The UK’s housebuilders staged a rally on Wednesday morning but failed to spark a FTSE 100 rebound from weakness in prior sessions.
Barratt Developments was up over 5% in midmorning trade following the release of a positive trading update that highlighted strong forward sales. The FTSE 100 was down 0.3% to 7,108.
“Housebuilders enjoyed a boost from Barratt Development’s latest update, putting that stock at the top of the FTSE 100 risers and lifting Persimmon, Taylor Wimpey and Berkeley Group in the process,” said Russ Mould, investment director at AJ Bel
Taylor Wimpey, Persimmon and Berkeley Group were up between 2.5%-4% as investors jumped on the coat tails of Barratt’s update.
“Forward sales have been good at Barratt and the company remains upbeat. There had been some nervousness towards the housebuilding sector that it would be negatively impacted by ongoing inflation in raw material prices and more recently from elevated energy prices,” said Mould.
Markets remain nervous
“Equity markets look to have stabilised after a patchy showing earlier this week, however it does feel as though investors remain slightly nervous,” said Russ Mould, investment director at AJ Bell.
“The FTSE 100’s biggest fallers in index point terms were a mixture of defensive and cyclical stocks, so investors are clearly not falling on one side of the fence. Pharmaceuticals, consumer goods and miners were among the stocks in negative territory.
Iron ore is down around 10% over two days making the miners some of the worst performers on the day. Rio Tinto and BHP Group were big drags of the FTSE 100 down 2.6% and 1.9% respectively in early trade on Wednesday.
The FTSE 100 was negative for the second day in a row meaning the FTSE 100 has now formed as series of lower highs at 7185, 7160 and now 7148 which could signal technical weakness in the index.