Shares tick higher, buoyed by more Wall Street gains

Shares are on track for a strong weekly performance after yet more gains in the US and Asia overnight.

Markets

Other markets

Market Data Notice

More market charts

by Deborah Hyde on Jul 09, 2010 at 09:07

Shares were higher again in morning deals after a third day of solid gains on Wall Street as worries about economic growth and government debt were laid aside and focus switched to company earnings.

The FTSE 100 was 5 points, or 0.09%, higher at 5110. The mid-cap FTSE 250 was 17 points, or 0.18%, higher at 9736p.

After a couple of miserable weeks, the index has advanced nearly 6% since last Friday's close, pulling back most of the losses in the previous two weeks but still well below April highs.

The DJIA finished 121 points, or 1.2%, higher at 10,139 and the S&P 500 rose 10 points to 1,070 after better than expected weekly jobless numbers and some positive updates from a number of retailers. The three day run of gains on the broader US index is the longest run since mid-April.

All eyes are now on the US corporate earnings season which kicks off on Monday. With the pre-season profit warnings largely out of the way, investors are hoping for some good news.

The good mood continued in Asia. Japan's Nikkei closed 50 points higher at 9585 making this its best weekly performance in nearly four months.

Traders point out volumes are low though, suggesting not everyone is feeling more optimistic yet.

On the corporate front, miners were leading the pack higher helped by some bullish broker comment. Citigroup has upgraded Antofagasta, up 22.5p at £8.74, to 'buy' from 'hold'.

On the second line chemicals group Bodycote and staffing company Michael Page were higher after well received trading statements.

House builders though were under pressure accounting for six of the top ten fallers after yet another downbeat broker note on the prospects for the sector. HSBC analysts initiated coverage on the sector and issued 'underweight' recommendations on Barratt, Persimmon, Redrow, Taylor Wimpey and Bellway. The quintet were down between 1.3 and 2.3%.

They expect volumes to falter during the correction and say the sector's long-term recovery will be restrained by limited affordability and restricted mortgage availability.

That overshadowed a solid update from Bovis Homes which said it would begin to resume dividend payments. Its shares fell 3.7p to 345.1p

Email a friend

Email me when someone comments on this article Print

1 comment so far. Why not have your say?

Skibo

Jul 09, 2010 at 10:27

House builders represent an interesting opportunity:

They have large land banks,excellent build quality process'(especially Persimmon) and mortgages are at an all time low cost.

People still need good quality housing at affordable prices so I would question HSBC analysis.

In the boom the builders forgot the maxim:

1/3,1/3,1/3 land cost,build cost profit and as they factored in 100% mortgages on high multiples of salary to cream profits for got the long term link between salary and house prices.Now they have the land they can drive the market by reducing profit marginand benefit from the low cost of materials and labour.There may be a need for bigger deposits from buyers which builders could factor in -they can either share the pain or sit with a land bank.

Houses sell when they are priced where the salary to mortgage multiple is lower than it was-instead of the doom mongers banging on about how bad house deflation is they should celebrate the fact that houses are- in relative terms -getting cheaper-So now is the time to remodel the price structure and generate sales through lower prices.

Builders face a choice : sit on the land or sell houses at lower margins-lower margins generate sales -lets see them do a Ryan Air and get the economy moving-the days of artificially high new build prices are over.

report this

Please sign in here or register here to comment. It is free to register and only takes a minute or two.