly another hike in November, although that depends heavily on the new prime minister’s fiscal response in September.

He added: “It is wage pressures that will strongly influence the Bank of England’s decision-making over the next few months.

“Wages (at least in nominal terms) have decent momentum right now, but there is a lot of uncertainty about how much lower labor demand will fall and whether labor demand will improve. labor supply.”


Retail relief for Wall Street, FTSE 100 seen higher

Retailers Walmart and Home Depot boosted Wall Street as their quarterly results helped the S&P 500 index move into positive territory.

Shares of Home Depot jumped 4% as they beat earnings expectations and remained stuck on previous outlook forecasts, while Walmart rose 5% as its numbers came in better than expected after the earnings warning for last month.

The focus on consumer spending in the United States continues today, with earnings expected from Target and Lowe’s alongside official retail sales data for July.

Ahead of the releases, US futures are pointing slightly higher and the FTSE 100 index is expected to open 24 points higher at 7,560, according to CMC Markets.

London’s first flight added 0.4% yesterday, helped by big gains in the mining sector after BHP announced its highest ever annual profit and pledged to distribute the equivalent of 77% of its underlying earnings in the form of dividends.

Post-Europe close, release of US Federal Reserve meeting minutes will be closely watched for where policymakers see the “neutral” level of interest rates following their decision to raise interest rates. 0.75% between 2.25% and 2.5%.

The Reserve Bank of New Zealand raised rates this morning another half a percentage point to a seven-year high of 3%.


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