There was a mild bout of optimism in UK equities on Thursday despite ongoing tension in the Middle East as the housebuilders and Tesco outperformed and helped the FTSE 100 higher.
Tensions in the Middle East remained a major concern, although they took a back seat to news closer to home on Thursday.
Positivity emanating from an upbeat Zoopla report on the UK property market and strong corporate results from Tesco offset weakness in miners as the index gained 0.3%.
After announcing rising revenues and profits amid action on lowering costs, Tesco was the top riser as investors cheered a 15% jump in operating profit.
“For a company in such a competitive market and with an already dominant market position to be taking share is quite the feat and that’s something Tesco has achieved in the first half of its financial year,” said AJ Bell investment director Russ Mould.
“The supermarket also demonstrated its confidence in its future prospects heading into the crucial Christmas trading period with a healthy increase in the dividend. This is underpinned by strong cash generation, which is also enabling Tesco to invest in the business and compete effectively on price.
“Its focus on value is clearly getting customers through the doors and the tills ringing and, alongside measures like its Clubcard discounted prices, should help to engender loyalty. A fairly astonishing 23 million households now have a Clubcard membership.”
The latest Zoopla House Price Index showing transaction activity increase 25% has been taken well by investor who saw a chance to jump into the housebuilding sector.
Persimmon shares added 3% and Barratts rose 2% after Zoopla’s revealed an improving environment for housebuilders and a 1% increase in average prices over the past year.
“The number of sales agreed is now 25% higher than a year ago as households that have held off making moving decisions over the last 2 years return to the market,” Zoopla wrote in their report.
“Sales are up by over 10% across the UK, and more than 30% across the East Midlands and North East.”