A strong housebuilding sector helped reverse early FTSE 100 losses on Thursday as investors looked forward to the resumption of construction by the UK’s leading house builders.
Taylor Wimpey announced in a trading statement they would be reopening their sites 4th May, sparking a wave of optimism in the housebuilding shares.
Taylor Wimpey had rallied by over 11% by early afternoon, with Barratt Developments and Persimmon not too far behind, both recording intraday gains just in excess of 10%.
The prospect of a resumption in construction brings forward the date house builders’ cash can once again start flowing. Investors will be anticipating further updates on dividends given the strong cash position of the house builders after they scrapped payouts in response to COVID-19.
“In the period while our sites have been closed, trading has inevitably been impacted. However, we are still seeing continued demand for our homes and our sales teams have been selling homes remotely, and digitally, week to week. Cancellations represent less than 1% of our current order book. We have a strong balance sheet and have managed the business conservatively and are as well positioned as we can be in the very difficult circumstances,” said Pete Redfern, Chief Executive of Taylor Wimpey.
Shares in Rightmove rose over 3% as the prospect of increased house building activity would ultimately lead to houses being listed on their site.
The FTSE 100 recovered early losses to trade mildly positive on Thursday after the US released weekly initial jobless claims figures that showed the world’s largest economy had recorded 26 million people unemployed since the beginning of the lockdown.
The US recorded 4.4 million initial jobless claims this week, down from 5.2 million last week.
The United States are currently locked in a debate over the opening up of the economy with some states outlining plans to open some restaurants, shops and even bowling alleys to help support jobs.
Critics say this may increase activity in the short term but could cause a potential second wave of coronavirus.