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LONDON MARKET OPEN: Housebuilders Lift FTSE After Taylor Wimpey Update

LONDON (Alliance News) - Stocks in London were higher on Wednesday as risk-on sentiment continued ...

Alliance News 9 January, 2019 | 8:41AM
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LONDON (Alliance News) - Stocks in London were higher on Wednesday as risk-on sentiment continued overnight after the US and China decided to carry trade talks into a third day, resulting in bargain hunting by investors.

"Slowly but surely, the numerous headwinds that contributed to the market sell-off in the final quarter of 2018 are becoming less gale force and more strong breeze. There is a clear risk that conditions could deteriorate quickly but at the moment, the storm is passing and investors are seeing opportunities in the wreckage," commented Oanda senior market analyst Craig Erlam.

Housebuilders were helping to boost the large-cap FTSE 100 after an upbeat update from Taylor Wimpey, while Softcat, Ted Baker and Greggs were vying for the top spot in the mid-cap FTSE 250 index.

The FTSE 100 was up 34.36 points, or 0.5%, at 6,895.96, while the FTSE 250 was 122.76 points higher, or 0.7%, at 18,298.55. The AIM All-Share was up 0.5% at 896.59.

The Cboe UK 100 was up 0.3% at 11,706.06, while the Cboe UK 250 was 0.6% higher at 16,418.81 and the Cboe UK Small Companies flat at 11,101.50.

In mainland Europe, the CAC 40 in Paris was up 0.8%, while the DAX 30 in Frankfurt 0.7% higher

In Asia on Wednesday, the Japanese Nikkei 225 index closed up 1.1%. In China, the Shanghai Composite ended 0.7% higher, while the Hang Seng index in Hong Kong closed up 2.3%.

Housebuilders were helping to drive the FTSE 100 higher in early trade after a robust trading statement from Taylor Wimpey.

Taylor Wimpey, shares up 4.1% in early dealings, said it expects to report 2018 results in line with forecasts, as well as reiterating its 2019 guidance.

Total completions were up 2.8% year-on-year in 2018 to 14,947 from 14,541, including joint ventures. Moreover, average selling prices on private completions were up 1.7% to GBP301,000 from GBP296,000, while the overall average selling price stayed flat at GBP264,000.

The company said that while it was too soon for a definitive view of trading in 2019, it has continued to see "solid forward sales indicators" and is starting the year with a "very strong order book".

Peer Persimmon was the second best performer in the FTSE 100, up 3.2%. Barratt Developments was up 3.0% and Berkeley Group up 1.3%.

J Sainsbury flitted in and out of the red on Wednesday, shares down 0.1% just after the open after the supermarket reported a fall in sales over the Christmas period.

"The headline sales figures are not pretty. Overall sales declined in the quarter, as compared to a growth figure in the corresponding period last year and, equally, light of analyst expectations. In particular, the General Merchandise unit came under particular pressure," highlighted Richard Hunter, head of markets at Interactive Investor.

For the 15 weeks to January 5, the grocer's total retail sales excluding fuel were down 0.4%, with like-for-like sales down 1.1%. Including fuel, like-for-like sales in the quarter were marginally up by 0.3%.

A year ago, in the quarter comprising the key Christmas period, Sainsbury's total retail sales ex fuel were up 1.2%, with like-for-like up 0.9%.

Grocery sales grew 0.4% in the recent period, boosted by a 6.0% surge in online and a rise by 3.0% in convenience products sales. However, General Merchandise sales, which includes Argos, declined by 2.3% year-on-year as the supermarket blamed a tough and highly promotional retail market.

Bunched at the top of the FTSE 250 were Softcat, Ted Baker and Greggs.

The top spot early Wednesday went to IT infrastructure firm Softcat, shares up 13% after the firm said it is ahead of expectations as it nears the halfway point in its financial year.

Softcat, in a short statement, said trading since its last update at the end of November has continued to be strong.

Ted Baker shares gained 7.4% after the fashion retailer posted double-digit sales growth for the Christmas period.

For the 5 weeks to January 5, the firm reported retail sales up 12% against the same period a year ago. At constant currency, sales were up 11%. E-commerce sales were up 19%, representing just over a quarter of the company's total sales in the period, while average retail square footage was up 5.0% to 429,576 square feet.

Baker Greggs rose 6.9% after lifting its annual guidance following a "strong finish" to 2018.

For the year ended December 29, the sausage roll maker said total sales were up 7.2% against the prior year, with company-managed shop like-for-like sales up 2.9%.

As a result of its strong performance, Greggs said it expects its annual underlying pretax profit to be at least GBP88 million, "slightly ahead of our previous guidance". In November, the baker guided to profit of at least GBP86.0 million.

Chief Executive Officer Roger Whiteside said the company managed to deliver a strong end to the year despite the "well-publicised" challenges in the consumer sector.

In the economic calendar on Wednesday is eurozone unemployment is at 1000 GMT. The Bank of Canada releases its latest interest rate decision at 1500 GMT, while Bank of England Governor Mark Carney speaks at 1530 GMT.

At 1900 GMT, the US Federal Reserve releases the minutes of the latest Federal Open Market Committee minutes.

In the UK, members of Parliament are set to resume their debate on UK Prime Minister Theresa May's Brexit deal as rebel Tories made clear they were ready to wage a parliamentary guerrilla campaign to prevent a no-deal break if she is defeated.

The Commons will begin five days of debate on Wednesday culminating in the "meaningful vote" next week which could determine the fate of her government.

It comes after the prime minister dramatically pulled a vote before Christmas, admitting she was heading for defeat in the face of opposition from both pro-Leave and pro-Remain Tories.

Ahead of the debate, MPs opposed to a no-deal break were flexing their muscles on Tuesday evening to inflict another bruising defeat on the government.

Twenty Conservative MPs joined opposition parties in backing a cross-party amendment to the Finance Bill intended to limit the government's powers to make tax changes in the event of no-deal.

By Lucy Heming; lucyheming@alliancenews.com

Copyright 2019 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Persimmon PLC 2,527.00 GBX 0.08 -
Taylor Wimpey PLC 177.80 GBX 0.25 -
Sainsbury (J) PLC 223.50 GBX 1.59
Barratt Developments PLC 670.20 GBX 0.24 -
Ted Baker PLC 399.60 GBX 1.94 -
Greggs PLC 2,116.00 GBX 1.15 -
Softcat PLC 1,105.00 GBX 0.36 -
Berkeley Group Holdings (The) PLC 4,598.00 GBX 0.92 -

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