FTSE 100: 7682.27 ▲ 125.83 (1.67%)
Housebuilders struggled, making up four of the 10 biggest FTSE 100 fallers, after what one analyst called ‘miserable’ half-year results from Crest Nicholson (CRST) and subdued house price data.
The UK’s main stock market index shed 13 points, or 0.1%, to 7,723 and the FTSE All-Share benchmark dipped seven points, or 0.1%, to 4,258.
Crest, a FTSE 250-listed housebuilder, dropped 6% to 420p with Accendo Markets analyst Artjom Hatsaturjants blaming increased costs for ‘devouring pre-tax profits’ and knocking margins.
‘With the company unable to significantly upgrade its pricing structure as the housing sector was being hit by Brexit uncertainties, there was precious little Crest Nicholson was able to achieve to offset rising cost pressure,’ he said.
Markets were left ‘unimpressed’ with the lack of cost control at Crest and a more general downturn in the UK housing market, with the latest Halifax house price data pointing to ongoing weak pricing.
Hatsaturjants added: ‘It is not clear if the outlook for the housebuilder will improve substantially’, and this spilt over into other housebuilders. Barratt Developments (BDEV) was the biggest faller, down 2.2% at 566p, followed by Berkeley Group (BKG), which dropped 2.1% to £42.12. Persimmon (PSN) fell 1.5% to £28.15 and Taylor Wimpey (TW) 1.4% off at 186p.
The pound picked up at $1.3407 against the dollar after the Office of National Statistics said the number of unemployed in the UK fell by 38,000 to 1.42 million in the three months to April, a second month at a record employment rate of 75.6%.
Job creation still isn’t translating into higher wages however, with regular pay growth now actually weaker. Basic pay growth slowed to an annual 2.8% in the last quarter – down from 2.9% a month ago. Total pay growth, including bonuses, also slowed from 2.6% to 2.5%.
XTB analyst David Cheetham said employment data was ‘pretty solid overall’ despite wage growth missing consensus forecast.
‘The squeeze on real wages seems to be alleviating somewhat, as inflation has drifted back towards target after peaking near the back-end of last year and we’ll get the latest consumer price index release our tomorrow, which is expected to remain at 2.4%,’ he said.