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Market Wrap - Midday

Strong trading at Persimmon sparks housebuilder rally

05 July 2017 12:04

Housebuilders rallied following an 'excellent' trading performance at Persimmon (PSN).

The UK housebuilder said it had seen strong momentum moving into the second half of the year and highlighted an 18% jump in total forward sales to £1.6bn.

This had a strong read across for Persimmon's peers and lifted shares in Taylor Wimpey (TW.) by 1.7% to 178.8p and Barratt Developments (BDEV) by 2% to 577.7p.

Miners were also in demand as Glencore (GLEN) advanced 2.4% to 310.9p and BHP Billiton (BLT) gained 1.3% to £12.44. Despite the gains in these sectors, the FTSE was flat at 7,359.

Pharma giant GlaxoSmithKline (GSK) needed a shot in an arm after broker Citi cut its recommendation from 'buy' to 'hold'. The stock dipped 1% to £16.10.

Following yesterday's near-30% share price rally on potential bids from two companies, Worldpay (WPG) continued to climb 4% to 424.6p. This was due to reports that it was close to agreeing a preliminary deal with Vantiv.

On the economic front, the UK service sector grew at a slower rate. Markit's Purchasing Managers' Index nudged lower from 53.8 in May to 53.4 in June as subdued business confidence affected sentiment. The figure was still over 50, a level which represents expansion.


Asian equities bounced back from yesterday's setback after North Korea fired a missile in the direction of Japan, according to media reports. The Nikkei 225 in Japan closed 0.2% up at 20,081 this morning.

Stock markets in the US were closed yesterday for Independence Day.


Among the mid cap stocks on the UK stock market, specialist building products distributor SIG (SHI) excited investors. The company's improving like-for-like sales helped overshadow a poorer first half performance due to a tough comparative period. The shares rose 4.7% to 152.8p.

Shoppers took advantage of Ocado's (OCDO) loyalty scheme and were put off by fewer multi-buy promotions. These factors hit Ocado's average basket size by 1.4% to £108.45, highlighting a worrying trend that has continued through 2017. The market overlooked this point and focused on higher sales, but the stock remained flat at 289.7p.

Remaining in the food sector, shares in Londis owner and takeover target Booker (BOK) jumped 3.6% to 190.8p on a decent trading update for the quarter to 16 June. The company reported a 9.6% increase in like-for-like sales thanks to good weather and the late Easter. Earlier this year, Tesco (TSCO) announced plans to acquire Booker.

Retirement housebuilder McCarthy & Stone (MCS) failed to rally at 163p despite continuing to increase its forward order book and reservation rates.


Land specialist MJ Gleeson (GLE) said results would be at the top end of market forecasts, boosting the share price by 6.6% to 667.2p.

Tiles retailer Topps Tiles (TPT) slipped 1.8% to 81.5p on lower like-for-like sales amid weaker macro-economic conditions. The company also struggled with a strong comparative period (April 2016).

A positive business update and news of a proposed £2.5m unsecured loan facility to support growth at Nektan (NKTN) helped attract interest in the gaming solutions provider, prompting the shares to soar 28.6% to 22.5p.

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