Shares of Persimmon
PSN,
led the U.K. housebuilding sector higher Tuesday after the London-listed company reported an improvement in autumn sales and a survey showed the first increase in home prices in seven months.
The York-based construction group said in a third-quarter trading update that the average number of homes sold at its sites per week rose to 0.59 over the past five weeks, compared with 0.45 in 2022. Persimmon expected to sell at least 9,500 units in 2023, up from previous guidance of at least 9,000 for the year.
The British housebuilding sector has struggled of late after the Bank of England’s battle to constrain inflation pushed interest rates to a 15-year high of 5.25%, forcing up mortgage costs and deterring home buyers.
And Dean Finch, Persimmon chief executive, said: “While the near term is likely to remain challenging and we remain disciplined on costs, we continue to position the business for growth when the market recovers, as demonstrated by our further progress on planning in the period.”
However, investors were cheered by the signs of a pick up in Persimmon’s sales, sending the shares — which are still down 7% for the year — up nearly 5% in London trading.
Also helping lift sentiment was news from mortgage lender Halifax that U.K. house prices snapped a six-month losing streak to rise 1.1% between September and October as reluctant sellers held back supply.
AJ Bell investment director Russ Mould said the house price data meant Persimmon had picked a good day to release its update: “This helped paint the company’s statement in a positive light as it announced an increase in its build target for the year thanks to improved sales since the start of the October.”
“The sector is clearly not out of the woods yet but there are some shards of light creeping through a gloomy outlook,” Mould added.
Other housebuilders joined the rally, with shares of Barratt Developments
BDEV,
adding nearly 3% and Taylor Wimpey
TW,
up 2.5%. However, weakness in energy groups as the price of oil dipped left the FTSE 100
UK:UKX
in London barely changed on the day. Frankfurt’s DAX
DX:DAX
lost 0.4% and the CAC 40
FR:PX1
in Paris shed 0.7% as U.S. futures pointed to a soft opening on Wall Street.
Helping London’s bourse outperform was a 6% pop in shares of Associated British Foods
ABF,
after the group launched another £500 million ($617 million) share buyback, proposed a special dividend and said it expects margins at its retailer arm Primark to recover strongly.
“One of ABF’s key strengths is its diversified portfolio of businesses,” said Aarin Chiekrie, equity analyst at Hargreaves Lansdown. “The key Primark business has benefitted from a changing retail landscape over the past few years, especially with the demise of Debenhams and Topshop.”
Over in Zurich, shares of UBS
UBSG,
rose 3% after the Swiss banking giant delivered a $785 million loss in the third quarter — after recording $2 billion worth of integration expenses from acquiring Credit Suisse — but also saw $33 billion of new deposits.
Shares of Watches of Switzerland
WOSG,
which are listed in London, jumped 10% after delivering a trading update that calmed investors nerves.
“Watches of Switzerland has now updated the market with the news that despite headwinds, people are still buying posh watches,” said AJ Bell’s Mould.
“A new growth plan has also been unveiled, with used watches becoming more important, an intention to speed up opening new showrooms and making acquisitions, and to become a key player in luxury branded jewellery. It hopes this strategic move will more than double sales and profits over the next five years,” Mould added.
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