Strong results from FTSE 100 constituents helped drive further gains for the index on Thursday as investors digested updates from Persimmon, Tesco and Whitbread.
UK equities were also buoyed by confirmation of a falling US inflation rate. Headline US CPI for December came in bang in line with expectations at 6.5%. A reduction in the US inflation rate had largely been priced in and the meeting of estimates caused little initial reaction in stocks.
“No nasty surprises today. Inflation is making all the right noises for stock bulls,” said James Bentley, Director of Financial Markets Online.
The FTSE 100 was trading at 7,773, up 0.6%, at the time of writing and continued to break to the highest levels for four years.
The FTSE’s gains were made earlier in the session following upbeat corporate update in sectors with strong links to the UK economy.
Persimmon
Housebuilder Persimmon was storming ahead in afternoon trade, gaining 6.3%, after the company provided an update on trading for the end of 2022, accompanied by a sharp decline in forward sales. The group’s forward sales are down 36% on the same period last year.
The jump in Persimmon shares today suggests the destruction of their share price last year more than priced in a downturn in housing markets, and there is room for a rebound. These sentiments were also evident in Barratt Developments shares which gained 5.5%.
“Persimmon have followed in the footsteps of rival housebuilder Barratt, warning of a material slowdown in demand over the fourth quarter as consumers battle higher mortgage costs. This fed through to lower sales rates, higher cancellations, and a hefty drop in forward orders,” said Matt Britzman, Equity Analyst at Hargreaves Lansdown
“Though, it must be said, a lot of that was largely expected.”
Tesco
Tesco’s held their own during the Christmas trading period by maintaining market share and recording a 7.9% increase in group retail sales. The company will lock in prices on 1,000 products through to Easter to fight off pressures from the discounters, likely at the cost of margins. Tesco shares rose tentatively 0.9% to 254p.