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“The pound is rallying amid hopes that Theresa May could delay Brexit, rising 0.5% against the euro to €1.1591 and up by the same amount against the US dollar at $1.3160. “Strong sterling is generally bad for the FTSE 100 because a large number of the index constituents earn in overseas currencies but have their shares priced in pounds. “The blue chip index falls 1.1% to 7,105, weighed down by miners, oil producers, telcos and pharma companies,” says Russ Mould, Investment Director at AJ Bell.
Persimmon
“Housebuilder Persimmon couldn’t have known when it was preparing these full year results that they would be preceded by reports its contract to sell under the Help to Buy scheme was under threat.
“However, they seem designed to address items such as pay, build quality and customer care that were reportedly behind housing minister James Brokenshire’s concerns.
“A promise to change pay and incentives to include greater emphasis on quality and customer care, as well as ensuring sites are at a more advanced stage before being released to the market, represent an acceptance that change was required.
“The latter move has resulted in a slower pace of sales reservations in recent weeks and overall the outlook is not quite as bullish as it has been previously. References to the market being ‘robust’ and ‘resilient’ look like code for a flat or possibly slowing market.
“Therefore the billion pound-plus profit reported today could represent something of a high water mark for the business.
“The news that interim chief executive Dave Jenkinson is to step up to the role on a permanent basis is not a huge surprise. As a 22-year veteran at Persimmon he will clearly know the business inside out but some investors might have preferred an outsider to come in, particularly given the questions which have been raised about governance at the company.”
Travis Perkins
“The stars appear to be aligning for Travis Perkins. The builders’ merchant is simplifying its structure, reinvesting cash in the best parts of the business, trading is picking up in its consumer-facing brand Wickes, and operating profit improved in the second half of the year after a difficult first half.
“This progress will go down well with the market as many had feared that Travis had lost its way over the past few years. Not only had the business become too complex, the market backdrop looked unfavourable with Brexit concerns having a negative impact on the property market.
“A sluggish housing market isn’t necessarily a bad thing for Travis as a large part of its business is driven by repair, maintenance and improvement where homeowners will spend money to make their house look nicer. Deciding that now is the wrong time to sell a house could actually be a catalyst to stay put and spruce up the interior and exterior.
“In an ideal world, homeowners would spend money on tradesmen – who would get supplies from people like Travis – to do up their house before selling it. Travis would then get a second earnings boost when the same people move to their new home and spend money to fit their own style of living.
“One could conclude there is a win:win situation for Travis whatever happens with the property market. Though sadly it will not be immune to an economic downturn, for now the business is looking a lot more promising than it has done for some time.”
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